Newmont Corporation, the US-based mining giant, recently announced the agreement to acquire Australia’s Newcrest Mining in a blockbuster $17.5 billion deal.
This transaction, marking the end of an intense negotiation period and represents the largest M&A undertaking in the gold-mining industry’s history.
Newmont’s acquisition of Newcrest underscores a growing trend among gold producers, who are increasingly seeking consolidation in an industry grappling with limited new discoveries.
Furthermore, this deal escalates the ongoing competition among miners for essential commodities, integral to the manufacturing of electric vehicles and the infrastructure for renewable energy. This is particularly relevant, as Newcrest’s gold mines are noted for their substantial copper yields.
Newmont’s President and Chief Executive, Tom Palmer, shed light on the motivation behind the deal, attributing it to the attractive prospect of increased copper production. Newcrest’s expansive resource base, capable of supporting mining operations for decades, and the strategic placement of its mines in low-risk jurisdictions, such as Canada and Australia, contributed to why the company made the acquisition. Currently, the global mining sector is witnessing an M&A boom, which is very different to the broader global M&A climate.
Gold producers, including Newmont, have been at the forefront, hunting for mines that could supplement aging operations and drive down costs. However, the pursuit of lucrative deals has expanded, enveloping titans of the mining world like BHP and Glencore.
BHP recently undertook its largest deal in a decade, acquiring the Australian copper-and-gold miner, OZ Minerals. Similarly, Glencore, potentially recognizing the looming shortage of copper, proposed a hefty $23 billion merger with Teck Resources, which Glencore said in late April that the takeover bid still stands.
After a prolonged period of restraint, mining companies are once again making big moves, shaking off the repercussions of a spending spree during the China-led commodities boom.
As the industry emerges from a cycle of sizeable write-downs, mining giants are revitalizing their growth strategies, actively seeking opportunities to bolster their reserves for the future which is going to need a lot of commodities.
Interview with Craig Perry
(Chairman, Co-Founder of Inventa Capital)
Today, I have the pleasure of welcoming Craig Perry to our platform. With a career spanning decades in the mining industry, he has invaluable insights into where we are in the cycle.
His expansive journey has encompassed leading companies, financing them, and even leading them to unearth some world-class discoveries.
Craig is actively propelling numerous projects forward, notably Viszla Silver. Viszla envisions becoming one of the world’s most substantial single-asset silver primary producers. To achieve this, Craig and his team are vigorously exploring and developing the Panuco district in Mexico, which has lots of potential expansion.
In addition to his ongoing projects, Perry shared his insightful perspective on the current state of the broader commodity space, enjoy:
To begin, thank you for giving the Gold Telegraph community an update.
Could you please share some information about your experience and achievements in the mining industry with me?
I am sure the community would love to learn more about your background and the notable successes you have attained.
Thanks for having me, Alex. Excited to be here.
I have been working in the mining industry for over 30 years now, working across a broad range of commodities and fortunate enough to be involved in many great discoveries.
In 1999 I joined Rio Tinto as an exploration geologist. Shortly after, joined their projection generation group searching for iron ore, copper and coking coal assets across Chile, China and eventually globally.
Several years later, I founded a group of companies under the Tigers Realm Group banner. I started several companies including Tigers Realm Coal where we discovered the world class Amaam and Amaam North coking coal deposits in Russia which we brought into production.
During this time I was a founding partner in EMR Capital, a private equity manager focusing on the acquisition and development of gold, copper and hard coking coal projects globally.
In 2010, I co-founded NexGen Energy and we discovered the Arrow deposit in Northern Saskatchewan. Arrow is considered one of the world’s largest high-grade uranium deposits, which lead the company from junior status to a market capitalisation of over $3.5B.
Following the success of NexGen I was the founder, president and CEO of IsoEnergy where the discovery of the Hurricane uranium deposit and grew the company from a small junior explorer (<C$20M market cap) to a transitioning developer (~C$500M market capitalization) in less than four years.
In 2016 I joined the Skeena board when the company was a $15M market capitalization junior explorer. Becoming Chairman in 2018 and along with CEO Walter Coles, we identified and oversaw the acquisition of the Eskay Creek and Snip gold projects from Barrick Gold. Since taking over as Chair, Skeena has risen from junior status to a leading gold developer with a $900M market capitalization.
