Flush with cash at record gold prices, senior miners are shifting from share buybacks and dividends toward a more immediate focus on organic growth and acquisitions, Cupel Advisory director Neil Adshead said.
“There’s definitely a focus on growth right now,” he said last month during the Mining Forum Americas in Colorado Springs, Colo. “I think we’re going to see more of the developers get acquired by majors.” More near-mine work and a readiness to partner on long-drilled development assets is apparent in current miner strategies, he said.
Recent deals demonstrate the shift. Agnico Eagle Mines (TSX, NYSE: AEM) closed its takeover of O3 Mining on February and Equinox Gold (TSX, NYSE-A: EQX) completed its merger with Calibre Mining in June. China’s Zijin Mining Group (HKG: 2899) agreed in the same month to acquire Kazakhstan’s Raygorodok mine for $1.2 billion (C$1.7 billion)
Stronger balance sheets and a maturing cycle could see majors “tuck in” quality developers as pipelines are rebuilt, Adshead said, noting an industry pattern of extending mine life through discovery and deals. The advisory firm – co-led by wife Nicole Adshead-Bell – focuses on investments and technical diligence across exploration, development and mining.
Build-phase risks, particularly rising costs and ramp-up execution, the analyst noted, can present existential challenges to companies in an inflationary backdrop.
Another undercurrent to watch is the arrival of new capital sources, including crypto-adjacent players like Tether, whose steady industry investments could fuel valuation multiple expansion across the gold equity spectrum, Adshead said.
Watch the full interview below with The Northern Miner’s Western Editor, Henry Lazenby.
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