Our previous episode: https://www.cruxinvestor.com/posts/us-resource-equities-poised-to-rally-on-permitting-changes-and-project-pipelines-6275

Recording date: 24th March 2025

Compass, Episode 9

Gold and copper prices have reached or are approaching all-time highs, creating favorable conditions across the mining industry. This price environment is beginning to positively impact equity valuations, particularly for producers adding cash to their bottom line at these record commodity prices.

A significant indicator of market cycle progression is the accelerating pace of mergers and acquisitions. The M&A trend has evolved from producer-to-producer transactions to producer-to-developer deals, representing a natural maturation in the mining cycle. Recent notable transactions include Calibre-Equinox, Gold Fields' offer for Gold Road, Spartan's acquisition by Ramelius, and Northern Star's purchase of De Grey.

What's particularly noteworthy is the increasing scale of these deals, with several multi-billion dollar transactions resetting expectations for developer valuations. The Australian market appears to be leading this trend.

Several cash-rich producers remain positioned to make acquisitions, including Lundin Gold, Dundee, Iamgold, Barrick, and Centerra. With gold at all-time highs, producers are experiencing improved cash flows, making acquisitions easier to justify.

The current market conditions are especially advantageous for single-asset producers looking to diversify and grow into multi-asset, mid-tier companies. Companies like Lundin Gold and Torex can leverage their strong market capitalizations to acquire additional properties, following a path similar to B2 Gold in previous cycles.

Jurisdiction has become increasingly important, with a growing emphasis on secure Western locations. Recent policy developments in North America are enhancing project attractiveness, with Trump signing an executive order to streamline US permitting and Canada's federal government reducing its role in the permitting process. Finland and Sweden also represent favorable jurisdictions with straightforward regulatory frameworks.

Three companies highlighted as particularly well-positioned in this environment include Troilus (with 13+ million ounces of gold in Quebec), Arizona Sonora (a copper project in the US with Rio Tinto involvement), and Omai (a gold project showing resource growth potential).

As the market matures, investors are advised to position themselves in promising developers and explorers ahead of broader capital flows. While some companies have already seen significant share price appreciation, quality projects in favorable jurisdictions with clear paths to production remain available at attractive valuations.

The progression from producer-focused to developer-focused M&A signals a maturing bull market that should benefit quality development projects, creating opportunities for investors who can identify valuable assets before they're recognized by the broader market.

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