If you’ve tried to sell a gold mine in WA, or anywhere else for that matter, you’ve crossed paths with Liam Twigger.

The managing director of boutique corporate advisory firm PCF Capital Group, which is soon to merge with WA stockbroker Argonaut, Twigger is a respected voice in the local mining industry.

After 27 years attending Diggers and Dealers Twigger finally made his debut on the Goldfields Arts Centre stage, presenting as the chairman of London-based Ecuadorian copper-gold explorer SolGold.

But make no mistake, he was likely to be just as, if not more, active on the sidelines of the conference working on the next big deal.

Stockhead caught up with Twigger yesterday to ask him where M&A activity could come from now in the resources sector and who he thought shined at the famous Kalgoorlie mining forum.


We’ve seen quite a few project deals over the last few weeks in Tropicana, Kundana, Capricorn Metals with the Mt Gibson purchase. Is it more likely to be M&A now going forward?

“I think the market is more mature and a lot of the majors have shed projects, and now the price being paid to acquire projects is getting up there.”

“The long term average is around US$270 a reserve ounce, and that’s been the benchmark, and we saw Regis pay over US$800 a reserve ounce to pick up Tropicana, which was the highest price we’ve seen.

“It’s probably still value accretive for them but it was a high watermark for us, and the Kundana deal was at US$500/oz and again that was above US$273/oz but it works for Evolution.

“I think it’s a sign that there’s a lot of competition and opportunities are drying up, and probably the next phase will be if you can’t shake the projects that you want out of the company you may have to bid for the company.

“And we’ve also seen corporate valuations come off, the gold sector has come off the boil in the last couple of months, so there may be some value accretive M&A coming through and we’re certainly getting inquiries on that locally and particularly North America.”


Are there any clear takeover targets presenting themselves after the week at Diggers?

“I think a lot of them play hard to get and a lot of the challenge is dealing at the people level. Which CEO is going to step aside?

“I think a lot of these deals will be value accretive – probably the best deal that reflects that was the Doray-Silver Lake merger probably three years ago now where Leigh Junk dealt Doray.

“It was a nil premium merger, Doray had a $150 mil market cap, I think Silver Lake had $300 mil market cap, combined $450m, and literally within 12 months that combined market cap was $1.2 billion.”

“I think if you’ve got the likes of Randgold and Barrick coming together and bulking up, the more you can consolidate companies and bigger is better, you can get on the radar of more funds and certainly some of these ETFs will buy you. They don’t necessarily do research; they just work on your production and market cap and you want to get on their radar.

“That’s why you need to bulk up. I think it will work, it just comes down to who keeps a job and who doesn’t and that’s where it gets tricky.”


Growing mid-caps like Chalice, De Grey, Bellevue and Vulcan Energy, are they too big at this stage compared to where their projects are at for a major to look at them?

“It depends, when you’ve got a discovery it’s good to get a bump in your value but once your value gets to a certain point you can get very expensive and you can be forced to develop the project.

De Grey is in a league of its own given the size and scale of that opportunity, but if you want to be taken out you’ve got to leave some room on the table or derisk the project and until the thing is in production it’s still going to carry an amount of risk. People aren’t necessarily going to pay a massive premium for something that hasn’t been completely derisked.

“I think all of those are good targets and there’ll be a price that works and it’s great to have discovery.

“We’ve had Chalice and De Grey, two absolute standout discoveries in the last two years and it keeps the sector alive.”


Putting your SolGold hat aside, because you obviously have skin in the game there, who do you view as the winners out of this week?

“In terms of new discoveries, I don’t want to give specific advice, but I like the Apollo Consolidated (ASX:AOP) story.

“The outlook is really good. The Westgold (ASX:WGX) story is working really well, a lot of the stories were continuations of last year.

“There was a great acquisition by Capricorn (ASX:CMM). That Mt Gibson project, they paid $40 million, they only paid $20 a resource ounce and their market cap has gone I think up $150 million.

“I think that looks good, they are the kings of mining at just under a gram, they’re doing a great job at Karlawinda and that Mt Gibson resource I think is 0.9g/t and I think if anyone can make a lot of money out of a lower grade ore body it’s the Capricorn guys and (exec chairman) Mark Clark.

“I think that acquisition was quite strategic, they’ll make quite a lot of money out of it and people will follow them.

“And Tietto (ASX:TIE), they have a great resource but it’s in Africa and I think there’s a discount for a bit because political risk across the globe is on the rise and anything outside Australia and Canada gets a bit of a discount.”


African companies are doing pretty well on the operational side of things though. West African Resources who presented on the first morning are doing pretty well and Firefinch at their Morila development.

“You’re right, so West African would be the poster child, everyone wants to follow in their footsteps and Firefinch (ASX:FFX) picking up an asset from Barrick.

“Most people that have picked up an asset from Barrick or Randgold have done pretty well.

“They do well by the community, do well by the environment and they generally leave a bit of meat on the bone with the asset and there’s a huge amount of meat left on that bone at Morila, so I think Firefinch are going to go really well.”


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