While the gold price continues to consolidate recent outsized gains around key support in the $3900-$4000 region, the precious metals mining space has continued to consolidate as well.
Over the past few weeks, gold miners have mostly been reporting record Q3 operating margins as QoQ, the average gold price climbed over 10% from $3130/oz in Q2 to $3450/oz in Q3.
But with the mining sector up over 120% YTD into a mid-October interim peak, it appears that blowout Q3 earnings reports from major and mid-tier miners have already been priced in.
These stellar Q3 financial reports are coming on heels of an 11% correction thus far in gold from a mid-October peak at nearly $4400 per ounce, and a 16% correction in the silver price from a recent all-time high above $54 per ounce.
With the precious metals mining sector providing roughly 2x leverage to the upside YTD, the GDX correcting 20% thus far has been par for the course on the downside after being up over 120% into mid-October.
In the meantime, the M&A window has opened wider in the mining space, as growth has come back into focus during a healthy consolidation of recent outsized gains in the gold complex.
On October 20, major Canadian gold miner Iamgold (IAG) announced a pair of acquisitions that would more than triple its footprint in northern Quebec’s Chibougamau region.
Iamgold agreed to buy Northern Superior Resources (SUP-V) for C$2.05 in cash and stock per Northern Superior share in a transaction valued at about C$267.4M.
At the same time, the major gold miner also reached a C$17.2M deal to acquire Mines D’Or Orbec (BLUE-V) for C$0.125 a share. The transactions will combine several neighboring deposits to create what Iamgold calls the fourth-largest pre-production gold camp in Canada.
Both transactions would consolidate land ownership around Iamgold’s Nelligan and Monster Lake projects, which together hold 3.21 million indicated oz. gold and 5.65 million inferred ounces.
Iamgold President and CEO Renaud Adams said the Chibougamau region is "quickly advancing to become one of the most exciting gold mining districts in Canada."
Eleven days later, junior gold developer/explorer Probe Gold (PRB.TO) announced on October 31 that it is being acquired by silver miner Fresnillo plc (FRES.L). The Mexican major has agreed to acquire all the issued and outstanding common shares of Probe for US$556M, at C$3.65 per share.
Probe has been a Top 10 holding in the JMJ newsletter since my subscribers and I began accumulating the stock just after a spike pandemic induced low in April 2020.
Although this deal gives us a nice 4-bagger win, we feel the transaction does not reflect the full value of Probe’s 10m oz high-margin Novador asset, especially with gold trading around $4000 per ounce.
Fresnillo is paying just $58 per in-ground gold ounce located in a top tier jurisdiction, within a district-scale land package. But a low C$31M break fee, and an all-cash offer, makes it easier for us to take a “wait and see” approach while hoping for a more competitive bid before the deal is expected to be completed in Q1 of 2026.
With Agnico Eagle (AEM) being the dominant operator in the Abitibi, we are hoping for a competitive bid from the world’s second largest gold miner.
Or possibly Kinross Gold (KGC), who paid nearly 3x more for its Dixie Project in Red Lake by acquiring Great Bear Resources for US$1.4B in late 2021, without as much as a defined resource, while gold was trading 50% lower.
By the time this major gold miner had published a Mineral Resource Estimate (MRE) for Dixie in February 2023, Kinross had paid 4x more per in-ground gold ounce than Fresnillo is paying for Novador.
Probe has already proved up to 10M gold ounces at Novador and is set to publish a Pre-Feasibility Study (PFS) for the project, possibly before the deal with Fresnillo is expected to be finalized early next year.
After a solid Q3 released this week, Kinross has US$1.7B in cash and total liquidity of US$3.4B, so they can easily afford to make a better offer for Probe.
The deal with Fresnillo will also add another major player with a vested interest in the area, creating a natural competitor for ground not already taken up by majors Eldorado Gold and Agnico.
Eldorado controls 9% of Probe’s outstanding shares and supports the deal, leaving Agnico as the most likely to make a competitive bid.
Agnico’s 60k t/pd Malarctic mill is expected to have 40k t/pd spare capacity from 2028. Novador is only 50km away and is targeted to be shovel-ready by 2028.
The Novador Project’s expected 15k t/pd feed could help fill that mill, while Agnico is already looking at regional tolling ore hauls from their Wasamac and Upper Beaver projects, which is 90-130km away.
Probe’s Chairman of the Board Jamie Sokalsky is currently the lead Director on the Board of Directors of Agnico, which suggests the Canadian major gold miner was well-aware of the negotiating process to sell the company.
Maybe they were waiting to see how much another player was willing to pay, and are now planning to make a more competitive offer as the company can afford to do so with US$2.2B in cash after a record Q3 was announced last week.
Wesdome Gold Mines (WDO.TO) also operates in the area. But I expect the mid-tier gold miner does not have the capacity to dedicate this much cash for a competitive offer, which must be over C$3.80 per share to cover the C$31M break fee.
Finally, on November 3, Coeur Mining (CDE) announced the company is to buy Canadian gold producer New Gold (NGD) in an all-share US$7B deal with a 16% premium to create a $20B precious metals company.
The combined company will produce an estimated 20Moz of silver, 900k oz of gold and 100Mlb of copper in 2026, or 1.25Moz of gold equivalent from North American operations. Coeur and New Gold shareholders will own about 62% and 38% of the combined company, respectively.
Judging by share price reactions in both CDE and NGD, the market does not like this deal much. On the heels of significantly beating Q3 expectations with production totaling 115k/oz of gold at all-in sustaining costs of $966/oz, and NGD hitting a 12-year high, New Gold is being taken over by a company that has experienced excessive dilution of its share price over the past 20 years.
Coeur also completed an all-stock $1.7B acquisition of SilverCrest Metals in February to obtain the Las Chispas mine in Sonora, Mexico. Las Chispas is one of the world's highest-grade, lowest cost, and highest-margin silver and gold operations.
From a share price high near $75 in 2004, CDE is now trading over 80% lower following the announcement of yet another highly dilutive deal. I imagine that growth via excessive dilution and no dividend has kept long-term Coeur shareholders very frustrated.
Based on M&A deals increasing since the gold complex reached an interim peak in mid-October, it is likely that overall M&A activity will be stronger, following the recent deal-flow developments in the global mining sector.
At Junior Miner Junky (JMJ), my subscribers and I have accumulated shares in several near-term gold, silver, and copper related junior developer/explorer takeover targets, ahead of the recent M&A wave in the mining sector.
The JMJ weekly newsletter is a one-stop shop for precious metals stock speculators. Along with providing detailed macro commentary and technical analysis for subscribers following the real-money JMJ junior portfolio, the letter also teaches its members risk management via successful buying and selling strategies.
The real-money JMJ Portfolio is up over 170% thus far is 2025, massively outperforming both GDX and GDXJ. Trimming profits from large positions along the way, while holding core positions until the bull market matures, has been recommended.
Considering the length of the previous bear market, and the severely depressed levels seen in CDNX over the past 18-years in the junior space, a major top in this tiny sector may not be seen for 2-3 years.
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Full disclosure: I have purchased shares of AEM and PRB.TO in the open market and cover Probe Gold in the JMJ weekly newsletter.
