Golden Days: M&A in the gold market hasn’t peaked, it’s just getting started

With gold prices soaring we take a look at five logical M&A moves that could make sense as dealmaking heats up.

Gold M&A is heating up as prices soar. Pic: Getty Images

• As gold trades beyond $4800/oz, M&A continues to heat up

• Two significant deals announced in under a week with Spartan-Ramelius merger kicking off and Gold Fields bidding for Gold Road

• We look at five potential M&A moves that could emerge in ASX gold

With prices running hot, consolidation continues to envelope the ASX gold sector.

If the key Northern Star Resources (ASX:NST) acquisition of De Grey Mining (ASX:DEG) passes the muster for De Grey shareholders, valued at around $5bn at the time of its announcement in December, well over $10bn of mergers and acquisitions could take place in 2025.

Last week saw the culmination of nine months of will they, won't they talk over a tie-up between Ramelius Resources (ASX:RMS) and Spartan Resources (ASX:SPR), with RMS committing to offer 25c cash per share and 39.5% ownership of its company to SPR investors in deal worth an estimated $2.4bn.

The 'no brainer' acquisition will add the high-grade Never Never and Pepper deposits at Spartan's Dalgaranga to neighbouring Ramelius' pipeline to feed its Mt Magnet operations, giving the company 4.4Mtpa of milling capacity and a runway to produce upwards of 500,000ozpa from 2030 on, making it one of the largest mid-tier gold miners in Australia.

And yesterday South African giant Gold Fields revealed it had made a US$2bn ($3.3bn) offer to acquire its JV partner in the Gruyere gold mine, Gold Road Resources (ASX:GOR).

Rejected by the target, the offer clocked in at $3.05 per share, including $2.27 per share and a variable portion equal to each company's share of De Grey, in which Gold Road holds a +17.3% stake.

Despite coming in at a 28% premium, GOR's board rejected the offer, instead counter-bidding for Gold Fields' operating 50% stake in Gruyere, knocked back also by the South African major.

Further down the food chain Catalyst Metals (ASX:CYL) traded off its non-core Henty gold mine in Tasmania on Monday to Kaiser Reef (ASX:KAU), the operator of the modest A1 gold mine in Victoria.

James Champion de Crespigny led Catalyst transformed itself from a Victorian gold explorer into a significant, $1bn-plus WA gold producer after acquiring the Plutonic gold operations near Meekatharra in 2023.

It became a 100,000ozpa producer last year (~85,000oz at Plutonic) and is seeking to grow that to as much as 200,000ozpa as it opens new mining fronts from its consolidated land package in the Mid West.

The minimum $47m deal will see Catalyst receive $15m cash and a $4m reimbursement for environmental bonds, $14m in deferred gold consideration and $14m in the form of a 19.99% stake in Kaiser Reef, plus a 0.5% net smelter return royalty on gold produced from the Darwin Extension Target Zone and an option for a 50% interest in KAU's Maldon processing plant.

A number of juniors operating in other commodities are also using the art of the deal to plant their flag in the gold market. Minerals 260 (ASX:MI6) recently launched a $220 million, 12c per share public offer to fund its $166m purchase of Norton Goldfields' 2.3Moz Bullabulling gold project near Kalgoorlie.

It's all come with gold trading at upwards of $4800/oz in Aussie dollar terms, with both prices themselves and a weak Aussie dollar making Australian gold miners attractive at home and overseas.

Expert: We'll see more

BDO head of global natural resources Sherif Andrawes has his finger on the pulse of dealmaking in the small cap resources space.

And he says we'll see more, with cashed up gold miners ready to deploy capital.

The shift of funds from other commodities into gold has been extraordinary in the past year.

Based on the ASX companies who file quarterly cashflow reports, gold explorers smashed the rest of the market in 2024, with financing inflows for gold companies raising $10m or more of $2.68bn last year.

Uranium trailed in second place at just $970.86m, while lithium firms raked in $751.64m, down from $1.95bn in 2023, according to figures tabled by BDO in its Explorer Quarterly Cash Update yesterday.

