The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
From junior mergers to major takeovers, scene has changed Mining Explorers 2023 - January 18, 2024
Trucks at Newmont's Red Chris copper-gold mine with beds painted to represent Canada, Tahltan Nation, and Australia.
Diamonds from Burgundy's newly acquired Ekati mine.
Hoping to add to its global metals and coal assets, Glencore made an aggressive bid to buyout Teck Resources in 2023.
A Hercules 737 delivers supplies to the Goose camp during the 2013 exploration program at Back River. Today, equipment and supplies are delivered by ship via a port owned by Sabina.
From neighboring gold explorers merging to create a district-scale project that will likely be attractive to majors, to Glencore making an aggressive bid to buyout Teck Resources Ltd., 2023 was a year of North of 60 mergers, acquisitions, and attempts at takeovers.
The multi-billion-dollar M&A frenzy across Alaska and Canada's North was underscored by B2Gold's roughly C$1.1 billion (US$820 million) acquisition of Sabina Gold & Silver Corp. and the Back River Gold Mine project in Nunavut, and Newmont Corp.'s US$19 billion merger with Newcrest Mining Ltd., an Australian major with two mines operating in BC's Golden Triangle.
Despite their size, these were not the biggest offers put on the table for mining companies with assets in the North of 60 Mining News coverage area. That honor goes to Glencore's $24 billion aggressive and unwelcome bid to buy out Teck Resources Ltd.
"Glencore has made two opportunistic and unrealistic proposals that would transfer significant value to Glencore at the expense of Teck shareholders," Teck Resources Chair Sheila Murray said in an April 13 statement.
While these friendly and unfriendly mergers and acquisitions grabbed international headlines, there were numerous smaller deals brokered across the North:
• Burgundy Diamond Mines Ltd. paid $136 million to buy the iconic Ekati diamond mine in Northwest Territories.
• Hecla Mining Company, which was a frontrunner in the North of 60 M&A activity with the 2022 buyout of Alexco Resource Corp. and that company's Keno Hill silver mine in the Yukon, expanded its footprint in the territory with the 2023 acquisition of ATAC Resources Ltd.
• Benchmark Metals Inc. and Thesis Gold Inc. completed a merger that brings together two large gold projects in Northern BC's Toodoggone Mining District that analysts are already seeing as an attractive acquisition target for a larger gold producer.
The one unsolicited buyout bid that did not come to full fruition may best represent the landscape that set stage for a flurry of North of 60 M&A activity over the past 18 months.
Glencore's aggressive move to acquire Teck, and the Canada-based miner's vehement rejection of the global commodities company's US$23 billion offer, goes beyond the typical disagreements over valuation and delves into how mining companies want to position themselves in a world transitioning to clean energy.
As a Canadian-headquartered producer of copper, zinc, and steelmaking coal with future-leaning ESG initiatives, Teck believes it is well-position for growth in a world demanding sustainable sources of the mined materials needed for the energy transition.
Early last year, Teck announced plans to spin its steelmaking coal unit into Elk Valley Resources, which would be a world-leading steelmaking coal mining company that would export premium coal mined from its portfolio in Southern British Columbia.
A rebranded Teck Metals would continue to advance the Canadian company's portfolio of copper- and zinc-forward metals mining operations.
Teck says the coal and base metals businesses that emerge from the proposed decoupling of its current assets would remain committed to strong ESG performance.
This proposed split, however, spurred Glencore to make a swift and aggressive buyout bid while Teck's assets were still intact.
The company believed that a merger with Glencore, which holds significant thermal coal assets and one of the largest oil trading businesses in the world, would muddy the ESG waters for Teck shareholders.
"The fundamental flaws of Glencore's revised proposal continue to make it a non-starter," said Teck Resources CEO Jonathan Price. "It does not address major inherent risks including substantial regulatory hurdles, jurisdictional and ESG concerns, and diluting the base metals business with significant oil trading."
Teck was able to hold off Glencore's aggressive bid, but the buyout offer forced the Canadian company to table the spinning out of its steelmaking coal assets.
In October, the British Columbia-based mining company agreed to sell EVR to Glencore for US$9 billion, which provides Teck with an influx of cash to expand its energy metals businesses, especially copper.
"This sale sets the stage for Teck for continued growth as a major Canadian-based producer of copper and other future-oriented metals, while preserving the jobs and operations of the coal mines in the Elk Valley," said Teck Resources Chairman Emeritus Norman Keevil.
Once the transaction is closed, expected after mid-year, Glencore plans to spin its newly enlarged coal assets out into a new company.
Newmont's buyout of Newcrest, a company that started out as an Australian subsidiary of Newmont back in 1966, was also at least partially rooted in global mining companies positioning themselves for the energy transition.
In addition to making the world's largest gold mining company even larger, the merger bolsters Newmont's production of the metal that is wiring the clean energy future.
