Ramelius eyeing Canadian gold play amid M&A wave

Ramelius Resources (ASX:RMS) is staying mum after it was revealed on 8 March 2024 it is in exclusive talks with Canadian gold giant Karora Resources (TSE:KRR) surrounding a potential $1 billion corporate transaction.  

Mining.com.au reached out to Ramelius, however, the gold company declined to comment further than what’s been released in previous announcements. 

Ramelius, which has a $1.71 billion market capitalisation, says in an ASX statement that it continually assesses strategic options and holds discussions with various industry participants as part of its growth strategy. 

“Ramelius confirms that it is currently in exclusive discussions regarding a potential corporate transaction with Karora. The company refers to the press speculation of a potential transaction value of between $700 million to $1 billion. 

Discussions concerning valuation are ongoing and no final agreement has been reached in this regard. The Company notes Karora’s market capitalisation of approximately C$841 million. Discussions between the parties, including in relation to value, remain incomplete. There is no certainty that the discussions will lead to a transaction and if so at what price.” 

Karora Resources is a multi-asset minerals resource company focused primarily on the acquisition, exploration, evaluation, and development of precious metal properties. 

Earlier this week the company updated its 2024 gold production guidance of 170,000 – 185,000 ounces and all-in sustaining cost (AISC) cost guidance of US$1,250 – US$1,375 per ounce sold.

Paul Andre Huet, Chairman and CEO says: “Following our record full year gold production of 160,492 ounces in 2023, gold production in 2024 is projected to be another significant increase to between 170,000 – 185,000 ounces. 

Our updated guidance incorporates our ramp up to an annualized 2.0Mtpa production rate at Beta Hunt by end of year as well as contributions from Pioneer, Two Boys and stockpiles. The minor (5%) trim to the top end of our gold production guidance reflects a focus on prioritizing higher margin Beta Hunt ounces over slightly lower margin smaller open pit options at Higginsville.

Given increased cost pressures experienced across the industry since our last update in March 2023, we have adjusted our AISC guidance for 2024 to reflect the current operating environment and lower planned nickel by-product credits.”

The company’s wholly owned assets include the Beta Hunt Mine, Higginsville Gold Operations, and Spargos Gold Mine about 60km from the regional mining centre of Kalgoorlie in Western Australia. 

Karora also owns the Lakewood and Higginsville mills, which are fed ore from the aforementioned projects.

Both projects are touted to produce up to 195,000 ounces of gold this year, as per Karora’s latest presentation.  

Ramelius Resources owns and operates the Mt Magnet, Edna May, Marda, Tampia, and Penny Gold mines, all of which are located in Western Australia. 

The potential transaction is the latest amid a wave of M&A deals in the Australian mining industry starting to kick off in 2024. 

According to PwC Australia, following a period of slowdown in H2 2023, an uptick in M&A activity is increasing internationally, with Australia in particular displaying signs of an upswing. 

As reported by Mining.com.au in January 2024, consolidation, primarily in the gold sector, is not slowing down after what was a ‘monster’ of a year for M&A in 2023. 

In 2023 Newmont (ASX:NEM) acquired Newcrest Mining for $26.2 billion to create the world’s largest gold miner, while mining giant BHP (ASX:BHP) forked out $9.5 billion to buy OZ Minerals.   

Maintaining this momentum in the gold space, after buying up a 19.9% stake in OreCorp (ASX:ORR) in November 2023, Perseus Mining (ASX:PRU) became an interloper and launched a takeover bid in January to rival that of Vancouver-based Silvercorp (TSX:SVM). 

This takeover bid followed Cosmo Metals (ASX:CMO) also in January signing a terms sheet to acquire privately held La Zarza Minerals, which holds tenements comprising the Kanowna Gold Project. 

The project sits 1km west of Northern Star Resources (ASX:NST) ‘world-class’ Kanowna Belle gold operations, which has produced more than 5.4 million ounces of gold since 1993.   

However, this wave of M&A extends beyond the confines of the gold market.. 

So far in 2024, this news service has reported on several M&A deals occurring across the mining industry.   

One such proposed takeover which is still unfolding in the market is Diatreme Resources’ (ASX:DRX) bid to acquire ASX-listed silica sands neighbour Metallica Minerals (ASX:MLM). 

On 16 February 2024, Diatreme made a conditional intention to make an all-scrip takeover bid for Metallica to create what would be an ASX-listed silica company with a pro-forma market capitalisation of about $110 million and a ‘significant’ mineral resource base. 

Another was the merger between vanadium players Technology Metals Australia (ASX:TMT) and Australian Vanadium (ASX:AVL), which closed the books on the synergistic deal on 1 February this year after the latter secured all shares in the former, as reported by Mining.com.au.  

Write to Adam Drought at Mining.com.au 

Images: Ramelius & Karora
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.