This Mega-Deal Reveals 2 Critical Points On The Gold Sector

As I’ve said before, one of the things I love most about writing Pierce Points is: the letter keeps me in touch with some of the best professionals going in the global resource business. 

That point was driven home again late last week. When the Pierce Points network proved extremely informed on one of the biggest deals we’ve seen for years in the gold space.

In late September when I wrote about rumours that Barrick Gold was selling its Nevada mines, my inbox lit up with suggestions on the likely buyer. Below is my September 23 post from my Twitter account:

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Last week Waterton Global did indeed step forward to buy Barrick’s Spring Valley and Ruby Hill mines in Nevada. With the investment fund bidding a significant $110 million for these assets. 

That’s yet another sign that private funds are the biggest story going today in mining M&A. With some of the industry’s best assets continuing to pass from major miners into the hands of investment firms. 

But there was another part to Barrick’s asset sale. Showing an interesting twist on this theme.

Barrick also said it will sell two additional mines — Round Mountain and Bald Mountain — to fellow gold major, Kinross Gold. For a hefty $610 million in cash. 

That’s a very significant move from Kinross. The major has been sitting on over $1 billion in cash for years now, as assets have been getting cheaper. Up until now however, Kinross had made no moves at all in the M&A space. 

But the new Nevada deal shows that cashed-up companies like Kinross haven’t gone into “turtle mode”. Rather, they were simply waiting for the right mines and the right prices — and today, they feel assets and costs have finally become attractive. 

That’s a signal for investors to pay attention to. If the world’s top gold firms feel it’s time to buy, maybe it is. 

Here’s to seeing it coming,

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Dave Forest

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