Gold Digger: ‘Looks like M&A is back on the menu, boys!’

• Northern Star/Saracen $16bn mega merger could open the M&A floodgates, experts say
• Cashed up producers are running out of gold reserves, which is good news for potential takeover targets
• This weeks top movers include Encounter Resources, Red Mountain Mining, Nexus Minerals, and Tesoro Resources

“Looks like meat’s back on the menu, boys!”  roars a hungry Orc in the film Lord of the Rings: The Two Towers.

Substitute ‘meat’ with ‘mergers and acquisitions’, and ‘hungry orc’ with ‘gold-starved miners’, in this shitty metaphor and we set the stage for a deal-making blitz.

Gold M&A has been going through a dry spell. In 2019, gold M&A was worth $US26bn. In 2020, just $US9.8bn worth of deals have either been completed or agreed upon so far, according to Bloomberg.

Experts say the well received $16bn Northern Star (ASX:NST) — Saracen Mineral Holdings (ASX:SAR) mega merger announced this week could open the floodgates.

The fact that cashed up producers are hungry for more gold is also good news for potential small and medium-sized takeover targets.

Its more expensive, but often quicker and easier, for these major miners to replace their reserves through acquisitions rather than exploration.

In June, $1.45bn gold miner Perseus Mining (ASX:PRU) scooped up West African explorer Exore Resources (ASX:ERX) at a 69 per cent premium to the stock’s last closing share price.

Meanwhile, a fiery Russia vs China battle over 5 million oz gold project developer Cardinal Resources (ASX:CDV) has sent the stock up +320 since March. Who’s next?

The gold price continues to bounce around the $US1,900/oz mark. It was a decent week for ASX-listed stocks — 98 went up, 60 went down, and 35 stayed the same.

Winners & Losers

Here’s how 193 ASX-listed gold stocks performed October 05 – October 9 [intraday]

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop:

Small Cap Standouts

Drilling has started at Encounter Resources’ (ASX:ENR) Aileron gold-copper project, a joint venture with gold miner Newcrest Mining (ASX:NCM) which is funding exploration.

Red Mountain Mining (ASX:RMX) is picking up gold nuggets off the ground at the Mt Maitland project, ahead of a maiden drill program which will kick off in the next seven to 10 days.

Big gold nuggets, like this one:

Drilling at Nexus Minerals’ (ASX:NXM) Wallbrook project in WA’s Eastern Goldfields region has returned high-grade hits including 2m at 12.93 grams per tonne (g/t) gold and 1m at 12.48g/t gold.

Promising results are also pending from a drill program at Torian Resources’ (ASX:TNR) Diorite East prospect.

And Tesoro Resources (ASX:TSO) continues to define wide gold zones at its El Zorro project in Chile. This small cap bolter is now up 884 per cent over the past 12 months.