As Gold Soars, Opportunity Lies in ‘Better, Not Bigger’ Mining Acquisitions

This is VanEck’s monthly gold market and economic insights from Imaru Casanova, Portfolio Manager, featuring her unique views on mining and gold’s portfolio benefits.

This article covers market developments through the end of November 2025. All performances are stated in USD. Returns may increase or decrease as a result of currency fluctuations.

Key Takeaways:

• Gold broke above $4,200 in November as markets rapidly shifted rate expectations.
• Record prices are driving more mining sector deal activity, with discipline outweighing scale.
• Some of the more compelling opportunities may be in focused, regional consolidation, not large, complex acquisitions.

Key Risks:

• Gold prices can be volatile and highly sensitive to shifts in interest rates, inflation expectations, and macro sentiment.
• Mining companies face operational risks, including cost inflation, production disruptions, and reserve uncertainty.
• Geopolitical, regulatory, and jurisdictional factors can materially impact both gold markets and mining operations.

Gold Surges as Markets Reprice Fed Expectations

Gold spent November comfortably hovering around the $4,000 mark, even as the odds of a December Fed rate cut declined early in the month¹. But once markets began actively pricing in a cut, gold took off. The implied probability of a December rate cut jumped from 23% on November 19 to 83% by month-end and gold responded in a way that aligns with certain historical patterns, though such relationships do not always hold. Historically, gold has sometimes benefited from expectations of lower rates, although this relationship does not always hold. Past performance is not a reliable indicator of future results.

By November 28, gold closed at $4,239.43 per ounce, a gain of $236.52, or 5.91%, for the month. And while equity markets attempted to rebound from their lows, the S&P 500 finished roughly flat at 0.25%². Meanwhile, gold ended the month just $117 shy of its all-time high of $4,356, and gold equities rallied right alongside it, as both the MVGDX and MVGDXJTR Index advanced sharply, with MVGDX³ up 15.23% and MVGDXJTR⁴ rising 16.37%.

Rate Cut Hopes Fuel a Gold Rally in November

Gold is intended as physical gold, while S&P 500 and NASDAQ are indexes, which have different characteristics. It is not possible to invest directly in an index.

Record Prices Fuel Rising Transaction Activity

Record gold prices are driving greater deal activity across the mining sector. Strong cash flow generation and improved valuations are giving companies more flexibility to expand and optimize their portfolios. In 2025, the industry saw an uptick in asset sales and purchases, minority equity investments in earlier-stage companies and a rise in corporate-level mergers and acquisitions.

Senior producers have generally focused on portfolio rationalization, using strong gold and silver prices to divest non-core assets at attractive valuations. Rather than pursuing large-scale acquisitions, many are choosing to make smaller, entry-level equity investments in earlier-stage companies to strengthen their longer-term project pipelines. There appears to be an industry preference: funding internally generated, prudently phased growth with operating cash flow rather than higher-risk acquisitions that often require issuing equity, particularly at a time when many companies’ shares still trade at historically low valuations. As a result, many companies across the sector seem to be taking a more disciplined and selective approach to M&A.

Why Scale Alone Doesn’t Create Value

Scale does not always translate into increased value in the gold mining industry, and in some cases, becoming too large can introduce additional challenges. Companies are not looking to grow for growth’s sake. They aim to create value by lowering costs, extending mine life, improving returns on invested capital and reducing operational risk. Achieving all of this is no small task. Miners struggle to find assets of sufficient size and quality to justify the substantial acquisition premiums sellers expect in a strong gold-price environment. This reality helps explain why M&A activity has not accelerated as much as many expected during this cycle.

There appear to be opportunities around the world for meaningful regional consolidation, and these tend to be the types of transactions that make the most strategic sense. Mining operations can benefit significantly from synergies created when multiple assets operate as a single district, hub or complex – sharing critical infrastructure, equipment, labor, leadership and technical talent, supply chains and in-country or regional expertise, among other advantages.

Integration Risks: Lessons From Past Consolidations

Even the most obvious consolidation opportunities carry meaningful risks. Consider the challenges Barrick Mining faced integrating its Nevada assets with Newmont’s to create the Nevada Gold Mines joint venture, the largest gold mining complex in the world. This combination was clearly necessary, yet it still took years to fully integrate, optimize and fine-tune operations. These assets were not far-flung: they were in the same country, the same state, and in close proximity – mature operations run by the two largest gold mining companies in the world when the JV was formed in 2019.

