M&A: DUNDEE PRECIOUS METALS TO ACQUIRE INV METALS / 2 Geotech_Earlug_2016_Alt2.pdf 1 2016-06-24 4:27:20 PM
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Evolution Mining’s Jake Klein on margins over volume GMS 2021
| Australian gold miner is taking a deep dive into Canada
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EVOLUTION MINING
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n the first six months of fiscal 2021, Evolution Mining (ASX: EVN) banked over 50% of every ounce of gold it produced in terms
GMS 2021
| Veteran executive believes world has seen peak gold production
Evolution’s chief financial officer, Lawrie Conway (left), with Executive Chairman Jake Klein at the company’s Mt Rawdon asset in Queensland, Australia.
BY TRISH SAYWELL
David Garofalo talks about reversing the decline in gold reserves
of its EBITDA margins, posted a return on equity of 18%, and issued an interim dividend of US$247 per oz., or about 12% of its revenue, well above its peers. “It’s been all about a journey of
“WE’RE NOT CONVINCED THAT PRODUCING MORE GOLD AND MAKING THE SAME OR LESS MONEY IS BETTER THAN PRODUCING THE MOST PROFITABLE OUNCES.” JAKE KLEIN FOUNDER AND EXECUTIVE CHAIRMAN, EVOLUTION MINING
trying to improve the quality of our assets and focusing mostly on margin and return on capital rather than on volume,” Jake Klein, the company’s founder and executive chairman, told The Northern Miner’s secondquarter Global Mining Symposium. “We’re not convinced that producing more gold and making the same or less money is better than producing the most profitable ounces.” Klein added he was “very proud” that the company has paid 16 consecutive dividends. “It’s our job as a company to safely convert ounces in the ground into cash in the bank and then decide prudently how best to invest that cash, and if we can’t invest it better and get a better return than our shareholders can, we should be giving it See KLEIN / 6
BY HENRY LAZENBY
he precious metals-focused royalty and streaming business model continues to unlock value through win-win deals for exploration and development, Gold Royalty (NYSE-AM: GROY) CEO David Garofalo told The Northern Miner’s recent Global Mining Symposium. The prominent mining executive has made the transition to the royalty and streaming business. Garofalo is perhaps best remembered for his role as CEO of Goldcorp before its US$10 billion merger with what is the largest gold producer today, Newmont (TSX: NGT; NYSE: NEM), in 2019. He says a 40% drop in global gold reserves over the past seven years has caused a proliferation of metals streaming and royalty companies fiercely competing behind the scenes to meet the industry’s “existential need to reinvest” in exploration and development projects. This comes at a time capital is most critical to build the industry’s next generation of cornerstone mines. Garofalo believes the world has seen peak gold production, and the industry is now in steady structural decline. “I don’t think that trajectory gets reversed anytime soon given the long lead time from discovery to production,” he said. “I’m excited to see the juniors being able to raise money again. Some of the better juniors can raise capital, but we aren’t going to see the fruits of their efforts for many years to come. It’s vital for the industry for them to be successful.” Garofalo took up the reins at the recently-gone-public Gold Royalty in August last year. The company’s parent, GoldMining (TSX: GOLD; NYSE: GLDG), opted to spin out royalties on a selection of its most advanced assets into a new royalty and streaming vehicle to daylight value by writing royalties on each of the underlying assets. GoldMining acts as a gold project bank, buying assets on the cheap at the bottom of the cycle. Gold Royalty gives GoldMining cash to invest back into the more advanced assets in the stable in return for the royalties. “I saw a lot of potential for outside capital to be deployed into these
PERU: POLITICAL GRIDLOCK WITH ELECTIONS CONTINUES / 7
assets. And as that happens, they would get re-rated within the GoldMining portfolio and, by extension, for Gold Royalty,” said Garofalo. “It’s timely now because the industry is going to have to refine their skills, exploration and mine development, which capacities have been largely underutilised over the last six or seven years. The result of that has been this downward trend in reserves.” Garofalo took Gold Royalty public in March, raising US$90 million, and in doing so, resulted in a post-money valuation of about US$200 million. Not only has the company collected 18 net smelter return royalties ranging from 0.5% to 2.0% covering 12 projects located in the Americas, but Garofalo has also gathered a “fairly impressive” board and management with collectively over 250 years of operational experience. The board includes Garofalo with more than 30 years of experience; his successor at Hudbay Minerals (TSX: HBM; NYSE HBM), Alan Hair, See GAROFALO / 6
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