Investment
What’s the deal with the current M&A environment?
The forecasts for the next M&A season are in: Conditions are optimal for a highly transactional period, with copper and gold prices at near-record levels. As of April 2025, the global M&A value in the mining sector had reached US$25 billion, surpassing previous years, according to Bloomberg. Higher margins for existing producers result in strong cash flows, reduced debt, and overall “bulletproofed” balance sheets, as Charles Funk, the CEO of Heliostar Metals, a gold producer, put it: “As shareholders push companies to get bigger, and the companies have the cash to do it, they will launch into M&A.”
Behavioral psychology distinguishes between reaction (an automatic behavior or emotion) and response (a deliberate, rational behavior). These notions lend themselves well to current M&A sentiment. While the first reaction may be that of greater confidence, cash-rich optimism and higher propensity to spend, that instinct is tempered by memories of the last gold cycle, with many transactions made between 2010 and 2012 ending up losing value for shareholders. Previously burnt, a cool-headed rather than hot-blooded market expects more from transactions.
Shareholders are also putting more pressure on mining companies: According to Bloomberg, shareholders expect minimum premiums of 25-30% to recommend a transaction, but acquiring companies have often underperformed gold prices. Mega-mergers are no longer hyped and are getting harder to approve. “Getting bigger just for the sake of getting bigger won’t cut it,” said Mitchell Krebs, the CEO of Coeur Mining, a gold and silver producer, adding: “Acquisitions need to be strategic, with a sound underlying industrial logic, and result in win-wins.”
This subdued, more rational deal-making approach is perfectly suited for – and indeed supported by – the low company valuations we currently see in the market, as most stocks have not caught up with the spot prices. Undervalued, or at least not overvalued assets, make for ideal targets in a prudent market. The leverage is particularly high for acquisitions in Latam North and Caribbean, where stocks do not command the high premiums of tier-one jurisdictions. According to the Fraser Institute 2024 Survey, assets in Canada, Australia and the US come with a 20-30% valuation premium compared to those in higher-risk regions.
M&A has become the pill to solve low levels of exploration. According to S&P Global, exploration (and discovery rates) have been falling globally, the worst hit being the early-stage junior sector. S&P notes that fundraising for early-stage exploration plummeted to US$10.3 billion in 2024, the lowest in five years and a 12% decline compared to 2023. In Ecuador and Mexico, grassroots exploration spending contracted by more than US$20 million in each, while the share of grassroots spending out of total global budgets is at a record low of 22%, informs the same source. “The capital markets for exploration and single-asset development companies have almost swung too far to a point where there is almost no equity available for them,” said David Awram, co-founder and senior executive VP of Sandstorm Gold Royalties.
Instead of investing in exploration, mining companies have shifted to M&A to replace declining reserves and fast-track value. High discrepancies in valuation between cash-generating, increasingly larger producers and single-asset juniors with a small balance sheet have further accelerated the M&A trend, generating ideal acquirers and acquirees.
Preference for producing assets...
The most in-demand assets have been producing assets (Equinox-Calibre, First Majestic-Gatos Silver, Coeur-SilverCrest, etc.). This is a classic feature of a mature market, as companies with the clout to acquire cash-positive operations can achieve operational synergies, a shortcut to top-line expansion, as well as more generous shareholder returns, and even potential graduations on the stock exchange after crossing a certain threshold.
Rising operational costs that make it difficult to generate high returns from single assets have increased the need for diversification. For example, MAG Silver, which has a 44% interest in the Juanicipio mine in Zacatecas, Mexico (the remaining 56% being held by Fresnillo), is looking at a second cash-flow generating silver and/or gold mine to “address the single-asset risk:” “Our preference would be for an already-producing asset rather than a development asset. Our shareholders have been very good to us, and they would probably not want to see cash going into another development project unless it is a truly outstanding asset, like Juanicipio,” said George Paspalas, MAG Silver’s CEO.
…Or near-production opportunities
While leading producers seek clean balance sheets and a high-quality asset that will stay resilient in any market conditions, junior companies have focused on near-production opportunities, particularly assets that have formerly been on care and maintenance and divested from by larger players. This has been a popular scenario in Mexico’s silver space, in particular, where permitting uncertainty and devalued assets created opportunities for small-cap companies to enter production.
For example, in 2023, Heliostar Metals acquired its now flagship Ana Paula project from Argonaut Gold for US$10 million and US$20 million in milestone payments, later cancelled out in exchange for US$5 million after acquiring the remainder of Argonaut’s portfolio, including formerly producing mines La Colorada and San Agustín. Heliostar is now on a path to restart mining from these two assets by the end of 2025, summing a guidance of up to 40,000 oz/y. With Ana Paula in production in the next couple of years, Heliostar would come closer to its goal to become a mid-tier producer with up to 200,000 oz in annual guidance. “We acquired Argonaut’s assets at a time when nobody was interested in advanced projects in Mexico due both to moribund gold prices and strong anti-mining rhetoric from the former Mexican government, which made financing in the country very challenging. This gave us the opportunity to acquire high-quality assets at low prices. With gold prices continuing to move upwards and the change in political sentiment in Mexico, the wheels have started to really turn for us since last year,” said Charles Funk, Heliostar’s CEO.
In scanning for potential targets, priority is given to the most advanced projects with the most de-risked resources in the ground. Whereas the transition from discovery to production typically takes between four to seven years, acquiring an advanced project can halve that timeline, not to mention the risk-reduction benefits of counting on already proven resources. G Mining Ventures, for instance, a producer with assets in Brazil, acquired the Oko West project in Guyana with a ready resource in place, so that, only a year later, it could deliver a DFS for a 12.3-year, 350,000 oz/y operation.
