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Sprott's Grosskopf expects record M&A activity in 2021

Peter Grosskopf

Peter Grosskopf

3rd September 2020

By: Marleny Arnoldi

Deputy Editor Online

     

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Global investment manager Sprott CEO Peter Grosskopf expects 2021 to be a record year for merger and acquisition (M&A) activity.

He commented during a September 3 Mines and Money Online Connect conference that “all the kindle for the fire is there”, but noted that it had been a slow year owing to Covid-19 restrictions.

During the discussion with junior gold miners and investment managers, Grosskopf said it had been difficult to execute M&A this year, since many companies had been focused on becoming health and safety compliant or adopting remote working strategies.

“But 2021 is likely to be a different story, since there is no shortage of capital or projects, just a shortage of capable development teams. It is now cheaper for companies to buy developing or developed projects than to develop themselves, given shortages of these teams, coupled with timeline pressures,” he explained, adding that these factors would contribute to increased deals next year. 

Meanwhile, Sprott and investment management firm Ruffer quizzed junior gold miners and explorers about their precious metal projects’ development stages, given the ideal precious metal price environment for projects to be brought online.

Among the newly producing miners are ASX-listed West African Resources, which started commercial production from the Sanbrado mine, in Burkina Faso, during the second quarter.

This company is West Africa’s newest unhedged gold miner.

West African CEO Richard Hyde said the project was built and commissioned ten weeks ahead of schedule and $20-million under budget.

The project is processing oxide openpit and underground development ore, with first stoping ore expected later in this quarter.

Hyde confirmed that the company would reach full production capacity before the end of the year.

The company continues with drilling activity towards reporting a targeted 1.7-million-ounce probable reserve.

Meanwhile, ASX-listed Emerald Resources MD Morgan Hart provided an update on the company’s one-million-ounce opencut Okvau gold project, in Cambodia.

He confirmed that construction of the project was about 50% complete, but said that the building of a process mill in Italy, had contributed to some delays as a result of the severity of the Covid-19 outbreak in the country earlier in the year.

Nonetheless, the project remains on track to start producing by mid-2021. It will produce more than 100 000 oz/y.

ASX-listed Saturn Metals MD Ian Bamborough also shared details about the progress on the company’s Apollo Hill project, in Western Australia, which hosts a mineral resource of 781 000 oz gold.

Saturn will publish an updated mineral resource estimate later this year, following 20 000 m of reverse circulation drilling planned for this quarter.

The company aims to upgrade to a one-million-ounce resource by November and a 1.5-million-ounce resource by the end of next year.

Some recent assay results from exploration on this project included 8 m at 12.9 g/t gold, 25 m at 3.99 g/t gold, 12 m at 9.98 g/t gold and 13 m at 1.39 g/t gold.

Further, TSX-listed Mawson Resources CEO Michael Hudson said the company had eight drill rigs set up at four gold projects across the world.

The company’s two biggest projects are the wholly-owned Rajapalot gold/cobalt exploration project, in Finland, which has the potential to be a multimillion-ounce field, as well as a wholly owned project and two joint ventures in the high-grade Victoria Goldfields of Australia.

The company has done 20 km of drilling in Finland since December last year and a resource upgrade for this project is due to be published in September.

Mawson has done 5 km of drilling as at the end of August in Australia, with initial results expected in September.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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