Motivated sellers are scarce, says Evolution CEO
With capital available to junior miners and major producers having sold most of the assets that they were intending to sell, value-accretive transactions are hard to come by, says Australian gold producer Evolution Mining CEO Jake Klein.
“An acquisition is only going to be good for our shareholders if you have a motivated seller and there aren’t many motivated sellers out there at the moment,” he said during the first day of the virtual Denver Gold Forum’s Americas conference.
With motivated sellers few and far between, value could still be delivered through discovery and Klein said Evolution was “carefully and selectively” considering opportunities that its discovery team had identified.
When Evolution was founded about a decade ago, the company set out a strategy of being a midtier miner, owning between six and eight mines. It has since bought four mines and sold three, as it continued to improve its portfolio. The gold producer currently has six assets in its portfolio.
“Fewer, larger, high-margin assets are better than a large portfolio of low-quality assets,” said Klein.
He also believes that Evolution’s focus on tier-one jurisdictions will stand it in good stead, citing rising geopolitical risks.
“We are living in a world where geopolitical tensions are rising. Fractures and friction with China is increasing. You are going to see increasing resource nationalism, growing tension and growing shareholder value destruction where mines are located in jurisdictions where government intervenes unexpectedly.
“Location of assets will become increasingly important to investors,” he said.
Evolution operates five wholly-owned mines – four in Australia and its most recent acquisition, Red Lake, in Ontario, Canada. The miner also holds an economic interest in the Ernest Henry copper/gold mine, in Australia’s Queensland.
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