... according to Randy Smallwood, President and CEO of Wheaton Precious Metals and Chair of the World Gold Council.
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Smallwod spoke with Kitco News journalist Ernest Hoffman at the recent PDAC 2023 mining convention in Toronto, where he discussed the state of the precious metals market. He also explained what’s driving the recent M&A activity in the mining sector.
“I think it's a problem with growth opportunities out there,” he said. “When people start looking at their production profile going out, they realize they've got some holes four, five, six years out, and shareholders don't want to see those production holes come to fruition, so everyone has to look at different ways to grow.”
Smallwood said that things like permitting and licenses are making it harder and harder to build new mines. “There's no doubt consolidation is going to play a more important role as time moves on on that front, and I think we're starting to see it's one of the paths towards filling some of those production holes.”
He also acknowledges that M&A is a way for mining majors to support their stock prices and keep investors happy while new projects get underway. “Definitely, assuming that it's good value that they're buying,” he said. “Sometimes you can pay too much for these things.”
Smallwood believes that the mining sector has been in a growth phase since 2018, following a focus on balance sheet repair during the five years prior. “When we look at where demand is going for metals in this world, I think we still have a lot of growth in this industry in terms of new mines coming on stream,” he said. “There's a lot of very, very tired old mines that are getting near the end of their life over the next few years, and so they're going to have to be replaced with something. Not only that, there's an increasing demand as the world tries to electrify, especially for a lot of the critical minerals. We don't see any slowdown on that, there's going to be continued investment in the space.”
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