In the past, juniors could count on being taken out by a major - VanEck's Joe Foster
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(Kitco News) - Recent mergers and acquisitions have been heartening, but there is more the sector can do, said Joe Foster, gold strategist at VanEck.
In February, Foster was interviewed by Kitco correspondent Paul Harris at the BMO Global Metals, Mining & Critical Minerals Conference.
Foster said he was pleased with the recent M&A action in the gold space. Last month the number one gold miner, Newmont, announced a $16.9 billion takeover bid for the number-seven gold miner Newcrest Gold. Newcrest has rebuffed the offer. At the BMO show, Integra Resources announced a friendly at-market merger with Millennial Precious Metals.
"It's something that we've been calling for quite some time," said Foster. "The investment climate isn't that great for these companies. A lot of them struggle to raise funds and capital."
With limited options, juniors are now advancing production on their own, which is costly and requires significant in-house talent and expertise.
|'Consolidation has to happen' - Integra Resources' George Salamis on M&A|
"In past markets, a junior could count on getting taken out by a larger company," said Foster. "You never had to think about going into production."
Better to combine, said Foster, so the companies can make themselves more attractive to investors.
"As analysts, we all know properties where there are synergies," said Foster.
Coverage of the BMO Global Metals, Mining & Critical Minerals Conference was sponsored by First Majestic Silver.