In 2018 I met Michael Konnert and together we have built several great companies at our Inventa Capital. We started and sold Cobalt One in 2018 and sold that a year later returning investors a 50x multiple on their investment. We then started Vizsla Silver – the most exciting company I’ve been involved in. I remember flying down to Mexico and looking at the Panuco project for the first time thinking it is one of the greatest opportunities in my career. Shortly after we had a world class discovery hole (8,078g/t AgEq over 6.0m) and in the space of four years the company grew from a $20m to +$400m market capitalisation with a global resource of 200Moz AgEq at just under 500AgEq.
You are currently the Chairman of Vizsla Silver which owns the Panuco silver-gold project which hosts one of the highest-grade silver primary discoveries in the world.
What is it about this company that ignites your passion, and what is your vision for the company’s growth and development over the next 1-3 years?
As I mentioned previously, I have been fortunate enough to be involved in many world class discoveries and Vizsla Silver ranks at the top of the list in terms of growth. The Panuco-Copala district has many hundreds of millions of ounces that are yet to be discovered and when it is all said and done it will be one of the most significant primary silver projects on the planet.
We currently are running an 90,000m drill program with 7 rigs turning. The primary focus is defining and expanding the Copala vein which holds 50% of Vizsla’s Resource. Copala has an average grade over 500g AgEQ with thickness of 11m. The high-grade silver-gold rich structure is traced over 1,100m 400m down dip is open in all directions. Only last week we expanded Copala by 150m to the south intercepting 1,591 g/t AgEq over 5.89m. We will continue expanding on this and deliver an updated project resource in H2, 2023.
Additionally, we are completing the metallurgical test work, geotechnical and hydrogeological studies at Copala. This work will feed into the initial PEA, expected in 2024.
In terms of medium term to long term horizon our growth and development will be focused on continuing to add high grade ounces to our known structures and underpinning value with advanced economic studies. We have only tested 30% of known targets on our 7200ha land package which is truly exciting and provides significant upside to the company.
Given that only 30% of the known targets at Panuco have undergone drill testing, I can only imagine the level of excitement you and your team must be feeling about the substantial growth potential that lies ahead.
Absolutely. We’ve explored less than 10% of the property so far and it has delivered massively. The conversion from drill testing to resource conversion is nothing like I’ve ever seen. Initially with Napoleon and Tajitos and now with Copala and Cristiano. I think we have many more discoveries to come and will have the opportunity to build Vizsla Silver into one of the world’s greatest silver and gold producers.
Our property has been broken down into three categories; West Area, Central Area and East area. The majority of efforts have been targeted in the west area. There are several key targets in the west area to test such as La Luisa, 4 de Mayo, Santa Ana and Descubridora.
However, we have only mapped 49% of the property. There are many organic growth opportunities in the Central and Eastern Areas of the property. We will systematically work through the geology and determine the most prospective targets accordingly.
I just want to note we have three dedicated drill rigs for exploration work. We believe the three allocated rigs could provide a step change in value through additional discoveries.
Another one of the companies in Inventa’s portfolio is TinOne Resources which is focused on advancing its highly perspective tin projects in tier 1 jurisdictions.
Myanmar, which happens to be the world’s third-largest supplier of tin, suspended production in a significant mining region. This move had a considerable impact on prices, which surged as a result.
What should investors be on the lookout for with TinOne in 2023?
The global critical metal outlook has become a geopolitical tug of war between certain countries. We have seen moves by the US where late last year a bill was passed called the CHIPS and Science act which subsidizes companies to produce advanced semiconductors in country. This was followed by the Biden Administration issuing a wide range of restrictions on the export to China of chips and chip-making technologies. The reason why this is important for tin is that 50% of the metal produced is used for soldering. The origin of the metal for upstream manufacturing will be key moving forward in decades to come.
Additionally, approximately 75% of the world’s tin is sourced from China, Indonesia, Thailand, Malaysia, Myanmar and the DRC. From 2012 to 2020 Myanmar emerged as a significant tin producer, but recent political turmoil has caused a steep decline in supply and as you have mentioned, a recent complete suspension. This all leads into our thesis that critical metal production in tier 1 jurisdictions will be sought after and significantly valued. Just to note, there is not one operating tin mine in the USA or Canada. The US will have to source tin from ‘friends’.
