The composition of the big name gold industry has gone through some changes over the past few years. Big name mergers have changed the game and are continuing to do so well into 2024.
These mergers reflect a broader trend of consolidation within the gold mining industry.
Companies are acquiring assets to expand their resource base, anticipating future rises in gold prices or ensuring long-term operations. Larger entities can reduce costs by leveraging economies of scale, shared infrastructure, and more efficient operations.
Additionally, acquiring assets in geopolitically stable regions minimizes risk, a crucial factor given the uncertainties in many mining areas.
Despite current undervaluation by Wall Street, companies are positioning themselves for a shift in market sentiment, believing in the enduring intrinsic value of gold.
Here are three of the most noteworthy acquisitions of the past few years.
Gold Fields acquires Osisko Mining
Gold Fields Limited (NYSE: GFI) intends to close its acquisition of Osisko Mining before the year is out. The deal will cost approximately USD$1.57 billion and consolidate Gold Fields’ ownership of the Windfall Project in Québec, Canada.
Previously a joint venture, this acquisition grants Gold Fields full control, eliminating previous financial obligations and positioning the company to fully harness the potential of what’s considered a long-life cornerstone asset.
The transaction is expected to close following shareholder approval and reinforces Gold Fields’ strategy to expand its footprint in regions with high exploration potential.
Gold Fields completed the deal two years after its failed bid for Yamana Gold in 2022, adding a project that Fraser says will boast low costs and complement its Salares Norte mine in Chile, which began production earlier this year.
Yamana rejected Gold Fields’ original offer in favor of a higher joint bid from Agnico Eagle Mines (TSE: AEM) (NYSE: AEM) and Pan American Silver (TSE: PAAS) (NYSE: PAAS), causing the deal to fall through. The Windfall deal now fills the gap from that missed opportunity, adding 300,000 oz. per year at an all-in sustaining cost (AISC) of under $800 per oz. starting in early 2027.
Barrick Gold (TSE: ABX) (NYSE: GOLD) CEO Mark Bristow suggested that Gold Fields may have overpaid for Windfall Lake, reflecting some analysts’ concerns that the price could stretch the company’s balance sheet and strain returns.
In a mid-August note, BMO Capital Markets analyst Andrew Mikitchook spoke about the quality and scarcity of Windfall. He pointed out that the cash bid reduced the likelihood of a competing offer, given the existing joint venture and premium.
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Newmont expands by picking up Newcrest
The world’s largest gold mining corporation, Newmont Corporation (TSE: NGT) (NYSE: NEM) got even bigger in the middle of last year after it closed its long anticipated merger with Newcrest Mining.
It originated with a USD$16.9 billion bid in early 2023, and eventually closed for USD$19.2 billion.
This acquisition signifies Newmont’s continued dominance in the gold sector but also its strategic interest in copper, given Newcrest’s significant copper reserves. The merger, completed despite Newmont’s market cap taking a hit, takes part in the broader industry trend of companies shoring up their resources through acquisitions rather than organic growth, especially when the market undervalues these assets.
By integrating Newcrest’s assets, Newmont aimed to boost operational efficiencies, reduce costs through synergies, and enhance its production capabilities.
This move granted access to Newcrest’s high-quality, long-life operations, such as the Cadia East Ridgeway, further expanding Newmont’s extensive portfolio. Newcrest’s strong presence in Australia and Papua New Guinea complements Newmont’s global reach, adding physical assets in stable, mining-friendly jurisdictions.
While Newmont is primarily known for gold, the acquisition also increases its copper production, an essential metal for the electronics and renewable energy sectors, aligning with future industrial demand.
Although Newmont’s stock experienced a decline in the near term, the acquisition positions the company to capitalize on the long-term value of gold and copper, especially during periods of economic uncertainty that often drive up gold prices.
Newmont’s post-merger strategy throughout 2024 has been to divest from core assets, including the Telfer operation and 70 per cent of the Havieron gold-copper project in the Paterson region of Australia, which it sold to Greatland Gold plc (LON: GGP).
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Calibre Mining grows with Marathon Gold acquisition
Although less covered than the mega-deals, Calibre Mining Corp’s (TSE: CBX) (OTCMRKTS: CXBMF) acquisition of Marathon Gold represents another facet of this consolidation wave. This merger is part of Calibre’s growth strategy, focusing on high-quality, development-stage assets in mining-friendly jurisdictions.
While specifics of the deal’s valuation haven’t been as widely publicized, this move is indicative of mid-tier miners seeking to scale up, diversify their project portfolios, and enhance their production capacity.
Part of this project portfolio diversification included the Valentine Mine in Newfoundland, Canada. The mine is set to become one of the largest gold operations in Atlantic Canada, with anticipated production reaching approximately 175,000 ounces of gold annually over its 13-year mine life.
With its strategic location in a mining-friendly jurisdiction, the Valentine Mine benefits from well-developed infrastructure and proximity to power. Calibre Mining plans to leverage modern extraction techniques and sustainability initiatives to optimize the mine’s output while reducing environmental impact, aligning with broader industry trends toward greener mining practices.
Last month, the company received government approval to add a third open pit to its Valentine Gold Mine in Newfoundland.
In August of last year, the company submitted an environmental assessment update to the Impact Assessment Agency of Canada (IAAC) outlining the changes to the mine.
After conducting an analysis, which included consultations with Indigenous groups, communities, and stakeholder organizations, the IAAC recommended approval. The minister then granted the green light for the expansion based on the IAAC’s findings.
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