(Kitco News) - Rising gold demand will favor development companies, said Morgan Lekstrom, president and director, NexGold.
On Thursday, October 10, Lekstrom spoke to Kitco Mining. He was in the studio on the same day NexGold Mining Corp. (TSXV: NEXG) and Signal Gold Inc. (TSX:SGNL) announced plans to merge. Joining the companies will combine two assets: NexGold's Goliath, located in Ontario, and Signal Gold's asset in Nova Scotia. Goliath is currently undergoing provincial permitting and is expected to receive approvals next year. Construction is estimated to start in 2026.
Signal's Goldboro project in Nova Scotia has its provincial environmental assessment approval.
When combined, the company expects to attain production of over 200,000 ounces per year. Between both companies, the two will have 4.7 million gold ounces of measured and indicated mineral resources and 1.3 million gold ounces of inferred mineral resources.
Dual asset companies are significantly de-risked, said Lekstrom, which was a key rationale for doing the deal.
"Look, as a single asset company, any one thing can go wrong and boom, you're done," said Lekstrom.NexGold also announced a non-brokered private placement financing for up to $11.5 million that coincided with the merger.
In this market, Lekstrom said being a gold development company is ideal. Gold has hit successive all-time highs in 2024. Gold miners are mostly up, but development and exploration companies are still lagging.
"What do you think is going to happen to development stage gold companies that are on a track to get to construction or production? They're going to go insane," said Lekstrom. "You can't hold an industry down that has such pent-up demand. I'm 39. I'm all in. This is wild."
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