Whether at exploration or development stage, buyers emphasize the importance of permits and a lack of legal or ownership baggage: “You need to make sure you buy the property in the right way from the start, without any overriding burdens or title issues. Many companies will claim to own 100% of the property, but most will have overriding royalties,” said Lawrence Page, president of Southern Silver Exploration, which recently acquired the Nazas exploration project in the Faja de Plata belt of Mexico.
“Many investors remain cautious, recalling the value-destructive M&A boom of 2010–2012. This may offset some of the enthusiasm of higher prices. There’s real pressure to stay disciplined and start returning cash, whether through buybacks or dividends.”
Mitchell Krebs, CEO, Coeur Mining
District scale and consolidation
Grade and size of course always matter in a project’s attractiveness, but in the Latam North and Caribbean, great attention is paid to the district potential. In Colombia, Quimbaya Gold has consolidated its presence in the Segovia province, where it is neighboring producer Aris Mining. Quimbaya’s license area stretches over 17,000 ha, and its concessions are contiguous with Aris.
The region provides another key impetus for consolidation, and that is the lack of a dominant player. With the exception perhaps of Zijin Mining, which has assets in Guyana, Colombia and Suriname, and the upcoming Equinox-Calibre merger creating a regional Mexico-Nicaraguan platform, we cannot speak of a company with a clear leading platform in the region, not like we see in North America or Africa.
This gap provides an opportunity for investors like La Mancha Resource Capital. “Besides a significant size, a top quartile cost, and strong geological profile with sufficient exploration upside, the fourth characteristic that makes a good asset is the possibility of regional consolidation – like we did with Endeavour Mining in West Africa or, more recently, with G Mining Ventures in Latin America. It is costly to enter a new country, so we are always looking for the opportunity to build a portfolio within that country you’ve taken a risk on. Even if majors like Newmont or Barrick hold large assets in the region, no player has consolidated a leading gold platform across the continent,” said Vincent Benoit, CEO and managing partner at La Mancha Resource Capital.
“While a geographically diverse portfolio allows us to spread the risk, the main way to reduce risks from an investment perspective is by having more than one producing asset, which we will achieve once Oko West comes online.”
Louis-Pierre Gignac, Founder, President and CEO, G Mining Ventures
The weight of jurisdictional risk
There is a long tradition of North American companies investing in Central and South America, enjoying the same timezone and a more “controlled” risk compared to other emerging countries further away in Africa and Asia. However, we also note a trend whereby companies with assets in Latam are diversifying into North America. Orla Mining, a Mexican gold producer, acquired the Musselwhite gold mine in Ontario from Newmont this year. Minera Alamos also acquired Sabre Gold, adding the Copperstone project in Arizona to its Mexican portfolio, while Mexican developer Minaurum Gold acquired the Lone Mountain zinc project in Nevada. Breaking away with this trend, Mexican mid-tier silver producer Endeavour Silver has also just agreed to acquire Minera Kolpa in Peru, deepening a purely Latam focus.
Competition with premier jurisdictions is rising, especially for M&A, with Canada, the US and Australia accounting for 70% of deals in 2024, while divestments from higher-risk jurisdictions are accelerating, according to a report by Baker McKenzie, cited in Discovery Alert. A recent US executive order that plans to expedite permitting and approval processes as well as strengthen financial mechanisms for mining will no doubt further tilt the balance in favor of the northern neighbor.
Famously risk-tolerant, China has been increasing its footprint in the mining sector in Latam, particularly in frontier jurisdictions. Zijin Mining is probably the only miner with assets in three countries in this region (Suriname, Guyana and Colombia), two acquired in 2020, in the middle of the pandemic, and the third one in 2022, which demonstrates the affinity for risks. This year, Chinese companies made further inroads, with CMOC acquiring Lumina Gold in Ecuador, where another Chinese company, Ecuacorriente SA (ECSA), owns the only copper mine in the country, Mirador. Also, Cordoba Minerals sold its remaining 50% of the Alacran copper project in Colombia, positioned as the country’s largest upcoming copper mine, to Veritas, an indirect wholly-owned subsidiary of JCHX Mining Management Co. JCHX is already a 19.81% shareholder of Cordoba.
Prominent Transactions
2025
- Equinox Gold combines with Calibre Mining in an all-share at-market merger for US$1.8 billion
- CMOC acquires Lumina Gold for CAD581 million
- Alpayana acquires Sierra Metals following a US$1.15/share offer
- Cordoba Minerals sells remaining 50% interest in Alacran project to Veritas Resources (subsidiary of JCHX Mining Management) for up to US$128 million
2024
- Coeur Mining acquires SilverCrest Metals for US$ 1.7 billion
- First Majestic Silver acquires Gatos Silver for US$970 million
- G Mining Ventures acquires Reunion Gold in share deal valued at US$875 million
- Silvercorp Metals acquires Adventus Mining for CAD200 million
- Metals Exploration acquires Condor Gold for £67.5 million
- Mako Mining closed on CAD33.3 million all-stock purchase of Goldsource Mines
2023
- Sierra Madre Gold and Silver acquires la Guitarra from First Majestic Silver for US$35 million
- Golden Tag Resources (now Silver Storm Mining) acquires La Parrilla from First Majestic for US$33.5 million
- IMPACT Silver acquires Plomosas from Consolidated Zinc Limited for US$6 million
- B2Gold buys remaining 50% stake in Gramalote project from AngloGold Ashanti for up to US$50 million (US$20 million on closing, US$10 million once a construction decision has been reached within five years of closing, and another US$10 million if commercial production starts within five years of closing)
Source: GBR Research
Article header image courtesy of Barrick Mining