Clem Chambers: Gold's Top Driver Now, Silver's Coming Boom Phase

Bullet briefing — Gold M&A heats up, GDX switches index

Newmont announces sale of Coffee

Denver Gold Group hosted its Mining Forum Americas in Colorado Springs this week, bringing together the gold sector's major players — and with them a slew of news.

Among the major transactions announced was Newmont's (TSX:NGT,NYSE:NEM,ASX:NEM) sale of its Yukon-based Coffee project to explorer Fuerte Metals (TSXV:FMT,OTCQB:FUEMF), formerly Atacama Copper, for total consideration of up to US$150 million.

The Coffee transaction is the latest in a series of divestments from Newmont, which is looking to cut costs and hone in on tier-one assets after buying Newcrest Mining in 2023. Once the deal goes through, Newmont will have sold all six operations and two projects it set out to trim.

"The sale of the Coffee Project reflects our ongoing efforts to streamline the portfolio and sharpen our focus on core operations" — Tom Palmer, Newmont

During the last gold bull market, major miners were criticized for doing high-priced deals and letting costs spiral out of control — this time, they appear to be taking steps to avoid that.

Alamos to divest Turkish subsidiary

Also divesting an asset this week was Alamos Gold (TSX:AGI,NYSE:AGI), which said it plans to sell its Turkish subsidiary to a unit of industrial conglomerate Nurol Holding.

The US$470 million agreement will take several assets off Alamos' hands, including its Kirazlı gold project, which has been blocked since 2019, when its mining licenses were not renewed amid protests. Alamos filed a $1 billion claim against Turkey in response, but said arbitration will be suspended and ultimately discontinued if certain contractual milestones are met.

"This transaction marks a positive outcome, allowing us to crystallize significant value for our Turkish assets, and utilize the proceeds to support the development of our portfolio of other high-return growth projects" — John A. McCluskey, Alamos Gold

Zijin Gold plans IPO

Zijin Gold International, which operates all of Zijin Mining Group's (OTC Pink:ZIJMF,HKEX:2899,SHA:601899) mines outside of China, is lining up a Hong Kong initial public offering (IPO) that could raise over US$3 billion.

Trading is set to begin on September 29, and the deal will value Zijin Gold at US$24.1 billion. According to Zijin Gold's prospectus, it ranks ninth and eleventh globally in terms of gold reserves and production, respectively. The IPO is reportedly the world's largest since May, and of course comes as gold continues on its record-setting price run.

GDX makes index switch

The VanEck Gold Miners ETF (ARCA:GDX), better known as GDX, began tracking a new index on Friday. It now follows the MarketVector Global Gold Miners Index.

VanEck announced the change at the beginning of June, saying that it would coincide with GDX's regular index reconstitution and rebalance cycle. In an update this week, the company shared how the shift will impact weightings for its holdings. While in many cases the difference is less than a percentage point, there are some larger changes — for example, Newmont's weighting is falling by 6.04 percent; in addition, some companies have been removed or added.

So far VanEck hasn't announced changes for the VanEck Junior Gold Miners ETF (ARCA:GDXJ). Adjustments to that fund could be interesting — market participants often note that it doesn't provide true exposure to exploration-stage companies.