Erik Wetterling – High Profile Merger And Acquisition Deals With The Large Producers, Shines A Light On The Valuation Gaps In Gold Development Projects
Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins us to discuss some of the larger recent merger and acquisition deals in the higher quality projects in tier one jurisdictions, and the value arbitrage that is setting up in the high-quality development-stage companies of size and scale that are still held by juniors.
We start off also noting the recent $5Billion takeover of De Grey Mining (ASX:DEG) by Aussie major gold producer Northern Star Resources (ASX:NST), for their Hemi gold project in Western Australia. We also recounted the last few divestments by Newmont Corp (NYSE: NEM) (TSX: NGT) where Dhilmar is acquiring the Éléonore operation in Northern Quebec, Canada for $795million, and there was also the $850 million sale from Newmont of the Musselwhite mining operation to Orla Mining Ltd. (TSX: OLA) (NYSE: ORLA).
This leads to a discussion of the big disconnect in the value of gold development projects with significant gold resources and compelling economic studies in place, that are trading at a mere fraction of where these most advanced assets are at the time of their sale. It is a nuanced discussion, where we review that not all ounces in the ground should be valued the same, and we get into the quality of the project, the proximity to other major operations, the jurisdiction premiums and discounts, and whether or not the project has already attracted strategic investors in the form of larger producers.
- In full disclosure, Integra Resources mentioned by Erik in this interview, is a position held in his personal portfolio, and also may be site sponsors of The Hedgeless Horseman website at the time of this recording. Additionally, Shad is a shareholder of Integra Resources at the time of this recording.
