Aussie miners circle $1bn-odd Canada gold play

The strong gold price is offering fire power for further M&A by Australian miners. Picture: David Gray, AFP

Some of the most prominent names in Australian gold mining are believed to be lining up to further their exposure to the lucrative Canadian market as Orion Mine Finance taps RBC to sell its interest in the $1bn-plus Greenstone Gold Mines.

The Greenstone Gold Mines properties are 60 per cent owned by Equinox Gold and 40 per cent Orion Mine Finance and involve the development of the Hardrock Project and the Kengamisis, Brookbank and Viper Properties.

The assets are pre-development, which is where Evolution Mining says it sees the strongest value when it comes to its desire to buy assets in Canada, although it would be unlikely to acquire a minority interest given its operational expertise.

The other logical Australian listed buyer is Northern Star Resources.

The projects are located in Ontario and made up of several claim groups having a cumulative strike length of more than 105kms along the district’s most prospective geological structures.

The company describes its access to infrastructure, including the Trans-Canada Highway and TC Energy’s natural gas pipeline, which extends along its length, as excellent.

Market analysts say that Northern Star and Evolution are the two Australian listed gold miners that have the balance sheet to embark on an acquisition.

It comes at a time that the gold price is trading strongly, above $US2000 an ounce, providing fire power for miners in the space to lift cashflow from their projects.

Further mergers and acquisition activity is expected to happen in the Australian gold mining space, with a number of eyes on Ramelius Resources.

Sources say that the $2bn Ramelius has been the strongest performer of the Australian gold miners this year with its share price moving from 88c to $1.70.

Yet the question is whether a party would be keen to take its expensive scrip in a merger deal.

Sources say that Ramelius has been knocking on a lot of doors regarding acquisitions and the targets it is most focused on are those operating in its back yard.

WestGold or Gascoyne Resources fit this description.

Ramelius is understood to be in search of an opportunity in Australia, preferably in Western Australia, where it can add 100,000 ounces of gold per annum.

It already has its Edna May and Mt Magnet production hubs in Western Australia and wants to add a third production hub.

The company is sitting on $261m worth of cash which could be used for deals.

Meanwhile, Chinova Resources, which DataRoom reported in August was for sale, could be exploring a break up play for its Cloncurry copper assets.

It is understood that South32 expressed interest in its most valuable asset, the flagship Mount Elliott copper and gold project, before walking away, while Sandfire Resources was also looking, although it remains unclear if it is still keen.

Smaller mining groups have been interested in the less valuable assets within the portfolio.

The understanding is that advisers working on the sale had been planning to match-make to get a deal done in an effort to secure up to $400m for the owner.

Chinova Resources is owned by Shanxi Donghui Energy Group, which bought the copper projects and a processing plant from Ivanhoe Australia in late 2013.

BurnVoir Corporate Finance has been running the sale process.

The assets include the Osborne processing plant, which has been on care and maintenance since 2021, as well as a power plant, air strip, accommodation facilities, and several projects with a combined mineral resource estimate of 3.9 million tonnes of contained copper, 6.8 million ounces of gold as well as molybdenum and cobalt.

Chinova operates from the Osborne Mine site, 190km south east of Mt Isa and 150km south of Cloncurry in Western Queensland.