Yamana Gold Inc.’s Peter Marrone said the sale of the company he founded two decades ago to two Canadian rivals heralds a wave of gold mergers as executives and investors seek to maintain margins amid higher production costs and declining grades of the metal.
Marrone, currently Yamana’s executive chair, oversaw the company’s sale to Agnico Eagle Mines Ltd. and Pan American Silver Corp. last year for about US$4.8 billion. Marrone will leave the company when the deal closes, which is likely to take place next month.
The “gold price today is roughly where it was in late 2020 … but interestingly the margins have decreased quite substantially for almost all of the companies,” said Marrone. “It seems to me that we are going into universally, lower grades, higher costs, inflationary impacts,” he continued, meaning “any form of consolidation is a smart one.”
Marrone’s comments echo the views of other grandees of the gold industry, including Tom Palmer, who heads the world’s largest gold miner, Newmont Corp. Palmer told the Prospectors and Developers Association of Canada conference in June that gold miners would need to consolidate if they wanted to survive a future that will involve getting by with mines that yield low-grade ores and higher expenses related to climate change.
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