We’re on the Tip of the Iceberg (Uncut) 03-12-2025

‘We’re on the Tip of the Iceberg’: Gold’s Next M&A Boom Explained | Alastair Still

Kitco News special coverage of PDAC is brought to you by Gold Mining, Uranium Energy Corp. and Uranium Royalty Corp. Hey everyone, welcome back to Kitco News.

I’m Jeremy Safran. We are here on location at PDAC 2025. Believe it or not, our 15th year covering this fantastic investment conference.

Of course, today we got to talk about gold, up 18% year over year, just a tremendous year for it. Although, we saw a slight pullback. What does that mean for the miners? Well, of course, let’s welcome now Alistair Steele.

He is the CEO of Gold Mining. What’s happening, my friend? Pleasure to be here. You mentioned 15 years.

I’ve been coming here for over 30, so I’m starting to feel a bit old now. A little bit. It’s a good vibe here this year, for sure.

It is a good one. Alistair, we were talking last year at the same conference, you know, we had $2,000 gold. We were very, very excited.

Today we’re sitting around spot 2,829. What’s that year been like for a miner? Well, surprisingly, to see such a rapid increase in the price of gold, what we haven’t seen is a catch-up with the equities. And that’s one thing that you’ll see is a common theme this year.

There’s a disconnect between gold price and the gold equities. What we haven’t seen is that influx of the generalist money coming into the big name stocks, the big producers, the Newmonts, the Barricks, or Kinrosses, Agnicos, who are starting to crush it with their earnings. We just haven’t seen that as a catch-up yet.

And even more so on some of the earlier stage explorers and developers. There’s an even bigger disconnect. So what does all that mean? That means opportunity for buying opportunity to capture some of this gold price, which yet to be reflected in the gold stocks.

Yeah, you’re not kidding. I mean, all year we’ve been talking about it. Last year we’ve been talking about it.

We have seen some ETF inflows as of late into the gold side of things, which is an encouraging step. We were talking before coming to Cameron Newmonts, printing $5 billion annually, it’s said to be, with free cash flow. When is this going to catch up to the evaluations? Well, there’s so many factors that can influence it.

But even we’ve seen recently in the headline over this weekend, the geopolitical makeup of different nations on the stage. And what insecurities that causes, what instabilities in different countries, generally that works out favorably for gold. So I think there’s still opportunity for increasing the price.

We may see some settle in the short term, but long term, the fundamentals are still very much there. I think you’re going to see safe haven buying, people looking for that investment that has security protection going forward. That’s all positive.

I think we’re continuing as an industry to face a scarcity of supply. So the big miners, their reserves are difficult to replace and they’re needing to play catch up. So that creates M&A opportunity.

At the end of the day, I think it all bodes well for gold investors. Yeah. When do you think that retail investor will start to look over to this place? I mean, it almost feels like it’s easy to buy an ETF.

But if you actually want to get into the game, there’s a lot of producers to pick up. I mean, is it just a matter of Nvidia, larger stocks that have gotten their attention, even though we’re in this resource rich moment? Yeah, I think you’re right. I mean, there are certain stocks that capture people’s attention, captures the flavor of the day sort of thing.

But I think the nice thing about gold is it offers generational opportunities. It’s been there. It’s secure.

It’s not going to disappear overnight. It’s not going to go out of flavor. It’s not going to come up with a new version or a better model.

It’s tried, tested and true. And it’s withstand the test of time. So I think it’s still that stability piece is there.

Always people will try and find something short term, try and get a quick win on. People have done well on gold in some ways that way. But I think for a long term bet, gold has to be part of people’s portfolio.

Now, we have to talk about gold mining for a moment. Obviously, it’s an equities play. You guys also have a lot of cash.

You’re waiting for that price to come to the equity side. But with this tariff talk of 10 percent, you know, we’re not sure about precious metals now. What are your thoughts in looking at your miners? Yeah, I think certain producers are going to feel different things and they’re going to see prices change in various sectors.

For our company, Gold Mining Inc., I think it’s not a huge impact for us. We’re not at the production stage. We’re an explorer starting to develop our projects.

So I think that may not impact us. But really, I think in a global industry, people have been watching the margins and complaining that some of the big producers, the margins have been increasing. But the gold price has been rising more.

So margins have actually been increasing. So we’re emphasizing that, that if you look at a long term chart, last five years, gold price and margins, the margins have grown as an industry. People are generating cash flow.

That creates more opportunities to purchase new assets and thinking about how you go back to rewarding your shareholders. I must wonder if it’s almost a lagging effect because it’s taken this long for it to actually appear on the balance sheet. But now with all this new cash flow, are we entering an M&A transition? Are we going to get into, you know, these companies don’t even, they have so much cash, they don’t even have to use their stock as currency.

