Analysts Predict a Wave of Mergers and Acquisitions Among Gold in 2021

One of the big issues for the gold mining companies in recent weeks has been the prospect of mergers and acquisitions. Analysts are forecasting another round of consolidation for the industry in 2021, despite not looking for mega-mergers. Instead, they expect the trend to continue in 2020, which brought with it a larger number of smaller deals.


In a report this week, Bank of America analyst Michael Jalonen and the team said pressures to replace depleted reserves will be a major driver of mergers and acquisitions this year. They found that gold reserves have decreased since 2012 while gold production has remained stable. In addition, their supply universe must replace 50 million ounces of reserves that are mined every year.

Earlier this week Agnico Eagle Mines Ltd. (NYSE:AEM) acquired TMAC resourcesIt adds 3.5 million ounces of reserves. This replaces more than Agnico Eagle’s reserves that were mined last year. BofA analysts estimate that their gold producers will produce 46 million ounces of gold equivalent this year, which is about 53 million ounces before recovery is lost.

At the end of 2019, the total gold reserves for the miners in the BofA cover were 606 million ounces, compared to the high of 875 million ounces in late 2012.

Effects of COVID-19 on gold miners

Last year was particularly difficult to replace gold reserves as exploration programs were temporarily suspended in the second and third quarters. The BofA team anticipates the suspension will have a negative impact on many companies attempting to replace gold reserves mined last year.

Barrick Gold Corp. (NYSE:GOLD) who is Warren Buffett Berkshire Hathaway Inc. (NYSE:BRK.A) bought in 2020, said on his November Investor Day that Kiball and Loulo-Gounkoto will likely add reserves. However, the Nevada Gold Mines, in which Barrick has a 61.5% stake, will not fully replace the reserves extracted in 2020.

Nevada Gold is now focused on increasing its resources for the next two or three years, which will likely result in an increase in reserves. Newmont Corporation (NYSE:NO), which owns the other 39.5% of Nevada’s gold mines, said on its December Investor Day that exploration would likely replace 45% to 50% of the reserves mined in 2020.

Some new projects replace reserves but are capital intensive. For example, Kinross Gold Corporation (NYSE:KGC) completed a pre-feasibility study on their Lobo Marte project in July. This study converted 6.4 million ounces of gold into reserves and increased the company’s total reserves by 25%.

How M&A offers an abbreviation for replacing reserves

The BofA team said the deals announced last year more than replaced the depleted reserves Yamana Gold Inc. (NYSE:AUY), Harmony Gold Mining Co.. (NYSE:HMY), Northern Star Resources (OTCMKTS: NESRF), Kirkland Lake Gold Ltd. (NYSE:KL) and Endeavor Mining Corp. (TSE:it). However, they find that mergers and acquisitions are not finding new gold, which requires real exploration and drilling.

The BofA team does not expect any mega-mergers in mining this year. Instead, they are looking for leading gold producers to optimize their assets to reduce costs and build the next generation of growth projects. However, they also indicate that senior producers are on the lookout for world-class available assets.

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

Creation of the “older” medium-sized miners

According to BofA, three new “high-level” medium-sized producers were founded in 2020, namely Endeavor Mining, Kirkland Lake and Northern Star Resources. Jalonen and his team expect this subgroup to sell non-core assets this year. High-ranking medium-sized producers have a production of 1 to 2 million gold equivalents. Medium-sized producers have a production of 500,000 to 1 million ounces, while high-level gold producers have a production of more than 2 million ounces.

Additionally, they find that larger companies trade with higher multipliers, which means smaller midsize miners run the risk of being left behind by their fast-growing peers. This also creates pressure to make and consolidate acquisitions in order to keep up.

The BofA team expects more interest in destinations in the US, 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 Merger and Acquisition Market in 2021

Jalonen and his team said that mergers and acquisitions in the gold mining market last year were due in part to senior gold producers selling off non-core assets. This year, they expect senior midsize gold producers to review their recently expanded asset base for non-core assets with a view to selling them. The result could be the creation of new producers and developers this year, just like last year.

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

Jalonen and his team see junior and intermediate producers as potential acquisition targets for larger producers who are struggling to balance their reserves despite declining production. They could also be targets for similar sized businesses that just want to get bigger. Companies with stretched balance sheets and limited cash flow could also become targets. In addition, the BofA team sees companies with multi-million ounces gold development as potential acquisitions for high-level and medium-sized gold producers.

Possible goals

In particular, they cited several companies that they believe have “fascinating assets” that are ripe for acquisition. Among the companies they mention are Cost Resources Inc. (NYSE:PVG), Victoria Gold Corp. (TSE:VGCX), Wesdome gold mines (TSE:WDO), and New Gold Inc. (TSE:NGD) in Canada. The list of BofA also includes Mexico’s Torex Gold (OTCMKTS:TORXF), Ecuador’s Lundin Gold (OTCMKTS:FTMNF), Australia’s Gold Road Resources Ltd. (OTCMKTS:ANY), and Perseus Mining in Ivory Coast (OTCMKTS:PMNXF).

The company also viewed 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 the BofA list. In the USA the company was 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.

At the time of this writing, Michelle Jones held positions (neither directly nor indirectly) in any of the securities identified in this article.

Michelle Jones is the Editor-in-Chief of and has been on the site since 2012. Previously, she was a television news producer for eight years. She produced the morning newscasts for NBC’s Evansville, Indiana and Huntsville, Alabama affiliates, and spent brief periods with the CBS affiliate in Huntsville. She has experience as a writer and PR expert for a variety of companies. Email to

Comments are closed.