There is a duality currently underscoring the gold sector.
Whether you firmly believe a bull market is already out of the gates, or whether you feel one is coming, there is a chasm between juniors and majors.
While bullion shines in headlines and balance sheets, a strange thing is happening. Junior mining companies have been undervalued, underbought, and largely overlooked.
Explorers are caught in a paradox with an impatient market demanding production and perhaps not as attuned to the critical work an explorer undertakes. As the price of the precious metal soars, the companies responsible for finding the next resource remain stuck in the market’s blind spot.
Yet a shift may be coming – and Canada could emerge as leading the charge.
Industry executives are forecasting a wave of mergers and acquisitions within the next 12 to 18 months, driven by a sustained high gold price and the looming supply gap facing producers.
Marco Roque, CEO of Cassiar Gold (TSX-V:GLDC) laments that despite an 18-month gold rally, most juniors’ share prices have moved little – if at all. Roque envisions a scenario unfolding where well-funded producers will begin snapping up undervalued juniors.
“Given the discrepancy in valuations between big producers and juniors in this context, and given the need from the big producers to replace ounces – given they have been benefiting from massively improving balance sheets – an aggressive M&A cycle and producer buying spree of juniors has a high chance to occur,” the CEO tells Mining.com.au.
“This should aggressively whip junior gold valuations higher especially with the biggest and most advanced ones, in which Cassiar gold is part of.”
EY in its 2025 Risks and Opportunity for the Gold Sector report suggest a renewed focus on project development. According to EY, miners are expanding existing mines or where possible, are bringing more greenfield projects into their portfolios.
Major producers are grappling with declining reserve bases and Antipa Minerals (ASX:AZY) CEO Roger Mason says there is scarcity of new large-scale discoveries.
“This makes exploration success not only valuable … it’s essential,” Mason tells this news service.
Rua Gold (TSX-V:RUA) CEO Robert Eckford says capital inflows are being increasingly scrutinised as producers manage margins amid dwindling grades, rising costs, and gold’s perpetual buoyancy.
“Eventually people will look to build increased exposure in their gold portfolio and be looking to acquire explorers to deliver that,” Eckford tells Mining.com.au.
There are large deals being inked but opportunistic acquisitions are coming to the fore as buyers capitalise on the sheer number of undervalued gold stocks across most exchanges. These once overlooked companies are firmly on the radar of suitors.
EY refers to the example of Gold Fields (JSE:GFI), which undertook one of the largest takeovers in recent times of Canadian pre-production junior Osisko Mining for US$1.6 billion to gain full ownership of the Windfall Project in Québec.
Renforth Resources (CSE:RFR) CEO Nicole Brewster believes the tide will turn once investors seek to amplify their gold exposure.
“I see individuals owning a basket of the miners and explorers in order to have better leverage and exposure to a sector of the market which regularly delivers returns in multiples of the purchase price,” she says.
The great disconnect
Globally renowned natural resources investor Rick Rule tells Mining.com.au we’re already in a gold bull market but the bulls are running at varying speeds.
“If you merged every junior in the world, all 3,000 of them, the Australians, the Canadians, from AIM (the international market for growing companies trading on the London Stock Exchange), the US over-the-counter crap,” Rule explains.
“If you merged them all into one company, (hypothetically called) Junior ExplorCo, that company in a good year would lose US$2 billion.”
There are too many juniors and Rule suggests many “aren’t worth the paper that they’re printed on”. As such, a complex picture emerges – one shaped by macroeconomic currents, capital markets inertia, and the slow reawakening of investor interest.
While opinions vary on what is next, one thing remains clear: the disparity between gold’s price and the market valuation of many juniors may not last much longer.
Rua Gold’s Eckford echoes Rick Rule’s sentiments, saying there is a disconnect from the “equity space and the generalist investors have been slow to catch on”.
“It has started to turn in 2025 with producers leading the way however we are early in the cycle and it is yet to flow through the developers and explorers,” Eckford tells this news service.
Cassiar Gold’s Roque bemoans just how protracted the valuation disparity has been,
“With Cassiar Gold in particular is trading at valuations low in enterprise value/ounce or in absolute terms similar to the lows in the last 15 years, ie, enterprise value/ounce of around C$10 per resource ounce,” Roque says.
Soma Gold (TSX-V:SOMA) CEO Geoffrey Hampson shares a similar stance. While gold prices climbed from US$2,900 per ounce in Q1 2025 to US$3,300 per ounce in Q2 – a 14% jump – Soma’s, like most other juniors’ valuations, have barely stirred.
“Junior producers like Soma Gold are undervalued, trading at under 2x trailing EBITDA rather than being valued on the increase in the price of gold,” Hampson explains.
These challenges are not just market-based, they are structural too. Renforth’s Brewster tells Mining.com.au it’s evident in the market that volumes are not significant, which she says is “indicative of little market participation, the lack of market interest has allowed prices to drift downwards, affecting valuation directly.”
Brewster suggests the market has shifted to ETFs dominating investment choices, and “the reality is that most juniors do not qualify for inclusion by ETFs or other funds”.
However, Elementos (ASX:ELM) Managing Director Joe David cautions it does not come as a “huge surprise” the markets are not valuing certain gold mining companies.
“The current gold price obviously only represents the last traded spot price of gold, mining companies are valued based on a forecast of received revenue over their life of mine, which is obviously based mostly on the underlying commodity price,” David says.
According to Mining International, many juniors are left with no choice but to de-risk their assets to attract funding rather than venturing into frontier exploration.
One of the primary challenges faced is securing funds for early stage exploration. Mining International says the investment in the junior space is driven by speculative cycles, where capital floods the market during commodity booms but can quickly dry up in downturns.
Canadian quality
While Rick Rule’s warning about the excess of paper-thin juniors holds water, his long-standing belief in quality – particularly Canadian quality – stands firm.
The resource-rich North has always punched above its weight in exploration, and with gold near record highs, it may soon do so again.
Canada is well-endowed with gold – from British Columbia’s Golden Triangle with historical assets, Yukon’s history dating back to the 1800s, among other examples.
The Government of Canada’s Department of Natural Resources reveals that gold is the nation’s most valuable mined commodity, with a production value of C$15.1 billion in 2023.
Gold is mined in 10 Canadian provinces and territories, mostly in Ontario and Québec, which accounts for 70% of the nation’s total gold output as of 2023.
According to the World Gold Council, Canada was ranked fourth in the world for gold production, totalling 202.1 tonnes, just behind Australia which has produced 284 tonnes of gold.
Rua Gold’s Eckford says Canada has become “increasingly bureaucratic and red tap is at all-time high levels”.
“Whether its community, indigenous, provincial and federal levels, every aspect has gotten more costly and pushed permitting timelines,” Eckford says.
“Australia has a more pragmatic approach and sees the benefits to communities and stakeholders locally, as well as the state and national economies and so has a better ‘ay yes attitude’ compared to the ‘say no’ attitude in Canada.”
Roque adds that Canada and British Columbia in particular are very similar to Australia.
“Both benefit from low geopolitical risk, rule of law, property rights, stable regulations, world-class infrastructure, and skilled and available workforce, coupled with big geological endowments that should continue to attract the biggest producers on the planet,” he explains.
Although there is an apparent disconnect between the price of gold and market valuations, the dots have been connected between Australia and Canada.
The similarities shared are not only among the geopolitical, regulatory, and infrastructural aspects. But within the junior mining sector, as more than not, gold juniors are feeling undervalued, underbought, and overlooked.
Write to Aaliyah Rogan at Mining.com.au
Images: World Gold Council, Soma Gold & Mining.com.au
