The one reality mining companies can never escape is the inevitable depletion of its mine's resources. This truth adds pressure to senior mining companies to acquire new discoveries, exploration/development projects, and producing mines.
Higher gold prices spur on this merger and acquisition lifecycle.
In 2021, the price of gold reached multi-year highs, in part to the impact of Covid-19 shutdowns and economic uncertainty. This renewed interest in gold spurred the plans of many gold majors to acquire assets around the world.
For the top 10 acquisitions, over ~95 Moz of gold switched hands in 2021 in deals valued at over $17.5 billion for TSX and TSX-V listed gold companies. From our calculations, this implies a $/oz average valuation of $144.11 per ounce of gold.
The most expensive deal, from a $/oz valuation was Fortuna Silver’s acquisition of RoxGold and its producing Yaramoko gold mine and its construction ready Seguela project. The largest deal by deal value was the merger of Agnico Eagle and Kirkland Lake Gold.
Deal Value ($CDN): $10,466,833,146
Gold Ounces Acquired: 39,552,0000
Cost of Per Gold Ounce Acquired: $264.63/oz
Date of Announcement: September 28, 2021
With this acquisition, Agnico-Eagle is consolidating its position in the Kirkland Lake district of Ontario while acquiring low cost producing assets. Kirkland Lake’s Ontario assets include the Macassa Mine, the Detour Lake gold mine and the Holt complex. Detour Lake which is similar to Osisko’s Malartic mine, a low grade, bulk tonnage open pit. In Australia, Kirkland operates the Fosterville mine, the largest gold producer in the state of Victoria.
The merged miner will use Agnico’s name and have a board and management team drawing from both companies. Investors will receive 0.7935 of an Agnico share for each Kirkland share held.
Newcrest Mining/Pretium Resources
Deal Value ($CDN): $2,800,000,000
Gold Ounces Acquired: 14,200,000 oz. Au
Cost of Per Gold Ounce Acquired: $197.18/oz.
Date of Announcement: November 9, 2021
Australia-based Newcrest is establishing a stronger presence in Canada with this transaction. Earlier in the year, Newcrest acquired 70% of the Red Chris copper mine from Imperial Mines, and now with Pretium, it is becoming a major presence in British Columbia's Golden Triangle.
Kinross Gold/Great Bear
Deal Value ($CDN): $1,400,000,000
Gold Ounces Acquired: 8,500,000* oz. Au
Cost of Per Gold Ounce Acquired: $164.71/oz.
Date of Announcement: December 8, 2021
Great Bear's Dixie Project in Northern Ontario's Red Lake District is the property that grabbed the attention majors. Great Bear has no resource estimate for the Dixie Project.
According to the terms of the acquisition, the contingent value right is based on delineating 8.5 million oz. Au, which is what we have assumed for our $/oz calculation. Kinross plans to drill 200,000 metres this year to further define the resource.
Chifeng Jilong/Golden Star Resources
Deal Value ($CDN): $470,000,000
Gold Ounces Acquired: 11,720,000 oz. Au
Cost of Per Gold Ounce Acquired: $40.10/oz
Date of Announcement: November 1, 2021
Th acquisition is Chifeng’s second attempt to move into Ghana after walking away in April from a deal to buy Resolute Mining’s Bibiani gold mine, saying it had not received timely information about the termination of the mining lease.
Golden Star owns 90% of the producing Wassa gold mine in southwest Ghana, with the remainder owned by the Ghanaian government. The 30-year Wassa mining lease expires in September 2022 but Chifeng said the government had confirmed it will approve an extension if an application for one is made.
AngloGold Ashanti/Corvus Gold
Deal Value ($CDN): $450,000,000
Gold Ounces Acquired: 4,246,000 oz. Au
Cost of Per Gold Ounce Acquired: $105.98/oz.
Date of Announcement: September 13, 2021
This acquisition consolidate AngloGold's position the Beatty District, one of the largest new gold districts in Nevada. Corvus Gold owns the North Bullfrog, Mother Lode and other exploration assets located in southern Nevada, in close proximity to or contiguous with AngloGold’s exploration assets of Silicon, Transvaal and Rhyolite.
The company said it plans to develop North Bullfrog first, with production in the next three to four years. Next in line would be Silicon, Merlin and Mother Lode.
Agnico Eagle/TMAC Resources
Deal Value ($CDN): $226,126,997
Gold Ounces Acquired: 7,300,000 oz. Au
Cost of Per Gold Ounce Acquired: $30.98/oz.
Date of Announcement:
The acquisition by Agnico Eagle is distressed asset purchase of TMAC, who owned and operated the Hope Bay gold mine property in the north of Nunavut for four years. Agnico doesn't plan to produce gold at its Hope Bay property in 2022, and instead plans to focus on exploration activities.
Agnico Eagle already owns the Meadowbank and Meliadine gold mines operating in the Nunavut area and is on its way to becoming a Canadian gold giant in the Arctic region.
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