B2Gold CEO Clive Johnson spoke with Kitco News last week and told interviewer Paul Harris that he expects to see an increase in mergers and acquisitions in the gold mining industry as gold prices continue to rise.
He also said pricing the companies could prove problematic for M&A teams.
“I think it’s a real dilemma for the industry,” Johnson said when asked about investors wanting consolidation in the market. “They want fewer mining companies. They want better-run ones. We’ve seen some of that, but at the end of the day, what gold price do you use if you’re looking at M&A today? And it’s going to be competitive.”
Acquisitions looming
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Johnson’s comments alluded to the exponential increase in both spot prices and mining company market capitalization. B2Gold is a perfect example, Johnson said, noting that the company lost $5 billion in value on concerns about a 2023 mining law passed in Mali. Those concerns, however, were recently subdued after B2Gold and the Mali government agreed to allow its existing operations to continue to operate under 2012 regulations.
Johnson said the stock price has risen 25% in recent trading due to the alleviation of those concerns, which he said is added protection from potentially being acquired.
“I may have been more concerned over the past two years, but there were reasons our stock was down,” he said. “We’re seeing recovery now and we will never be entrenched management. We work for our shareholders — it’s the shareholder’s decision, not ours. We’re open to whatever makes sense moving forward.”
Looking to buy?
Considering the operation's current growth profile, Johnson said it’s unlikely B2Gold will look to acquire other companies.
“ We have 600,000-plus ounces of production growth potential for this company from its existing assets,” he said. “It’s going to be about realizing the benefit of what we already have.”
Johnson said the Goose project in Northern Canada is progressing extremely well.
“We don’t have to pay for it — we own it. At the end of the day, that’s a hell of a growth profile and we’re in a strong position to realize that.”
Johnson said the company’s all-in sustaining cost is currently around $1,100 an ounce, and he doesn’t see any reason that number should dramatically increase in the near future.
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