With gold prices at all-time highs and a dearth of shovel-ready development projects in the pipeline, 2021 could see a lot of merger-and-acquisition activity in the British Columbia mining sector, especially in gold.
Last year was a fairly busy one for mining M&As.
鈥淭here was at least $14 billion in M&A activity in the precious metals mining business last year,鈥� said Rick Rule, president and CEO of Sprott U.S. Holdings. 鈥淚 suspect that number increases 鈥� and I suspect it increases reasonably dramatically 鈥� in 2021.鈥�
In 2020, sales and acquisitions of projects involving Vancouver-headquartered companies included:
鈥ew Gold Inc.鈥檚 (TSX, NYSE:NGD)聽聽sale of its Blackwater property south of Prince George to Artemis Gold Inc. (TSX-V:ARTG) for $190 million;
鈥eabridge Gold Inc. (TSX: SEA) bought the Snowfield project from Pretium Resources (TSX:PVG) for $100 million; and
鈥ldorado Gold (TSX:ELD, NYSE:EGO) acquired QMX Gold Corp. (TSX-V:QMX) for $132 million in a friendly acquisition.
鈥淭here has been such an underinvestment in new discoveries that projects in B.C. in more advanced stages of development could be prime targets鈥�
Rick Rule, CEO, Sprott US Holdings
While some smaller B.C. companies may be prime acquisition targets, two 鈥� Equinox Gold Corp. (TSX, NYSE:EQX) and Eldorado Gold 鈥� have grown to the point where they are more likely to be the ones acquiring rather than being acquired.
Rule said there has been such an underinvestment in new discoveries that projects in B.C. in more advanced stages of development could be prime targets.
鈥淭he industry is sorely lacking high-quality exploration projects or development projects,鈥� Rule said. 鈥淭he consequence of that is, when somebody makes a good discovery, they can be taken at absolutely eye-popping multiples.鈥�
Several analysts have tagged Pretium Resources (TSX:PVG) as a prime target for acquisition. It has only a single producing gold mine, Brucejack, but it鈥檚 a rich deposit.
Another B.C. company that could be ripe for picking is New Gold Inc., which has two operating mines, including the New Afton copper-gold mine in B.C.
SSR Mining (TSX:SSRM) is at the stage where it could go either way: be acquired by or merge with a larger company or continue to grow by making its own acquisitions.
SSR has four producing mines 鈥� in Canada, the U.S., Turkey and Argentina 鈥� and three development projects.
Analysts have pointed to Vancouver鈥檚 B2Gold (TSX:BTO) as a highly desirable acquisition for a gold mining major. It has three producing gold mines, in Mali, the Philippines and Namibia, and one development project in Colombia.
B2Gold recently passed a major milestone: the production of one million ounces of gold. The company produced C$1.8 billion in gold revenue last year, a 55% increase over 2019.
But the company鈥檚 founder and CEO, Clive Johnson, has rebuffed all proposals to date and has said any potential buyer would have to pay a hefty premium.
As for Equinox and Eldorado Gold, both have executed a number of acquisitions and both are more likely to be the ones doing the buying, rather than being acquired.
BC mining M&A potential players聽
British Columbia companies that could be on the radar of mining majors, or companies poised to become majors through their own mergers and acquisitions:聽
Pretium Resources (TSX:PVG)
Market Cap:聽$2.5 billion
Mines:聽One in B.C.
Production:聽347,743 ounces gold, 2020
New Gold (TSX:NGD)
Market cap:聽C$1.7 billion
Mines:聽Two operating
Production:聽293,139 ounces gold 2020
B2Gold (TSX:BTO)
Market Cap:聽C$7 billion
Mines:聽Three operating, two in development
Production:聽1 million ounces gold, 2020
Eldorado Gold (TSX:ELD)
Market Cap:聽C$2.4 billion
Mines:聽Four in operation, one in development
Production:聽528,874 ounces gold 2020
SSR Mining (TSX:SSRM)
Market Cap:聽$4.8 billion
Mines:聽Four operating, three in development
Production:聽711,000 ounces gold 2020.
(This article first appeared in )