The recent flurry of merger and acquisition activity is a sign that the resource sector is facing growth issues, according to Nicole Adshead-Bell, Director of Cupel Advisory.
Adshead-Bell spoke to Kitco in February.
Earlier this month, U.S.-based Newmont made a $16.9 billion offer for Newcrest Mining. Newcrest has spurned the offer as too low. Mid-month, B2Gold bought Sabina Gold & Silver for $824 million.
Adshead-Bell said the activity tracks with past commodity cycles. She describes it as "classic low-risk M&A."
"These companies have growth issues," said Adshead-Bell. "We have a paucity of whatever commodity that you look at. There's been a paucity of discoveries, and the timelines to develop new mines are getting longer. The average timeline now from discovery to production is in excess of 15 years, so how do you maintain your production profile as a gold company, let alone grow it?”
"For the large companies it's very, very difficult to do, and really the only way that you can do that is through substantial M&A."
Coverage of Mines And Money Miami was sponsored by Snowline Gold.
