The ongoing consolidation in Western Australia’s gold mining sector was a major topic at the Diggers & Dealers Mining Forum, as record gold prices and a spate of mergers and acquisitions activity over the past year set the stage for further changes in the industry.
Significant mergers have already taken place in the mid-tier section, with the recent merger of Red 5 and Silver Lake Resources, followed by Westgold Resources’ merger with Canada’s Karora Resources.
Westgold Managing Director Wayne Bramwell said the new floor for relevance was production of around 400,000 ounces of gold per annum. Bramwell expects further consolidation to occur among producers with annual production below the new threshold.
The mid-tier gold mining sector in Western Australia is small and fragmented, making it the subject of ongoing consolidation rumours, experts say. There are rumours in the industry that Gold Road is in merger talks with Regis Resources.
Meanwhile, De Grey Mining and Spartan Resources are among the most likely acquisition targets now. De Grey’s Hemi gold project in the Pilbara, which is planned to produce 530,000 ounces of gold per year at competitive prices, has attracted interest from major global players such as Barrick Gold, Newmont and Agnico Eagle Mines.
De Grey has fully financed the A$1.34 billion ($880 million) Hemi mine, which will produce gold for the first 10 years at an all-in sustaining cost of A$1,295 per ounce.
Another developer that has sparked speculation in the mergers and acquisitions market is Spartan Resources, owner of the high-grade 2.48 million ounce Dalgaranga project. Spartan Resources managing director Simon Lawson acknowledged that at A$1.4 billion ($925.9 million), the company was “quite expensive” for an explorer, but saw potential for Dalgaranga to rival the size of nearby Ramelius Mt Magnet, which has 6 million ounces in reserves.
While consolidation continues among mid-tier producers, larger companies such as Gold Fields and Northern Star Resources are focusing on different strategies.
Gold Fields, which has been rumoured to be actively pursuing opportunities in Western Australia, confirmed its expansion ambitions by acquiring its joint venture partner Windfall Osisko Mining. Gold Fields’ latest exploration deal was a A$13 million ($8.5 million) contract with Killi Resources, announced in May. Northern Star Resources, currently Australia’s largest gold miner with a market capitalization of A$16.4 billion ($10.8 billion), remains on track to hit its 2 million ounces per year production target by its 2026 financial year.
Evolution Mining, the country’s second-largest miner with a market capitalization of A$7.6 billion ($5 billion), has been active on the corporate front, with 11 deals — acquisitions and disposals — in the 12 years since its inception. The company paid A$400 million ($264.5 million) for 80% of the Northparkes copper-gold mine in New South Wales in December 2023, and A$1 billion ($661.4 million) to buy out Glencore’s stake in the Ernest Henry copper-gold mine in Queensland in late 2021. Evolution Chairman Jake Klein described the $375 million purchase of Canada's Red Lake mine in 2020 as the company's most difficult acquisition and one that "left a lot of scars."
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
