AngloGold Ashanti CEO Alberto Calderon said three-quarters of company output already comes from tier-one assets and the aim is 85% by the mid-2030s. Credit: Henry Lazenby
Colorado Springs – A year of record bullion prices has the gold sector talking less about buying ounces in takeovers and more about finding them in their midst.
At the Mining Forum Americas in Colorado Springs, the industry’s biggest producers, streamers and would-be builders struck a rare consensus this week: stick to tier-one assets, keep balance sheets clean, and let grade, margins and jurisdiction do the heavy lifting.
Franco-Nevada (TSX, NYSE: FNV) set the tone. CEO Paul Brink framed gold’s long run – about 9% a year against the U.S. dollar – as the backdrop for selective growth and shareholder returns. Wheaton Precious Metals (TSX, NYSE: WPM) echoed the message, citing how early-stage streaming can de-risk transactions without bloating operators’ capital plans.
Barrick Mining (TSX: ABX; NYSE: B), Agnico Eagle Mines (TSX, NYSE: AEM) and Newmont (NYSE: NEM; TSX: NGT) each pressed the case that the next leg of production will come from a smaller set of better mines.
“We’re not interested in growing for the sake of growing,” Brink said. “Our mantra is to grow profitably.” Franco sold 463,000 gold-equivalent oz. last year and sees “plenty of gas in the tank” from non-producing assets even though they have no output forecasts yet.
He joked that a restart at Cobre Panamá would have the team “drinking champagne for a month” because the company invested nearly $1.4 billion before the mine’s sudden closure nearly two years ago.
Another cycle
However, even with gold setting a new record this week above $3,700, miners face a range of obstacles, from permitting delays and rising construction costs to unpredictable politics in host countries. Gold majors have made similar vows to be disciplined in past bull markets, only to chase growth through costly deals such as Barrick’s 2011 acquisition of Equinox Minerals at the height of the copper boom, or Newmont’s $10-billion purchase of Goldcorp in 2019, which left investors underwhelmed by the returns.
Barrick Mining CEO Mark Bristow leaned into discovery, calling Nevada’s Fourmile “quite simply, the greatest gold discovery of this century.” Credit: Henry Lazenby
Some see partnerships and creative financing as ways for developments to succeed. Wheaton CEO Randy Smallwood described the company’s $300-$400 million (C$413 million – C$550 million) stream tied to Barrick’s pending Hemlo sale in Ontario as both validation capital and due-diligence ballast.
“Having a streamer come in and support the M&A side should help give confidence,” he said, calling Hemlo a “top notch asset” with room to run. Wheaton’s outlook climbs to about 800,000 gold-equivalent oz. by 2027 and, by its internal profile, a million by 2031. “I’m confident we get there before then,” Smallwood said.
Barrick CEO Mark Bristow leaned into discovery, calling Nevada’s Fourmile “quite simply, the greatest gold discovery of this century” and a “generational” project.
An updated study released Tuesday points to a 25-year mine producing 600,000-750,000 oz. gold a year at all-in sustaining costs of roughly $650-750 per oz., using a $2,500 per oz. gold price base case. Capital would run $1.5-1.7 billion.
“Think about what that means for the upside,” Bristow said. “Results are pointing to a doubling of ounces by the end of this year.” The growing copper contribution from Reko Diq in Pakistan and the Lumwana super-pit expansion in Zambia may see Barrick grow gold-equivalent output about 30% by 2029, he said.
Agnico stays the course
Agnico Eagle Mines’ CEO Ammar Al-Joundi distilled his message to four points: the business is performing, five major projects should add 1.3-1.5 million oz. of annual production from 2030, exploration is “exceptional” with 121 rigs turning, and focus beats fads.
“We’re not going to do anything crazy,” he said, adding the company is not considering a competing bid on the back of Anglo American’s (LSE: AAL) proposed acquisition of Teck Resources (TSX: TECK.A TECK.B, NYSE: TECK). As Canada’s largest miner, Agnico is encouraged by “a sea change in attitude” from Ottawa after the election, Al-Joundi said, while cautioning that progress will take time.
Newmont President and Chief Operating Officer Natascha Viljoen struck a sober note: lock in margin expansion rather than chase price. She said the company isn’t “turning dials” to grab short-term ounces – no high-grading, no surge mining – while gold is hot. Instead, Newmont is finishing the Newcrest integration, reshaping its organization around an 11-asset, tier-one core and has finished a disposal program capped by selling the Coffee project in the Yukon for up to $150 million, announced on Monday. The company has also announced a staff reduction.
“We have stabilized the business and our focus now is on optimization,” she said. The company aims to finish the restructuring this year.
AngloGold Ashanti CEO Alberto Calderon said three-quarters of company output already comes from tier-one assets and the aim is 85% by the mid-2030s. Arthur in Nevada is the “cornerstone” of that plan, with a prefeasibility study on the Merlin deposit due in February.
Tropicana in Australia – “a very good asset for still two or three years” – may be sold “at some point,” he said, with proceeds ideally recycled into another tier-one mine in a developed jurisdiction.
Meanwhile China’s Zijin Mining (SSE: 601899; HKEX: 2899) offered a different lens – 600 electric haul trucks across 12 mines in five countries and no sign of higher unit costs-creep versus diesel, deputy president Shaoyang Shen said.
The company is spinning out Zijin Gold International in Hong Kong, bundling eight non-Chinese producing gold mines into a 1.5-1.8-million-oz. unit in one of the year’s largest initial public offerings.
Shen closed with a plea for more cross-border cooperation despite “signs of anti-globalisation.”
Margin first, then ounces
Kinross Gold (TSX: K; NYSE: KGC) CEO Paul Rollinson kept to the margin script. With mills full, the lever is grade and cost discipline.
“Our margin expansion has outpaced the gold price,” he said, as Kinross returns about $650 million this year through dividends and buybacks.
He called the Great Bear project in Ontario “a cash engine” in waiting, forecasting roughly 500,000 oz. a year at about $800 all-in sustaining costs and, at today’s prices, near $1 billion of annual free cash flow once steady state is reached. In Chile, the Lobo-Marte mine remains the second leg of growth.
Gold Fields (NYSE, JSE: GFI) CEO Mike Fraser said consolidating the Gruyere mine via the Gold Road Resources acquisition will tilt about half of group production to Western Australia next year and, with Windfall in Quebec later, move about 80% of output into Organisation for Economic Co-operation and Development countries, a group of mostly Western wealthy nations.
“We don’t have to be the biggest,” he said. “We want to be the highest-quality producer,” measured per share.
Northern Star Resources (ASX: NST) managing director Stuart Tonkin underscored the scale of its KCGM mill expansion in Kalgoorlie – A$1.5 billion to lift capacity to 27 million tonnes a year within nine months.
Output there is set to double from about 450,000 oz. to 900,000 oz. by fiscal 2029, putting KCGM in the global top five. The project also unlocks a vast, low-grade stockpile with an estimated 3 million ounces.
“There’s A$12-13 billion ($7.95-8.62 billion) of cash flow just sitting in that stockpile,” Tonkin said.
If the sector holds that line, investors may finally get what they’ve asked for in every cycle: growth that adds value per share, not just ounces to the tally. As Brink quipped while projecting where a 9% compound price takes gold in five years: “I like that number. The industry’s bet is that discipline will make the math do the work.”