Gold M&A, Financing and More: Mines and Money London, Day 2

Day two of this year’s Mines and Money London event wrapped up on Tuesday (November 26), and it brought a slew of companies and investors together to connect.

The second day featured discussions on merger and acquisition (M&A) activity in the gold space, what’s ahead for gold and silver and what the financing environment is like right now in the mining industry.

If you didn’t make it to the show or just weren’t able to take everything in, read on for a brief overview. You can also click here for our coverage of day one and check back later for day three!

Kirkland Lake/Detour Gold deal and other M&A

The morning of day two brought a panel on M&A activity in the gold space, with six panelists answering questions from moderator Michael Amm of business law firm Torys.

Overall, the panelists seemed to agree that M&A just for the sake of doing deals is generally not positive. Many saw synergies in some of the larger deals announced over the last year and a half or so, but a number of participants said that tie ups like the one between Barrick Gold (TSX:ABX,NYSE:GOLD) and Randgold Resources are fairly unique and can’t necessarily be used to predict future gold M&A activity.

Discussing the recent Kirkland Lake/Detour Gold deal, Mark Burridge of Baker Steel Capital Managers says since Kirkland Lake’s share price fell 20% on the news it now needs to make up that lost ground, plus add more value #MinesAndMoneyLondon

— Resource Investing (@INN_Resource) November 26, 2019

Kirkland Lake Gold’s (TSX:KL,NYSE:KL,ASX:KLA) C$4.9 billion offer for Detour Gold (TSX:DGC,OTC Pink:DRGDF) also came up. The deal, which was announced on Monday (November 25), was not received well by all market participants, and Kirkland Lake’s share price dropped significantly on the news.

However, there was some optimism about the transaction. In a separate panel, Peter Grosskopf of Sprott (TSX:SII) suggested that market participants may just need time to take it in. In conversation with the Investing News Network during the summer of this year, Grosskopf described Kirkland Lake as the firm’s top performer in 2019 (and 2017 and 2018).

Speaking about yesterday’s Kirkland Lake/Detour Gold announcement, Grosskopf says Kirkland had a huge run due to its Fosterville discovery; market will need to digest this deal #MinesAndMoneyLondon

— Resource Investing (@INN_Resource) November 26, 2019

It’s worth noting that when Mines and Money London audience members were asked whether they see M&A continuing in the mining space next year, they gave a resounding “yes.”

Will #mining M&A activity continue in 2020? Audience members at #MinesAndMoneyLondon gave an overwhelming yes. pic.twitter.com/aH4JTBtPMr

— Resource Investing (@INN_Resource) November 26, 2019

What’s next for gold and silver?

Gold got more time in the spotlight later in the day, with Shayne McGuire of the Teacher Retirement System of Texas suggesting that the yellow metal has become more mainstream recently in part because of Ray Dalio, a billionaire who runs Bridgewater Associates.

Today investors are thinking about how #gold performs in a portfolio vs. thinking it’s only for gold bugs, says McGuire. Ray Dalio is part of the reason why – he’s gone out of his way to make mainstream investors comfortable with gold #MinesAndMoneyLondon

— Resource Investing (@INN_Resource) November 26, 2019

McGuire said that Dalio has made investors feel more comfortable about gold by helping them see it as a competitive portfolio component and not something that’s only for gold bugs.

Silver, he said, is not quite there yet in the public eye. According to McGuire, the white metal is seen as tactical, meaning that many buyers take their money off the table quickly if they make a profit. Financial culture may need to change in order for silver to be viewed as a longer-term investment.

Many people still view #silver as highly speculative and volatile – it needs to overcome those perceptions in order to become an asset that investors want to hold long term #MinesAndMoneyLondon

— Resource Investing (@INN_Resource) November 26, 2019

Gold was also in focus during a panel covering the different merits of physical gold, gold stocks and gold exchange-traded funds. The participants, who included Alain Corbani of Finance SA and Jay Layman of Seabridge Gold (TSX:SEA,NYSE:SA), were positive on the yellow metal overall, although they offered different opinions on the best ways to get exposure.

Financing in the mining industry

Another panel on Tuesday focused on financing in the mining space, with the general consensus being that while money is available, it’s only good companies with quality assets that will get it.

Michael White of IBK Capital on financing in the #mining sector – says we are seeing companies get financed overnight, “but it’s very particular companies” #MinesAndMoneyLondon

— Resource Investing (@INN_Resource) November 26, 2019

As a whole, the panelists agreed that it’s a difficult financing environment overall right now, and there was some talk about streams, royalties and offtake deals, which Julian Treger of Anglo Pacific said have emerged to fill a gap in public funding.

In terms of what might spark a change in financing circumstances, the panelists suggested a number of options, including “wins” for companies in the space and the return of generalist investors.

Treger adds that the smart money is now positioning for what will inevitably be a supply shock; Grosskopf says when there is a serious shortage generalist investors will come in and “overwhelm” strategics #MinesAndMoneyLondon

— Resource Investing (@INN_Resource) November 26, 2019

More juniors face off in pitch battle

Day two brought a continuation of Mines and Money London’s pitch battle heats. After two heats for gold companies on the first day of the show, the second day featured another battle, this time focused on base metals and bulk commodities stocks.

The four participating companies were Element 25 (ASX:E25), Fireweed Zinc (TSXV:FWZ), Callinex Mines (TSXV:CNX,OTC Pink:CLLXF) and Merdeka Copper Gold (IDX:MDKA). Although the race was close, Element 25 emerged as both the audience and judges’ pick.

Congratulations to Justin Brown @Element25Ltd
Winner of the 3rd gear of the #MinesandMoneyLondon pitch battles. pic.twitter.com/P3E7LENDuG

— Mines and Money (@MinesAndMoney) November 26, 2019

The first day’s winners were Panthera Resources (LSE:PAT) and Mako Gold (ASX:MKG); along with Element 25 and any additional heat winners on day three, they will face off in a grand finale competition at the end of the conference.

Check back on Wednesday (November 27) for our coverage of Mines and Money London day three, click here to see what happened on day one on Monday and stay tuned as we begin to post interviews on our YouTube channel.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Fireweed Zinc is a client of the Investing News Network. This article is not paid-for content.