"This transaction also increases Newmont's annual copper production – a metal vital for the new energy economy – and adds nearly 50 billion pounds of copper reserves and resources from Newcrest to our robust and balanced portfolio," Newmont President and CEO Tom Palmer said.
With the addition of Newcrest's mines, the enlarged Newmont is positioned to produce roughly 8 million oz of gold and 330 million pounds of copper annually.
A substantial portion of this and future copper and gold will come from Northern BC and the Yukon, a primary area where the portfolios of these mining majors meet.
Palmer said the Newcrest acquisition "would build upon the district potential in British Columbia's highly prospective Golden Triangle through a combination of operating mines and development projects that would deliver value through shared technology, local capabilities, and orebody experience."
With the Newcrest acquisition, Newmont now operates Red Chris and Brucejack, the only large-scale mines currently in production in BC's Golden Triangle, and owns a portfolio in this area that includes the advanced-staged Tatogga gold-silver-copper exploration property and 50% interest in the world-class Galore Creek copper-gold mine project in Northern BC, and the Coffee gold mine project in the Yukon.
"By combining the two existing Newcrest operations, Brucejack and Red Chris, with Newmont's Saddle North and Galore Creek projects, a Tier 1 district in the highly prospective golden triangle region of British Columbia will be created – a district in which Newmont will be operating for decades to come," Palmer said during a May 15 webcast on the definitive agreement to acquire Newcrest.
The one billion-dollar-plus North of 60 M&A deal that followed more traditional lines of a producer acquiring a junior that has advanced a project to the brink of production was B2Gold's buyout of Sabina Gold & Silver.
The district-scale Back River project that Sabina gained with its purchase of Sabina includes five claim blocks along an 80-kilometer (50 miles) belt in the Kitikmeot region of western Nunavut.
"The Back River Gold District has multiple high-potential mineralized zones which remain open, and we are confident that the district has strong untapped upside with numerous avenues for resource growth," said B2Gold President and CEO Clive Johnson.
The most advanced project at Back River is Goose, a fully permitted, construction-ready mine project that is slated to produce 3.34 million oz of gold over 15 years.
With Sabina doing the heavy lifting of permitting and de-risking, the Goose Mine is on track to pour its first gold early in 2025.
Overall, the Back River property hosts 33.45 million metric tons of measured and indicated resources averaging 5.88 g/t (6.2 million oz) gold and 13.74 million metric tons of inferred resource averaging 6.44 g/t (2.9 million oz) gold.
To gain ownership of the Goose Mine and larger Back River potential, B2Gold issued Sabina shareholders C$1.1 billion, a 45% premium for Sabina shareholders.
"The execution of the Goose project by Sabina did not come without risk to Sabina as a single asset, junior development company with capital constraints," said former Sabina Gold & Silver President and CEO Bruce McLeod. "With a two-year construction period until first gold production, we believe that additional value can be unlocked by participating as shareholders of a major gold producer with the northern experience and financial resources to optimize the Goose project and this prolific belt."
Over the past two years, Hecla has gained a strong foothold in Canada's Yukon through mergers and acquisitions.
The Idaho-based silver producer staked its first claim in the Yukon with the 2022 acquisition of Alexco and that company's Keno Hill Mine project.
The Keno Hill property covers one of the highest-grade silver districts in the world. Between 1913 and 1989, more than 200 million ounces of silver was mined from Keno Hill ore averaging 44 oz of silver per ton, making this district the second-largest historical silver producer in Canada.
Alexco began ramping Keno Hill up to commercial production at the end of 2020 but struggled due to not having the financial wherewithal to both bring the mine online and weather the pandemic.
Falling behind on its production plans, Alexco sought a suitor and Hecla was the ideal choice for a silver mine like Keno.
Since finalizing the acquisition of Keno Hill in September 2022, Hecla has been ramping up to commercial production at Keno Hill. This includes significant resource and reserve drilling.
Going into 2023, Keno Hill hosts 2.2 million tons of proven and probable reserves averaging 22.5 oz/t (49.7 million oz) silver, 0.01 oz/t (13,000 oz) gold, 2.2% (49,320 tons) zinc, and 2.4% (52,520 tons) lead.
This is a 33% increase over the reserves identified at the time of Hecla's acquisition of Alexco.
Already the largest silver producer in the U.S., thanks in large part to the Greens Creek Mine in Alaska, Hecla expects that with the Keno Hill Mine it will gain the same title in Canada.
"Hecla's silver production is in the United States where it already produces 40% of all the silver mined and, with Keno Hill, Hecla is on the path of being Canada's largest silver producer as well," said Hecla Mining President and CEO Phillips Baker, Jr.
Hecla's M&A activity in the Yukon, however, did not stop with Alexco. In April 2023, the silver miner finalized a hybrid buyout-spinout deal with ATAC Resources, an exploration company with assets in Yukon and Northern BC.
