Gold Mining Industry M&A Outlook 2022: Busy Year Ahead for Deals

By
IntelligentHQ

The gold mining industry is gearing up for a busy year in 2022. Mergers and acquisitions (M&A) activity is expected to increase as miners seek to replenish depleted reserves while also maintaining production levels. With sustained gold prices, senior gold miners now have some of the lowest debt levels in years while gold development assets are currently valued as amongst the cheapest they have been in some time. All of this points to a busy year ahead for M&A activity in the mining industry. Rising investment levels across the industry are set to benefit the junior mining space as investor inflows should boost stock prices for the industry.

Collective Mining (TSXV:CNL) may be one of the companies to see heightened investor interest due to its aggressive exploration program at the Guayabales and San Antonio projects in Colombia, which is part of an ongoing, fully-funded, 20,000-metre drill program in 2022. 

The company is run by the former Continental Gold team, which is no stranger to Colombia after having permitted, developed, and then ultimately sold its Buriticá project for $2 billion (EV) in March 2020. 

Guayabales is the company’s highest priority mining exploration project at present. Collective has mining titles in place, with modern infrastructure including access roads, mining equipment and easy access to telecommunications – all of which contribute significantly to reducing the overall risk profile for the company. Collective’s other property, called San Antonio, is located nearby and will be undergoing additional geologic assessment and drilling this year.

Since going public last spring, the company has already made two grassroots discoveries, while consistently releasing very impressive grab sample assay results from their “Olympus” target at Guayabales. 

Highlights included samples of up to:

  • 485 g/t Gold
  • 1,919 g/t Silver
  • 2.7% Copper
  • 18.6% Zinc
  • 14.4% Lead

Collective Mining is focused on its two Colombian mining projects with significant upside potential and additional discovery opportunities as it continues to move forward at high priority targets “Olympus” and “Victory”. Three diamond drill rigs are currently operating at Olympus with a fourth rig is expected to be deployed in the coming months.

The Collective approach to mining is to identify projects with short timelines to discovery and low capital intensity, reducing cash burn, and incorporating a highly principled approach toward the environment, sustainability, and governance.

2022 is Gold’s Year

Gold prices were relatively stable throughout 2021, as the global economy recovered from the COVID-19 pandemic while interest rates remained low. As a result of this, mining companies have been able to invest in exploration and development but with limited success at the drill bit. While mining M&A activity was robust in 2021, 2022 is set for a further uptick in deal making.

Why? 

Gold prices are now trading well above the industry all-in cost average of $1,100/oz., and 2021 already began the recovery in M&A activity, with some $30 billion in deals.

Notwithstanding, mining companies are now cash-heavy due to a lower deal count over the past two years in general, and gold development assets may be found to be even cheaper than we’ve seen in some time. Collective Mining’s projects have seen strong potential and progress, and appetite over the coming years for M&A could see the value of the Guayabales and San Antonio projects skyrocket.

Mining M&A is expected to continue to rise in 2022 on the back of 2021’s recovery as miners seek to cash in on this favourable market environment while meeting investor demand for growing resource levels.

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