In the fourth quarter, gold companies in that cohort raked in $845m, equivalent to almost $3.4bn on an annualised basis, providing plenty of ammunition for both drilling and M&A.

"We're seeing some good M&A and I think we're going to see some more," Andrawes said.

"Gold is certainly the place where there's interest in the markets and where the gold price is likely to be "stronger for longer" as the phrase goes.

"With that happening, the availability of funds is going to be there as well, which makes a lot of properties out there more valuable and there's more interest as well."

Where deals are likely to be made, Andrawes thinks, is where synergies can be found by companies in close proximity to each other.

"The most attractive ones are going to be ones where you're putting two or three or more companies together where they can get synergies from it, whether that's in terms of lowering operating costs because operating costs are high, or whether it's about utilising underutilised mills or adding in throughput to production."

Five potential deals the market is whispering about

It should be noted these are all purely speculative at this point, but all stem from some market chatter around the obvious M&A that could be on the horizon in the WA, Aussie and international gold space.

We're taking a look in the crystal ball at which potential transactions could make sense as the gold price stirs mine hunters into action.

Could Alkane take a swing at Medallion?

There is a key catalyst emerging for Medallion in the coming months. It's been in discussions with IGO (ASX:IGO) since the Forrestania Nickel Operations closed last year about acquiring its Cosmic Boy Mill, which would be retooled to process sulphide hosted gold and copper from its Ravensthorpe project, around 180km to the south.

That could provide a low cost development pathway for MM8, estimated in a scoping study last year to cost $73m with a nine-month payback on then spot prices which now represent a 20% discount on the current Aussie dollar gold price.

MM8 is aiming to reach binding status on the Cosmic Boy mill purchase by the end of an exclusivity period in May this year, with a BFS due after and strong interest already seen in offtake for its proposed gold and copper concentrate.

Ticking those boxes could well provide the impetus for a larger player to come sniffing.

Alkane's involvement in a $6.5m capital raising in early February saw the $380m capped gold miner take its stake in Medallion Metals (ASX:MM8) from 4.9% to 6.3% and makes it an obvious candidate.

It's already well in the money on those. MM8's share price has lifted from 10c to 19c since the raising, as it progresses studies on Ravensthorpe with an FID expected this year.

It should be noted Alkane, which has been around in some shape or form since the late 1960s, has regularly taken strategic stakes in junior players. One, Genesis Minerals, is now many times larger than its former cornerstone backer, with Alkane pocketing the gains from when Raleigh Finlayson took charge of the WA gold miner.

But its substantial position in Medallion is certainly worth taking note of, especially with the miner's cash flows solely reliant on the Tomingley operations in New South Wales.

They are expected to produce 70-80,000oz this financial year at costs of $2400-2600/oz.

Alkane drew big market attention when it discovered the Boda and Kaiser porphyries in NSW's Lachlan Fold Belt a few years ago, but their scale could make them overly ambitious development prospects for ALK alone and something of the ilk of Ravensthorpe could add scale with a quicker, less risky development timeline.

High grade copper hits from its Trilogy deposit announced to the ASX yesterday also demonstrated the exploration upside for Medallion at Ravensthorpe.

Genesis Minerals merging with Vault Minerals

This is the logical merger that would almost certainly push us beyond the $10bn mark for ASX gold deals this year.

Genesis owns the Gwalia gold mine and Mt Morgans operations, hosting two mills at Leonora and Laverton both in need of feed.

Vault owns King of the Hills but has mine life concerns at its Mt Monger and Deflector gold mines, also having put its Sugar Zone project in Canada in care and maintenance a couple years back.

A merger would effectively reconvene the flagship assets of the old Sons of Gwalia business under one roof, with the reunion of KoTH with Gwalia a combination that would make the combined entity the largest locally headquartered gold producer in Australia outside Northern Star and Evolution Mining (ASX:EVN).

Who runs the show may be a point of discussion, with Genesis' Raleigh Finlayson and Vault's Luke Tonkin two of the biggest names in WA's gold sector.