In an all-share deal valued at roughly C$31 million (US$23 million), Hecla acquired ATAC's Rackla and Connaught precious metals exploration projects in the Yukon. At the same time, Hecla invested C$2 million (US$1.5 million) to gain a 19.9% interest in Cascadia Minerals, a new junior exploration company formed to spin ATAC's Idaho Creek, Catch, Rosy, and PIL projects into.
"The acquisition further cements our position in the Yukon," said Baker.
For the former team at ATAC, the hybrid deal capitalizes on the significant discoveries already made and provides a free start on exploring its copper-rich polymetallic properties in the Yukon and Northern BC.
"I am very excited to begin a new chapter of discovery with Cascadia," said Cascadia President and CEO Graham Downs.
Hecla also holds a substantial interest in Dolly Varden Silver Corp., an exploration company focused on the Kitsault Valley project in Northern BC. In October, Hecla increased this stake to 15.7% with a C$10 million (US$7.2 million) equity investment.
"Hecla's support for Dolly Varden Silver's high-grade Kitsault Valley Project in BC's prolific Golden Triangle is validated with today's financing news," Dolly Varden Silver CEO Shawn Khunkhun said on Oct. 30.
Considering that the 64-million-oz silver found on Dolly Varden's Kitsault Valley project borders Kinskuch, a precious metals rich polymetallic project quietly being explored by Hecla, further deals between these companies can be expected.
Thesis Gold Inc. and Benchmark Metals Inc, neighboring gold-silver exploration companies in Northern BC's Toodoggone Mining District, merged in 2023 with the very idea of eventually being bought out by a major.
"This merger has given rise to an expansive district-scale development and exploration endeavors, characterized by remarkable potential for growth," said Ewan Webster, president and CEO of the new Thesis Gold resulting from the merger.
The most advanced of the projects in the merged portfolio is Lawyers, a 144-square-kilometer (56 square miles) land package contributed by Benchmark that hosts 67.38 million metric tons of measured and indicated resources averaging 1.26 g/t (2.74 million ounces) gold and 24.39 g/t (52.9 million oz) silver; plus 4.87 million metric tons of inferred resource averaging 2.39 g/t (378,000 oz) gold and 39.41 g/t (6.2 million oz) silver.
A preliminary economic assessment based on this resource envisions ore from open-pit mines at three Lawyers deposits – AGB, Cliff Creek, and Dukes Ridge – feeding a centrally located mill that would produce 1.7 million oz of gold and 26.7 million oz of silver over an initial 12 years of mining.
Lying immediately north of Lawyers, Thesis' 180,000-square-kilometer (69 square miles) Ranch property is at an earlier stage of exploration with some near surface zones expected to bolster the Lawyers mine plan with high-grade ore.
The 4.05 meters of 119.49 g/t gold, 12.57 meters of 3.87 g/t gold, and 6.3 meters of 14.9 g/t gold drilled at Ranch in 2023 provide some flavor of the potential this property offers.
"These results provide a robust foundation for this emerging trend, reaffirming our confidence in the Ranch Projects capacity to significantly contribute to our overarching strategy of building a unified Toodoggone district," said Webster. "This strategy leverages the combined potential of our assets to their fullest extent."
Toward its goal of building a balanced portfolio of the world's best diamond projects in favorable jurisdictions, Australia-based Burgundy Diamond Mines paid US$136 million (A$209 million) to acquire full ownership of Arctic Canadian Diamond Company Ltd.'s world-class Ekati Diamond Mine and other interests in Canada's Northwest Territories.
"This is an exciting and transformational acquisition for Burgundy with potential to generate significant and growing returns for our shareholders," said Burgundy Diamond Mines CEO Kim Truter.
Burgundy is no stranger to Canada's North or the Ekati Mine.
Burgundy began purchasing fancy-colored rough diamonds from Ekati in 2021 for cutting and polishing at its facility in Perth, Australia, and then selling them as luxury gems in high-end jewelry boutiques.
Over that same period, the Australian company has earned a 40% interest in North Arrow Minerals Inc.'s Naujaat project in Nunavut by funding the collection of a bulk sample from Q1-4, a kimberlite on the property known for its distinct population of high-value, fancy, yellow to orange-yellow diamonds.
With the acquisition of Ekati, Burgundy is now positioned along the entire diamond value chain in Canada's North and around the world.
"Burgundy is well-positioned for growth, with significant value to be delivered to all stakeholders through our fully integrated end-to-end value chain, now including the global scale Ekati asset," said Burgundy Diamond Mines CEO Kim Truter.
"I look forward to engaging with our stakeholders in the Canadian North, many of whom I have successfully partnered with previously," the former DeBeers Canada CEO said. "Local communities, Indigenous partners, and government officials, remain vitally important to what we believe will be an exciting and beneficial future for all involved."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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