Gold miners in China, the world's biggest producer, have been chasing mines and listed companies in a bid to grow and match the largest global producers, like Barrick Gold Corp .
A seven-fold rise in gold prices between 2001 and 2011 spurred a run of gold mergers and acquisitions. Activity fell last year as major miners digested some big buys and smaller players held out for better offers, with global gold M&A tumbling to $14.6 billion from $43.3 billion in 2011, according to Ernst & Young.
But that is expected to pick up again this year as a 15 percent plunge in gold prices this month forces smaller miners, especially those with high-cost production or single assets, to seek partners to stave off a cash crunch.
"This might be the final shoe to drop that makes some people think 'there's no way I'm able to finance myself going forward, so I've got to think more seriously about my investors and give my investors a return by putting things together with people that have ... got the cash'," John McGloin, executive chairman of Africa-focused miner Amara Mining, told Reuters.
With major gold miners like Barrick Gold and Newcrest Mining under pressure to rein in capital spending, slash costs and fix mine problems, they are more likely to be spinning off assets rather than chasing acquisitions.
That leaves the door open to the Chinese, as well as cashed up sovereign wealth funds and private equity and hedge funds, to fill the gap.
"With things so badly beaten up, it is an opportunity (for Chinese companies), who will only have one or two other bidders for any asset," said an adviser familiar with the sector.
Targets in frame
China's top gold producer, Zijin Mining and state-owned Shandong Gold Group have been leading the expansion push.
Zijin won control over small producer Norton Gold Fields in Australia last year for $240 million and on Wednesday made a A$13 million bid for explorer Kalgoorlie Mining Co.
Norton Gold Fields chief executive Dianmin Chen, a Zijin appointee, said the company was looking at further takeovers to consolidate gold miners in Australia, and was also open to buying assets outside Australia.
"In a period when gold is lower, that offers opportunities for companies with financial strength, like us," Chen told Reuters.
Shandong bought 51 percent of Australia's Focus Minerals last year for A$225 million ($232 million) and is in talks to invest in London-listed Chaarat Gold, which is looking to raise $450 million for a project in Kyrgyzstan.
Two bankers said while the Chinese are always looking, it is still not easy to get a deal done.
Following some disastrous forays into minerals in Australia and Africa, Chinese authorities are becoming more cautious about approving acquisitions and Chinese buyers are becoming wary.
Barrick Gold put its 74 percent stake in African Barrick Gold up for sale late last year, in what could have been a $3 billion deal, attracting interest from China National Gold Group Corp.
Talks collapsed in January as China National Gold questioned Barrick's valuations on a business whose costs have been soaring while output is set to shrink for a fifth straight year.
African Barrick is now trading at less than half the price it was at when the talks with China National Gold were called off in January and other miners have been equally decimated.
"If $1,300 gold stays in place into the second half of this year, then you'll start to see (sellers) resetting their price expectations," said Mike Elliott, global metals and mining leader at Ernst & Young.
Although the Chinese might be eager to expand their gold holdings, they won't overpay, said Canadian gold miner Iamgold Chief Executive Steven Letwin.
"They're very, very savvy, they're very, very patient, and they've learned through a couple of hard lessons that they're probably one of the few buyers in town - African Barrick was an experience," Letwin told Reuters in an interview in February.
Letwin said he would welcome the Chinese as partners in any operation. One location where the two firms could team up is in Mali, where Iamgold's partner in the Sadiola and Yatela mines, AngloGold Ashanti, is considering getting out.
Cashed up funds
Chinese firms may run into competition from sovereign wealth funds, private equity funds and hedge funds in picking up strategic stakes in gold miners that are looking to raise capital, advisers say.
Such stakes can provide opportunities for private investors who are willing to take a long-term view, which fits well with the long timeframes needed for building new mines.
"We will see over the coming months ... quite a rise in the available amount of capital," said Ernst & Young's Elliott, pointing to funds being put together in the Middle East and elsewhere.