Bigger is looking better for gold miners in wake of megamergers – by Gabriel Friedman (Financial Post – January 26, 2019)

With many gold companies struggling to raise equity in public markets, consolidation may become a way of life in the sector

Within the gold sector, few strategies attract as much public disdain from executives as merging with a rival simply to increase the number of ounces of yellow metal pulled out of the earth. At least one executive has compared it to a disease that infects the industry.

But with many gold companies struggling to raise equity in public markets — and with the Barrick-Randgold and Newmont-Goldcorp mergers resetting the scale of the industry — some executives are beginning to acknowledge that an increase in size by itself can carry quite a few benefits.

That has some industry watchers predicting a wave of combinations in 2019, as small single-asset companies and mid-tier producers vie to expand their access to capital, diversify their operational risks and gain greater visibility with investors.

“It’s not getting bigger for the sake of getting bigger,” said Jason Neal, chief executive of TMAC Resources Inc., which operates a mine and development properties in western Nunavut. “It’s getting bigger for the sake of getting relevant.”

Neal said his own company, which produced 33,000 ounces of gold in the third quarter of 2018, isn’t yet big enough to be included on many indexes. That’s a problem at a time when passive investment is on the rise, and equity financings are on the wane for mining companies, he said.

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