Mergers, Acquisitions in Gold Sector Expected to Increase in 2022

Last year saw the number of deals for mergers and acquisitions among gold companies increase. This number is set to go even higher this year as miners clamber for producing assets that will ensure their pipelines remain full.

The $10 billion merger between Kirkland Lake Gold Ltd and Agnico Eagle Mines Ltd was the largest gold deal of 2021. Other major 2021 deals include Kinross Gold Corporation’s acquisition of Great Bear Resources Ltd at $1.44 billion and the Newcrest Mining Limited $2.7 billion takeover of Pretium Resources Inc.

We expect to see companies follow a similar pattern this year, albeit with less options. The scarcity of gold assets, market pressure to bulk up firm valuations and depleting gold reserves will prompt large mining companies to consider swallowing smaller miners in the market, which are in possession of higher-quality projects and active mines.

In a statement, Gold Royalty CEO, chair and president David Garofalo stated that he expected the pace of mergers and acquisitions to increase.The Kirkland-Agnico deal is expected to close by the end of the first quarter of this year. This deal will make the company the third biggest miner of gold around the globe and the biggest producer of gold in Canada.

The Kinross and Newcrest transactions involved bigger gold companies taking out smaller producers organized around various assets in Canada, targeting the exploration-stage Dixie project and the producing Brucejack mine, respectively.

John Burzynskia, CEO and executive chair of Osisko Mining, stated in an interview that only a few gold assets were left and that was what companies were using to reinforce their almost-depleted reserves.

The draining of the precious metal’s assets for sale comes amid a bigger issue: declining reserves caused by reducing gold discoveries. In a 2020 analysis, S&P Global Market Intelligence found that there was a big decline in reserve life among major miners of gold. In the report, Robert Anders, a Market Intelligence analyst, stated that during the 2010–2019 period, 16 of the 20 biggest miners of gold globally saw declines in the remaining production years of their mines. The analyst noted that the primary drivers of this were lusterless investments in exploration and declining rates of discovery.

Before 2021, the gold sector was hindered from progressing by unstable firm valuations in a volatile gold market. However, Contact Gold Corp CEO Matthew Lennox-King noted that company valuations for gold stabilized last year as the metal traded at almost $1,800 an ounce for most of the year. The fairly stable gold prices will likely spur on companies such as StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF) to accelerate their efforts of distributing these precious metals in several markets around the world.

NOTE TO INVESTORS: The latest news and updates relating to StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF) are available in the company’s newsroom at https://ibn.fm/STUPF

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