Big fish Regis Resources may have failed in its bid to buy small fish Capricorn Metals — but there is plenty of consolidation yet to come in the gold sector.

That’s the view of Mark Clark, chairman of $2 billion Regis (ASX:RRL), which lost out on $50 million Capricorn (ASX:CMM) when the takeover target’s biggest shareholder said “no” this week.

“There’s a dichotomy between the big end of town and the smaller guys where the big end of town has got reasonable valuations [and] the smaller end of town is really struggling,” Mr Clark told Stockhead on the sidelines of the Precious Metals Investment Symposium in Perth this week.

“It’s hard to see companies that need to raise up to their market cap or multiples of their market cap how they’re going to move forward with the asset.

“So if that situation continues then I’m sure bigger companies will ultimately look at the smaller ones with a view to pocketing those assets at the right price.

“The developer end and the explorer end, that part of the market in Australia is almost at capitulation point.”

Opposing views

Mr Clark could not say much about the failed Capricon bid other than to confirm there were clearly opposing views between the major shareholder and the target’s board.

“I’m probably limited in what I can say other than their view of geology and their view of value is seen to be completely different to our view — and to be honest it seemed it was materially different from the company’s own board’s view and the market’s view,” he said.

“They’re completely entitled to that view, but I think it’s mostly around project potential, geology and ultimately valuation.”

While Regis does not plan to try and restart negotiations with Capricorn at the moment, it is looking at other opportunities.

“We don’t have anything that’s as far [along] as we got with Capricorn, but we’re certainly looking,” Mr Clark said.

Acquisition activity is picking up

Merger and acquisition activity in the gold space is starting to pick up with takeover bids lobbed by players like Vango Mining (ASX:VAN) for Dampier Gold (ASX:DAU) and Ramelius Resources (ASX: RMS) for Explaurum (ASX:EXU).

Regis, meanwhile, is also looking at North American assets, which are looking relatively cheap at the moment.

“Certainly, in the Australian producer space there is no doubt that the valuations of that group of companies is relatively strong certainly relative to our North American peers who don’t seem to be attracting the same sort of valuation that we’re getting,” Mr Clark said.

“I don’t think there’s any secret that a lot of Aussie producers are looking in North America because of that valuation disconnect.

“Clearly Regis would be doing the same thing, looking for North American open pit opportunities if you can get them at the right valuation and you could potentially look for projects where you could develop the project cheaper or bringing your skill set to bear to add value.

“I think there’s an active M&A landscape at the moment because all the Australian producers have been really successful producing a lot of gold, producing good cash flow, got reasonable currency in their shares, therefore I’m sure there’s a number of conversations that are happening.”