Douglas Silver, CEO of Balfour Holdings, believes that there is an excessive number of companies in the gold space. However, he does not expect consolidation to occur during the current market downturn. Silver predicts that mergers and acquisitions (M&A) will take place at the top of the market cycle when companies are able to secure funding for such endeavors. He suggests that instead of mergers, companies will face financial difficulties and potentially “die on the vine” due to the lack of capital coming into the exploration sector. Silver also expresses optimism about political support for U.S. mining, highlighting significant government investments in mining companies and critical mineral research.
During an interview at the Precious Metals Summit 2023, Silver emphasized the overpopulation of gold companies and the inability of capital markets to support them. He predicts a decrease in the number of companies in the industry, resulting in a “major winnowing” process. Furthermore, Silver noted that the current lack of capital coming into the exploration sector is a barrier to consolidation. However, he remains optimistic about M&A in the future when companies can raise sufficient funds for such endeavors.
Silver also discussed the changing attitude towards mining in the United States, highlighting the significant government investments in mining companies and critical mineral research. He views this as a positive shift for the U.S. mining industry. Additionally, he mentions that automakers such as General Motors, Ford, Tesla, and Stellantis are directly investing in mining companies to secure the necessary metals for electrification.
In summary, Silver believes that the gold industry is overcrowded with companies, resulting in a need for consolidation. However, he foresees this happening at the top of the market cycle when companies can secure funding. He also highlights the positive political support for U.S. mining and the increasing investments from automakers in mining companies.