(Updates with M&A comments in first paragraph.)
Jan. 9 (Bloomberg) -- U.S. Gold Corp. Chief Executive Officer Rob McEwen said gold companies will seek acquisitions this year as higher metal prices boost cash reserves.
“There’s a lot of opportunity out there,” McEwen said in an interview at Bloomberg’s Toronto bureau.
Gold miners are seeking to replace resources and increase production of the commodity, which posted its 11th straight annual increase in 2011.
“The seniors and the intermediates have watched these higher metals prices cause their treasuries to fill up very quickly,” he said. “And that’s going to burn a hole in their pocket.”
Rising metals prices have resulted in a “proliferation” of small companies, he said. These companies are vulnerable to takeovers because their access to capital is limited, he said. There may be more mergers of so-called juniors as a result.
McEwen proposed in June that Lakewood, Colorado-based U.S. Gold buy Minera Andes Inc., to form a new company to be named McEwen Mining Inc. He is CEO and the biggest shareholder of both companies, whose boards agreed to back the deal in September. Investors are scheduled to vote on the transaction on Jan. 19.
McEwen, who is also the founder of Goldcorp Inc., said he sees gold rising to more than $2,000 an ounce in 2012, reaching $5,000 an ounce in three to five years.
Gold futures reached a record $1,923.70 an ounce on Sept. 6 in New York. Gold for February delivery declined less than one percent to settle at $1,608.10 on the Comex in New York.
--Editors: Jasmina Kelemen, Charles Siler
To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net
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