Riding the Gold Wave: Record Prices, Strategic Mergers and Miners' Resilience

Surging gold prices are driving record cash flow for gold producers, and when paired with rising stock valuations, are creating a more favorable climate for mergers and acquisitions (M&A) within the sector. Gold miners led the way in metals and mining M&A in 2024, according to research from S&P Global Market Intelligence, which revealed that gold deals made up 70% of the total transaction value. The report highlighted 62 gold-focused transactions during the year—representing a 32% increase from 47 deals in 2023.

M&A Momentum: Gold Sector Takes the Lead

We believe one of the key factors supporting a re-rating of the gold equity sector is a balanced approach to capital allocation. Investors’ desire for dividends and share buybacks must be satisfied, but to remain competitive and attract business, companies must deliver growth. That growth doesn’t necessarily have to be annual production growth, to be clear. We are looking for companies that can grow the life of their existing assets, their reserves, their margins, their per share metrics and their rates of return. Growth can be achieved organically—through the drill bit, optimizations, efficiencies and expansions—and is certainly our preferred approach. However, growth can also be acquired through M&A. While not as economically attractive as organic growth, it remains an important—if not essential—component of any mid-tier or large gold producer’s growth strategy.

Diverging Deals: A Critical Look at Recent Mergers

Recently announced/proposed M&A transactions include the acquisition of De Grey Mining (1.9% of Strategy net assets) by Northern Star Resources (1.6% of Strategy net assets); the merger of Equinox Gold (not held) and Calibre Mining (0.3% of Strategy net assets); the acquisition of Spartan Resources (1.8% of Strategy net assets) by Ramelius Resources (not held); and a public offer by Gold Fields (3.8% of Strategy net assets) to acquire Gold Road Resources (not held), which has been rejected by the board of Gold Road Resources.

We are not supportive of the friendly, at-the-market merger between Equinox Gold and Calibre Resources, announced on February 23, 2025. The implied market capitalization of the combined company was estimated at around CAD$7.7 billion. We don’t see any synergies between any of the companies’ operations. Both operate in the Americas, but in vastly different locations. Calibre is ramping up its Valentine Gold Mine in Newfoundland, Canada. This is a transformational asset that will vault the company to mid-tier status. Construction is progressing as planned and we expected Calibre shares to have a positive re-rate once it achieves commercial production later in 2025. The terms of the proposed combination, which is subject to shareholder approval, do not include a takeover premium for Calibre shareholders. In our view, a premium would be necessary to justify Calibre shareholders walking away from the share price appreciation they were likely to realize as the company transformed itself into a multi-asset producer with a flagship asset in Canada.

In contrast, the other three transactions we are highlighting here (all coincidently involving the acquisition of assets in Australia) offer obvious regional and operational synergies, along with significant takeover premiums.

Strategic Consolidations in Australia

On December 2, 2024, Australian major Northern Star Resources, announced an AUD$5 billion friendly acquisition of De Grey Mining at a 37.1% premium to the prior day’s close. The deal is expected to close in the second quarter of this year. Northern Star is probably the company that is best suited to develop De Grey’s Hemi gold project. The company is established in Western Australia and has seen a tremendous growth trajectory over the past decade from scrappy junior to established mid-tier and now an emerging major. Their growth has come primarily from smart acquisitions, through which they have constantly created more value than expected through operational efficiencies and exploration. While Northern Star Resources is paying a generous premium for De Grey Mining, the land package offers upside from an additional five-million-ounce resource with exploration potential likely to extend the project’s life. Hemi also presents technical challenges due to metallurgically complex ores—challenges Northern Star Resources is well-equipped to handle. This project firmly establishes Northern Star Resources among the ranks of the world’s leading gold majors.

The Dalgaranga low-grade open pit operation in Western Australia opened in 2018, but by 2021, the junior company that owned it was failing due to poor planning and execution. Management was replaced, and in early 2022, new geologic ideas led to the discovery of the high-grade Never Never lode deposit beneath the pit. The unprofitable open pit was shut down, and in 2023 the company was recapitalized and renamed Spartan Resources. On March 17, 2025, Australian junior Ramelius Resources announced the friendly AUD$2.4 billion acquisition of Spartan at a 27.5% premium to the 30-day volume weighted average price. There are considerable synergies between the Dalgaranga properties and Ramelius Resources’ nearby Mt. Magnet operation that justify this premium. The merger will also transform Ramelius into a mid-tier producing a half-million ounces per year once Never Never is developed.

On March 25, 2025, senior gold producer Gold Fields made public an offer to acquire Gold Road Resources for a cash consideration that valued Gold Road Resources at AUD$3.3 billion, representing a 28% premium to its closing share price on March 21. Gold Fields already owns a 50% interest in and is the operator of the Gruyere mine in Western Australia. Gold Road holds the other 50% non-operating interest in the Gruyere joint venture, which is its only producing asset. The rationale is clear: consolidating ownership of the asset would allow Gold Fields to unlock the full potential of the Gruyere mine by eliminating dis-synergies stemming from the current joint venture structure. Gold Road Resources’ shareholders would have the opportunity to monetize their investment at a nice premium. It is now up to them to decide whether this is a good deal.

¹S&P 500 Index is widely regarded as the best single gauge of large-cap U.S. equities. The index is a float-adjusted, market-cap-weighted index of 500 leading U.S. companies from across all market sectors including information technology, telecommunications services, utilities, energy, materials, industrials, real estate, financials, health care, consumer discretionary, and consumer staples. ²NASDAQ Composite Index is a broad-based market index that includes more than 3700 stocks listed on the Nasdaq stock exchange. ³NYSE Arca Gold Miners Index (GDMNTR) is a modified market capitalization-weighted index comprised of publicly traded companies involved primarily in the mining for gold.