Well, I think you’re right. I think we’re on the tip of the iceberg sort of situation for that. We’re starting to see some M&A activity now.

This conference usually is the bellwether for the year, sort of setting the tone, setting the pace. Last week, I was at the BMO, have an international mining convention. There’s a lot of M&A discussion, a lot of talk on the floor there amongst people.

We’re starting to see more rhetoric this week about it. And you’re right. You know, big companies now have the option of paying cash or shares, which is a great option.

But the reality is the scarcity of projects and good quality projects in stable jurisdictions. That’s what companies are going to be fighting for. Yeah.

Yeah. So, so well documented, specifically in this geopolitical tension area where we’re not quite sure geographically what’s happening. It seems as though gold is not just a war product anymore.

You know, we had a lot of that scarcity last year. This year, we’ve been talking about supply and demand dynamics. I mean, we’re seeing COMEX deliver crazy amounts of gold to the U.S. Any thoughts on this? I mean, is it just the beginning? Is it people getting ahead of this gold rush? Well, I think it’s actually still just catching up to it.

I mean, even from a retail shop or different brokers of dealers and physical product, they’re having a tough time supplying their clients demand. In fact, restricting silver and gold sales because they just can’t keep up with it. So I think there is a demand there.

The price is reflecting that or continue to reflect it. But the nice thing about many gold mines and companies such as ours like Gold Mining Inc., not only do we have gold in the portfolio, but often byproducts that come with the gold. About 20% of our commodity exposure is to copper.

We know the importance of copper and the greening of the economy and the driving and economic engines for any major economy is important. Then we see other elements that can occur. You see silver byproducts.

You see antimony byproducts. So all these things are key parts of gold mines. So it’s not just gold itself, but they often come with a whole suite of other elements in the mix as well.

Yeah, and with that mix sometimes comes volatility. But it seems as though this is almost a hybrid model. I mean, you discuss it kind of merchant bank style, not quite a royalty play.

But I guess it would de-risk and diversify your holdings. Oh, absolutely. I mean, we’re not a single asset company that flowed up and down with a single drill result.

We’ve got seven projects in our resources. Over 12 million gold equivalent resource ounces indicated. Over 9 million inferred gold equivalent ounces.

A major cash and equity holdings, mainly of U.S. Gold Mining Inc., Gold Royalty Corp., NevGold. All these things help to diversify the portfolio. Not to mention, of course, copper occurs with our gold in some of our projects.

About 20% of the commodity exposure. And as an added bonus, we also have one of the largest uranium packages in the whole Athabascan Basin, which is a nice little bonus for a gold mining company to have, which we are looking to diversify, spin out, spit out some cash or potential other returns for our shareholders because many people don’t even know we have a uranium project. Yeah, yeah.

Fascinating. We just did some uranium interviews as well with one of your colleagues. Just a crazy market.

I’ve got to ask you, you know, when you’re looking at Trump’s energy policy here, you’re the CEO of a company looking in these, what’s going to happen? We don’t have a crystal ball. We all want to know, including me, covering it, what’s going to happen because it changes every day. But what are you expecting? I mean, it almost feels like this momentum with drill baby drill and getting products to market, it’s not going to slow down.

Is it only going to accelerate? Well, I think your first comment was right. Nobody knows. And we can see some unpredictability coming up.

But the underpinning of all this is the scarcity and the security that people are looking for in their metals. The U.S., whether it be Canada or any other country, does not want to be relying on importing metal for their own domestic supply. So having security of metal on your own shore is important.

That’s important for Canada. It’s important for the U.S., particularly when you have a state of Alaska, for example. We have our subsidiary, U.S. Gold Mining Inc., a major gold copper project.

When you have a project like that on U.S. soil with the state trying to build a road to getting it to port, that’s an asset that is extremely rare these days, extremely sought after and really adds a lot of value for our share. I know you can’t say much about this, but of course we know the DOD, the Department of Defense, is looking at critical minerals. We know the discussion that’s happening with the deal with Ukraine that’s ongoing as well.

How much of a focus do you think these types of minerals and critical elements and copper itself will go into play over the next few years with this rebuild? Well, I think certain metals will always stand the test of time. Copper is such a key component of any growth of the economy, greening of the economy. Then you get some that are kind of new, may go in phases.

And sometimes the supply demand can be tipped quite easily. We’ve seen this with antimony. I mean, there’s a surge in the price which we’ve never seen before, incredible uptick.