Magnetic Resources to Genesis Minerals/Gold Fields

Magnetic Resources boss George Sakalidis has made no secret of the fact the owner of the 1.49Moz Lady Julie North gold project has had a dataroom open, indicating at recent conferences that interest in the northern Goldfields discovery is substantial.

When last rendered, LJN4 contained 23.6Mt at 2.04g/t for 1.546Moz of gold, with satellite deposits taking the global resource at the Laverton project to 1.93Moz.

Its location makes LJN4 even more significant – 10km from Genesis' Laverton mill, which is currently processing second party feed from the likes of Brightstar Resources (ASX:BTR), 15km from Gold Fields' Granny Smith and 50km from AngloGold Ashanti's Sunrise Dam, it sits at the nexus of a major network of underfed WA gold plants.

But it remains a terrific standalone development opportunity too, especially at current prices.

A pre-feasibility study update in August last year painted the picture of a profitable mine averaging 104,000ozpa over an initial eight year mine life, with a pre-tax net present value of $925m and internal rate of return of 135% at $3200/oz. It'd cost just $111m to build.

That's Aussie dollars, by the way. With spot some $1600 higher today, a feasibility study next quarter which will contemplate an underground mining scenarios for the first time could produce something even more attractive.

Predictive Discovery's Mexican standoff

A takeover is on the radar of multiple analysts at PDI, owner of the 5.4Moz Bankan deposit in Guinea.

The next major milestone is the issuing of an exploitation permit by the Guinean Government.

But already interest in the $920 million capped developer is extensive.

Perseus Mining (ASX:PRU) took a strategic stake of close to 20% last year as a launching pad for a future takeover. But two bigger fish have interloped, with Lundin and China's Zijin taking stakes in a $69.2m private placement that gives them combined 10% ownership.

Canaccord Genuity's Paul Howard said there were plenty of options for a takeover, with a DFS on Bankan  – likely to become one of Africa's biggest gold mines – due in the second half of 2025.

"Our price target for this is 52c, so in my eyes there’s certainly a lot of options,” the Canaccord analyst told Stockhead in February.

“I think that corporates out there should be willing to pay 50c for this per share.”

PDI is currently trading at 39c.

Will Antipa be on the radar of Greatland?

Euroz Hartleys analyst Michael Scantlebury describes this one as a "plain target".

Antipa Minerals (ASX:AZY) owns the 2.3Moz Minyari Dome gold deposit, which also has by products of copper, silver and cobalt waiting to be dug up once it's developed.

But it's well and truly in the neighbourhood of Greatland Gold, a London-listed gold miner backed by Andrew Forrest's Wyloo Metals that is likely to be in need of additional feed sooner rather than later.

Greatland bought the Telfer gold mine from Newmont last year in a US$475 million deal.

Yet the project's 20Mtpa mill, consisting of two processing trains, will be underfed once the underground Havieron deposit becomes the primary feed source for the plant.

An updated study on Minyari Dome last year showed Antipa could well go it alone, with the mine expected to deliver 1.3Moz over its first 10 years at all-in sustaining costs of $1721/oz and a capex of $306m.

That would be mined at a rate of 3Mtpa, generating post-tax NPV and IRR of $1.2bn and 79% at a US dollar gold price of US$2800/oz and 70c AUD to USD exchange rate (A$4000/oz).

Up 67% YTD, Antipa, which recently underwent a share consolidation and has a $250m market cap, raised $16m to progress exploration studies and drilling last year.

Along with the $17m it pocketed from selling its 32% non-controlling stake in the Citadel joint venture to Rio Tinto, AZY is one of the most cashed up gold small caps out with $36.5m in the bank as of December 31, 2024.

At Stockhead, we tell it like it is. While Spartan Resources, Medallion Metals, Antipa Minerals and Magnetic Resources are Stockhead advertisers, they did not sponsor this article.

Originally published as Golden Days: M&A in the gold market hasn’t peaked, it’s just getting started