trending Market Intelligence /marketintelligence/en/news-insights/trending/qy-K_zef0oxTjX65MKnGAQ2 content esgSubNav
In This List

'Haven't seen enough' — Major gold execs talk M&A, growth at Denver gathering

Blog

Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings

Blog

Insight Weekly: LNG exports surge; investors unfazed by inflation; neobanks drive VC funding

Blog

Essential Metals Mining Insights November 2021

Blog

[Infographic]: 2021 World Exploration Trends


'Haven't seen enough' — Major gold execs talk M&A, growth at Denver gathering

As gold prices hover around six-year highs on the heels of significant consolidation in the sector, top gold producers are looking toward further growth opportunities with an emphasis on capital discipline, several gold executives said Sept. 17 at the Denver Gold Forum.

Recent high-profile merger and acquisition activity in the gold sector has grown the production bases of many of the world's larger gold producers. Canada-based Barrick Gold Corp. completed the acquisition of Randgold Resources Ltd. in January, while its U.S.-based peer Newmont Goldcorp Corp. bolstered its production base with the April acquisition of top-tier producer Goldcorp Inc. Both companies and other large gold players said they continue to focus on more growth.

"I haven't seen enough [merger and acquisition activity]. This industry needs to consolidate. There are far too many managers and far too few assets," Barrick Gold President and CEO Mark Bristow told S&P Global Market Intelligence on the sidelines of the conference. "We've put our money where our mouth is. Should opportunities arise where we can create value by consolidating and adding tier-one assets to our portfolio, we'll do that."

That means Barrick is looking for mines producing over 500,000 ounces of gold per year with at least a 10-year life and capable of delivering an internal rate of return of 15% at a gold price of US$1,200 per ounce, Bristow said. During a presentation at the Denver Gold Forum, the executive touted the company's success in achieving substantial cost savings through its merger and acquisition activities, including the Randgold acquisition and a joint venture on Nevada assets with Newmont Goldcorp. The same day of Bristow's presentation, the company took full control of Acacia Mining PLC.

"Our production guidance for 2019 is trending towards the top end of the range, while costs are likely to be at the lower end," Bristow told the crowd. "Let me assure you, we are not resting on our laurels. There's still a lot more work to do to ensure that the full value of our asset portfolio is unlocked, and the market recognizes the quality of our portfolio and the potential to come."

He also emphasized that the company is pursuing organic growth opportunities through exploration projects.

"Exploration is to mining what research and development are to the pharmaceutical industry," Bristow said. "Our continued success in discovering world-class assets is what will ensure our sustained profitability."

Newmont Goldcorp recently divested its position in the Nimba iron ore project in Guinea and is in the process of divesting its Red Lake gold mine in Ontario. Still, the company is not looking to a fire sale of its assets despite previous indications that it would target US$1.0 billion to US$1.5 billion in divestitures over the next two years.

Incoming CEO Tom Palmer noted that under his leadership, Newmont Goldcorp still aims to grow its reserves and resources while optimizing its project pipeline and maintaining capital discipline.

"Our robust project pipeline is a key differentiator and provides us with a solid pathway to steady production and cash flow generation for decades to come," Palmer said in his presentation. "We remain well-positioned to deliver a stable production profile with visibility into the next seven years through 2025."

Sandeep Biswas, CEO of Australia-based Newcrest Mining Ltd., said during a presentation at the conference that the company is also eyeing merger and acquisition opportunities but remains more focused on organic growth.

"We take the view that transaction [internal rates of return] these days do not meet our criteria," Biswas said. "So we've got to be able to see where we can add value to take it from the transaction [internal rate of return] that might be present to the sort of rates of return that we expect when we deploy capital within our business."

Agnico Eagle Mines Ltd. CEO Sean Boyd said the senior Canadian gold miner is not only focused on growing production but is also trying to boost per-share metrics such as earnings and cash flow. Agnico's strategy is focusing on assets that remain economical even when gold prices fall, including building the business between 2012 and 2015 "when most of our competitors were inactive."

"All of this is designed to continue to grow this business in a very steady, measured way," Boyd said.