Acquisition is the way to survival as major new greenfields discoveries appear to have dried up, according to PCF Capital principal Liam Twigger.
Companies with a capitalisation less than $500 million expressed they were facing one of the toughest markets ever experienced.
Nearly all gold, base metals, battery metals, mineral sands, diamonds, rare earths, iron and phosphate are also in the search for capital.
Those who are on “the wrong side” of $500 million have entered the 2020 financial year against a backdrop of a global trade wars and a two-speed market, a PCF Capital statement read.
“If the two largest gold companies in the world are merging to become of greater relevance to the investment community, what does that mean for everyone else?” he asked the audience at the Paydirt 2019 Africa Downunder mining conference in Perth this week.
Twigger flagged a renewed push into mergers and acquisitions in the next 12 months, with size and total market capitalisation being the “real value drivers.”
He added that Randgold’s recent move to merge with Barrick Gold in a nil premium $46 billion deal was sending a big signal to the market.
The transaction happened alongside Newmont’s “big-ticket” takeover of Goldcorp, with the world’s gold sector being dominated by the two giants.
Other buy side indicators of the emerging trend included Resolute Mining’s US$274 million ($402 million) bid for Toro Gold in July, and Sandfire Resources’ $167 million takeover of MOD Resources.
“In a market environment where there is little world-class greenfields success to report, growth-through-acquisition as miners look to buy their next generation of ounces or tonnes will likely continue to be the dominant theme,” Twigger concluded.