Last year TinOne focused on advancing the Great Pyramid tin project whereby ~5000m was drilled with the aim of expanding the historic resource. We are working to materialise the work by updating and releasing the resource. There is a clear benchmark we are working towards where another undeveloped tin asset in Australia was sold for total consideration of ~$35m with a lower head grade but more tons. We think that this is an achievable short-term goal to underpin our value. Currently the market capitalisation of the company is ~11m.
Interestingly though, late last year re-assayed rock chip samples on our Aberfoyle project for lithium. The results were very exciting, returning values as high as 1.14% Li20. As a result, we are working hard to systematically map and conduct targeted rock sampling in the areas.
At the very least, TinOne’s value is underscored by the tin but is levered to what the lithium could become.
What is your perspective on the current state of the commodity sector, particularly with regards to the widespread shortages that are being experienced across various industries.
In your opinion, do you believe that these circumstances position the mining industry favorably for the upcoming decade?
To put it bluntly, the supply side will not keep up with the upcoming demand resulting in commodity prices never seen in history. We will see a massive inflow capital to the sector when the light bulb moment happens. If you position yourself now, you will be favourably rewarded.
Copper for example was priced at 72c in 1999 and went to $4.6lbs in 2005. This was driven by a huge but nevertheless localized factor of the urbanization of China. Global supply and demand jumped from approximately 15Mt per annum to 21Mt per annum (I.e., a ~33% increase in demand). This time around the demand driver is a global phenomenon – the electrification and decarbonisation of the world. From analysts to traders, it is forecasted that we need another 7 Mt/a, taking global demand to 30Mt/a by 2030.
Whatever lens you view through, the world will see another 30% increase, similar to 1999-2012. But in absolute terms we need much more production (7Mt/a). Overlay that against a backdrop of massive underspend on exploration, development and crucially permitting along with diminishing head-grades and increased community and environmental pressures and I think we are in a situation where we could see copper jump 5x again. So, $20/lb copper is absolutely on the cards. We may even see $30/lb copper.
Other demand factors that are important are things like total installed copper in an economy against its per-capita GDP. To quote Adam Rozencwajg India is currently at 15lb of copper use per person and should go to 100lb per person.
The copper premise will be an analog for several metals; nickel (sulphide deposits), lithium, cobalt, silver and tin. All metals mentioned are most impacted by new technology.
I’m going to leave this with you, demand for metals is expanding but the industry and capital is not. The world is shaking the cola bottle, pressure is building but there is no reaction. At some point soon the lid will be unscrewed, and miners will get vengeance.
I am looking forward to catching up with you again soon.
Legal Notice / Disclaimer
The Gold Telegraph, goldtelegraph.com, hereafter known as Gold Telegraph.
Please read the entire Disclaimer carefully before you use this website or read the newsletter. If you do not agree to all the Gold Telegraph Disclaimer, do not access/read this website/newsletter/article, or any of its pages. By reading/using this Gold Telegraph website/newsletter/article, and whether or not you actually read this Disclaimer, you are deemed to have accepted it.
Any Gold Telegraph document is not, and should not be, construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
Gold Telegraph has based this document on information obtained from sources he believes to be reliable but which has not been independently verified. Gold Telegraph makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Telegraph/Author only and are subject to change without notice.
The Gold Telegraph/Author assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, The Gold Telegraph/Author assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this The Gold Telegraph/Author report.
The Gold Telegraph/Author is not a registered broker/financial advisor and does not hold any licenses. These are solely personal thoughts and opinions about finance and/or investments – no information posted on this site is to be considered investment advice or a recommendation to do anything involving finance or money aside from performing your own due diligence and consulting with your personal registered broker/financial advisor. You agree that by reading The Gold Telegraph/Author articles, you are acting at your OWN RISK. In no event should The Gold Telegraph/Author be liable for any direct or indirect trading losses caused by any information contained in The Gold Telegraph articles. Information in Gold Telegraph/Author articles is not an offer to sell or a solicitation of an offer to buy any security. The Gold Telegraph/Author is not suggesting the transacting of any financial instruments but does suggest consulting your own registered broker/financial advisor with regards to any such transactions
The author does own shares of Vizsla Silver Corp (TSX-V:VZLA). Inventa Capital is a paid advertiser on the Gold Telegraph.