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One of the big topics for the gold miners in recent weeks has been the prospect of mergers and acquisitions. Analysts predict another round of consolidation for the industry in 2021, although they aren’t looking for mega-mergers. Instead, they expect to see a continuation of the trend in 2020 that brought a larger number of smaller deals.


In a report this week, Bank of America analyst Michael Jalonen and team said they believe the pressure to replace reserves that have been mined will be one of the big drivers for mergers and acquisitions this year. They noted that gold reserves have been falling since 2012, while gold output has remained stable. Further, their coverage universe must replace 50 million ounces of reserves mined each year.

Earlier this week, Agnico Eagle Mines Ltd (NYSE:AEM) acquired TMAC Resources, adding 3.5 million ounces of reserves in the process. That more than replaces Agnico Eagle’s reserves mined last year. The BofA analysts estimate that their gold producers will produce 46 million gold equivalent ounces this year, or about 53 million before lost recoveries.

As of the end of 2019, total gold reserves for the miners in BofA’s coverage amounted to 606 million ounces, compared to the peak of 875 million ounces at the end of 2012.

Impacts from COVID-19 on Gold Miners

Last year was especially difficult for replacing gold reserves because of the temporary suspension of exploration programs during the second and third quarters. The BofA team expects that suspension to negatively impact many companies that are trying to replace the gold reserves they mined last year.

Barrick Gold Corp (NYSE:GOLD), which Warren Buffett‘s Berkshire Hathaway Inc. (NYSE:BRK.A) bought in 2020, said at its Investor Day in November that Kiball and Loulo-Gounkoto will likely add reserves. However, Nevada Gold Mines, which Barrick has a 61.5% stake in, won’t fully replace the reserves it mined in 2020.

Nevada Gold is now focused on growing its resources for the next two or three years, likely leading to increases in reserves. Newmont Corporation (NYSE:NEM), which owns the other 39.5% of Nevada Gold Mines, said on its December Investor Day that exploration would probably replace 45% to 50% of the reserves it mined in 2020.

Some new projects are replacing reserves, but they are capital intensive. For example, Kinross Gold Corporation (NYSE:KGC) finished a pre-feasibility study on its Lobo-Marte project in July. That study converted 6.4 million ounces of gold to reserves, raising the company’s total reserves 25%.

How M&A offers a shortcut to replacement of reserves

The BofA team said the deals announced last year more than replaced the reserves mined at Yamana Gold Inc (NYSE:AUY), Harmony Gold Mining Co. (NYSE:HMY), Northern Star Resources (OTCMKTS:NESRF), Kirkland Lake Gold Ltd (NYSE:KL) and Endeavour Mining Corp. (TSE:EDV). However, they note M&A doesn’t actually find new gold, which requires real exploration and drilling.

The BofA team doesn’t expect to see mega-mergers in the mining space this year. Instead, they look for senior gold producers to optimize their assets to lower costs and build the next generation of growth projects. However, they also point out that senior producers are keeping a watch for available world-class assets.

Barrick Gold CEO Mark Bristow said in October that they would like to acquire world-class gold and copper assets like Grasberg. Additionally, Freeport McMoRan Inc (NYSE:FCX) CEO Richard Adkerson said on the company’s third-quarter earnings call that there would be no “merger of equals” because it still must achieve its full operating volumes.

Creation of the “senior” mid-tier miners

In BofA’s view, 2020 brought the creation of three new “senior” mid-tier producers, which were Endeavour Mining, Kirkland Lake and Northern Star Resources. Jalonen and team expect this subset to sell non-core assets this year. Senior mid-tier producers have outputs in the 1 million to 2 million gold equivalent ounce. Mid-tier producers have an output of 500,000 to 1 million ounces, while senior gold producers have an output of more than 2 million ounces.

Additionally, they note that larger companies are trading on higher multiples, which means smaller mid-tier miners risk being left behind by their rapidly growing peers. This also creates pressure to make acquisitions and consolidate to keep up.

The BofA team expects more interest in targets in the U.S., Canada, Australia and other parts of the world that are politically safe. They believe the need to replace gold reserves means the M&A market will be a seller’s market this year.

What to expect in the 2021 mergers and acquisitions market

Jalonen and team said last year’s mergers and acquisitions in the gold mining market was partially driven by senior gold producers disposing of non-core assets. This year, they expect senior mid-tier gold producers to review their recently-enlarged asset basis for non-core assets to dispose of. The result could be the creation of new producers and developers this year, just like last year.

Like 2020, the BofA team expects a renewed focus on regional and bolt-on acquisitions where travel is either limited or not required due to the pandemic. However, they also said desktop analysis of potential targets will soon become standard and replace due diligence site visits, serving as a catalyst for even more mergers and acquisitions.

Jalonen and team see junior and intermediate producers as potential acquisition targets for larger producers struggling to make up their reserves despite declining production. They could also be targets for similar-sized companies that simply want to become bigger. Any companies with stretched balance sheets and limited cash flow could also become targets. Further, the BofA team sees companies with multi-million-ounce gold developments as potential acquisitions for senior and mid-tier gold producers.

Potential targets

Specifically, they named several companies they believe have “intriguing assets” ripe for acquisition. Among the companies they named are Pretium Resources Inc (NYSE:PVG), Victoria Gold Corp (TSE:VGCX), Wesdome Gold Mines (TSE:WDO), and New Gold Inc (TSE:NGD) in Canada. BofA’s list also includes Mexico’s Torex Gold (OTCMKTS:TORXF), Ecuador’s Lundin Gold (OTCMKTS:FTMNF), Australia’s Gold Road Resources Ltd (OTCMKTS:ELKMF), and Ivory Coast’s Perseus Mining (OTCMKTS:PMNXF).

The firm also looked at exploration and development companies as potential targets. Osisko Mining Inc. (TSE:OSK), Marathon Gold Corp (TSE:MOZ), Great Bear Resources Ltd (OTCMKTS:GTBAF), Artemis Gold Inc (OTCMKTS:ARGTF), Pure Gold Mining Inc (OTCMKTS:LRTNF), Battle North Gold Corp (TSE:BNAU), INV Metals (TSE:INV), Sabina Gold & Silver Corp (TSE:SBB), and Sirios Resources Inc (OTCMKTS:SIREF) in Canada all made BofA’s list. In the U.S., the firm named Gold Standard Ventures Corp (NYSEAMERICAN:GSV), International Tower Hill Mines Ltd (NYSEAMERICAN:THM), NovaGold Resources Inc. (NYSEAMERICAN:NG) and Midas Gold Corp (OTCMKTS:MDRPF) as potential targets with interesting assets.

On the date of publication, Michelle Jones did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Michelle Jones is editor-in-chief for and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at