(Kitco News) - Nicole Adshead-Bell, director at Cupel Advisory, sat down with Kitco Mining’s Digging Deep to discuss the gold market, saying the constructive upcycle is “definitely in a bull market, but we are not yet seeing the crazy bubble-like behavior”. She also discussed the reopening of financing, including for earlier-stage names. “There are private companies that are coming out raising 8, 9, 10, $12 million,” she said, a sharp contrast with last year’s tighter conditions.
Adshead-Bell said the rotation of non-specialist capital remains the missing piece. “Generalists are definitely doing their homework. I don't think they're in the sector in a material way yet, but we will start to see more of those marginal inflows, which of course, drive share prices higher,” she said. And when that money arrives, boardroom behavior tends to follow. “What normally happens is FOMO drives boards and management teams,” she said. “And that's when you start seeing above precedent, transaction premiums paid, and also competition for assets.”
Consolidation is likely to push into smaller caps as investors reward growth and multi-asset scale. “We're gonna see M&A go down the food chain,” says Adshead-Bell, and that scale and liquidity open doors to broader pools of capital. “For generalists, a billion-dollar company is considered small cap for them,” she said, and points to more structured financing and manufactured transactions as competition intensifies. As a late-cycle warning, she flags “a hundred percent premiums paid for M&A transactions.”
In terms of valuation discipline, she maintains a focus on cash generation, commenting that “the best arbiter is true free cash flow, and then obviously free cash flow per share.” With spot well ahead of many planning decks, she urged caution when resetting assumptions, “I think the forward curve is perhaps the best indicator of price.”
Execution and communication still separate contenders from pretenders, as “investors equate transparency with trust.” Adshead-Bell also discussed the World Gold Council's ‘Touched by Gold’ partnership with Elton John, released mid-September, saying, “I do not think this is an effective way to message gold.”
Watch on the Kitco Mining YouTube channel here: Catch the full, unedited conversation where Nicole Adshead-Bell explains why generalists are still early, how M&A is moving down the food chain, and why free cash flow per share and the forward curve matter.