Consolidation wave coming for junior gold miners
The bull case argued is that a lack of productive capacity in the precious metals industry will force larger players to acquire smaller producers.
The argument
The guest argued that larger gold producers lack the 'quality of dirt' and productive capacity needed to meet demand, which will drive significant industry consolidation over the next couple of years.
The thesis, stress-tested
✓ What validates it
- ✓An uptick in buyout announcements of junior mining firms by major gold producers over the next 12-24 months
▸ Risks discussed
- ▸Smaller producers may fail to find buyers if their asset quality is too low
- ▸Broad commodity price declines could depress mining equity valuations regardless of M&A potential
Hear it yourself
"I like the miners because I think there's so little productive capacity in the industry right now, Julia, that the larger players are gonna be forced to buy out a lot of these, smaller producers. And even then, they're not gonna have the quality of dirt, as I say, in the industry that they've had in the past."
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