But we don’t know the impact that a supply of one major mine might have on that. But it’s a nice bonus to have because most antimony producers, it comes as a byproduct. So if you can sell your project and justify the economics on the gold and you get a nice byproduct credit, whether it be copper, antimony, that’s a great thing to have.

We’ve seen that near our project. We’ve seen a project we have a major stake in with Nevgold. They were a gold-focused company.

They’ve now discovered antimony on their project. Something that was really untested, unknown about, but it adds a great little bonus kicker to the project. Talk to me a little bit about fundamentals.

I always find it fascinating because as you go and you look, okay, I’m going to diversify the company’s position and find this company. We’ll take a little bit in here. We’ll do a JV here.

What are the fundamentals you’re looking for to be sustainable in this environment? Well, I think what we’ve always done and we’ve done this through our last two spin-outs is where can we create the most fundamental value for our shareholders that we can create value today and also preserve creating value opportunities in the future. So if you sell an asset, you might get a payday today. But then down the road, what happens if they make a discovery? What are you left with if the project grows? The nice thing about our two recent spin-outs of creating Gold Royalty Corporation, which we own 13% of, and U.S. Gold Mining Inc., which we own just under 80% of, we’ve created value on our balance sheet by taking those public trade equities.

But because we have a significant holding there, should they advance, should they make discoveries, we stand to benefit from that. The benefit is we don’t have to fund it. They’re independent companies.

They’ve raised their own money. The market’s rewarded them. We can only stand to benefit as the share price goes up.

So we’re protected on the upside. So it gives us a nice valuation today when we crystallize that value, but also protected for a future upside as well. Before I let you go, we talked about the majors.

We talked about some of this M&A. It should come to fruition this year in a big way. Are they running numbers at this price? I mean, where are we here? Well, I guess maybe I should first preface that I worked almost 25 years for the major operators, Kinross and Goldcorp, Newmont, at operations and mine development.

And what I can say is that I don’t know their exact prices, but it’s going to be a lot less than today. And so that creates different opportunities. It means they’ve been conservative.

But you also don’t want to be too conservative that you miss opportunities. I was talking to someone earlier and said, hey, I remember back when gold was $250 an ounce. That’s in my career.

So to think we’re almost at $3,000 today, the price can move dramatically. Majors take a conservative approach. But what we also have seen is that they’re on the hunt right now.

And there’s not a lot of projects they’re hunting for, so there’s going to be competition for those. Projects such as ours, scarce, in demand, in good jurisdictions can only be a positive thing. You talk a lot about a lot of projects not being able to kind of come to fruition.

I mean, we know that there’s a lot of juniors out there that might not have anything. There’s some that have some. Tell me about if we’ve shaken out some of those loose juniors in this market.

I mean, it’s been a struggle to raise capital. Are we at a point where we’re just seeing legitimate juniors? Well, I think what we’ve seen is that the juniors with earlier stage projects have had a hard time raising money. So that focuses the best companies to be able to get the money.

That’s not a bad thing for our industry because we want to reward companies that are successful, have a good track record, have good technical teams and good projects. And I always say that if I need to have a $3,000 gold price to make my project economic, where does that leave room should the price go down? So we’ve taken a more conservative approach on our resources. We did our last PEA study at $1,750 gold price and showed good economics.

So you can see how that would increase today. We just put a resource out last week on our San George project. We used a gold price of $2,150.

So, again, well beneath the three-year trailing average, well beneath spot price today just to be conservative. So we have enough cushion to show good, solid economics at any foreseeable gold price. And has that cost come down? I mean, the margins have increased, obviously, due to the metal prices.

But we know the supply chains have had problems, crazy costs. It feels like it’s balancing. I think things have settled down.

About a year ago, I think inflation and cost pressure was more of a concern. That’s stabilized now. And I think what we’re seeing is that benefit of the majors with those big production profiles, high gold price, stabilized cost profile.

We’re really starting to see them knocking it out of the park, which is good for the industry because we need those generalists to come back in. That starts with the bigger companies getting the confidence going. Alistair Steele, CEO of Gold Mining Incorporated.

Fascinating time for you, my friend. Good luck this year. Yeah, super to be here.

Thanks for having me. Thanks, Alistair. I’m Jeremy Sapper for all of us here at Kitco News.

Thank you for watching. We’re going to have some great discussions coming all week long from the PDAC conference here in Toronto. It’s the 15th year we’re covering it here in 2025.

Thanks so much for joining us. We’ll see you next time. Kitco News special coverage of PDAC is brought to you by Gold Mining, Uranium Energy Corp., and Uranium Royalty Corp.