Integration challenges are amplified when operations differ in geology, mining and processing methods. These challenges can become more complex when operations are spread across countries or continents that vary in language, levels of government and community involvement, mining codes, regulatory environments, labor laws and operating and safety cultures. Layer onto that the complexity of proper due diligence and the risks compound quickly. Is the deposit’s size and quality truly what the seller claims? Was the feasibility study underpinning the valuation conducted with sufficient technical and economic rigor? Have years of underinvestment or mismanagement compromised operations, infrastructure or community relationships? The list goes on.

Buying a mining asset is nothing like acquiring a factory that simply produces more of what a company already makes, it brings far greater challenges. That’s why companies must carefully evaluate each transaction and weigh these well-known risks against the synergies and improvements they expect to achieve. Reviewing the most common sources of merger and acquisition synergies highlights just how complex it can be to estimate potential value gains.

Types of Synergies and Why They’re Hard to Capture

Operational Synergies

• Economies of scale: Spreading fixed costs, improving bargaining power with suppliers and reducing per-unit operating costs.
• Economies of scope: Sharing infrastructure, technical expertise and equipment.
• Elimination of duplication: Consolidating overlapping functions (HR, finance, IT), reducing overhead and excess capacity in plants or logistics.

Financial Synergies

• Lower cost of capital: Larger, more diversified balance sheets often secure cheaper debt and better financing terms.
• Tax advantages: Using loss carryforwards, asset revaluations and structural tax efficiencies.
• Optimized capital allocation: Surplus cash from one business can be redeployed into other higher-return opportunities.

Strategic Synergies

• Increased market power: Greater market cap, liquidity, broader investor base and the ability to compete in larger transactions.
• Diversification benefits: Revenues generated from multiple mines, allowing more flexibility in meeting companywide targets.
• Enhanced innovation: Combined R&D teams, shared IP and unified technology platforms drive productivity improvements and exploration success.
• Talent lift: Stronger portfolio and improved ability to attract, retain and develop talent.

While these examples may sound compelling, and often appear straightforward on paper, many transactions ultimately fall short of delivering their promised synergies. Common pitfalls include overestimated cost savings or productivity gains, unrealistic integration or development timelines, cultural misalignment, loss of key personnel, complex systems and process integration challenges, and regulatory, labor or community obstacles.

When Breaking Up Creates More Value

Breaking up a company, through a spin-off, split, or divestiture, is often the mirror image of a merger. The premise is that the costs of complexity outweigh the benefits of keeping assets together. A simplified structure can deliver several advantages:

• Sharper management focus on a core portfolio of assets, unlocking new optimization opportunities.
• Better alignment of leadership skills with the specific needs of each business.
• Greater transparency and clarity in setting performance targets, along with stronger ownership and accountability for achieving them.
• More efficient allocation of capital and technical expertise directed where it creates the most value.
• Improved valuation transparency, as investors can more easily assess the business model and risk profile of a streamlined entity.
• Potential market re-rating, with higher-quality assets no longer weighed down by weaker, riskier or underperforming segments.
• A broader investor base, as the newly independent company may meet the criteria of a larger pool of investors.
• Enhanced growth prospects, as a more focused company can pursue a concentrated set of opportunities with greater impact on overall performance.

Most companies promise substantial synergies and value creation when announcing transactions, yet only a few track or disclose the actual gains in the years that follow. This lack of transparency makes it difficult for the market to assess the true economic impact of a merger or breakup, and understandably fuels skepticism.

Our Perspective

We evaluate each transaction closely, assessing both the potential synergies and the likelihood of realizing them. Do the expected benefits truly outweigh the risks? Are we being adequately compensated for any additional risk, or are we leaving value on the table? We then monitor the financial, operational and stock-price performance of the pro forma entities to gauge how successful these transactions ultimately are.

Our analysis suggests that consolidation may play an important role in addressing structural challenges within the gold mining sector. The industry remains highly fragmented, yet only a limited number of groups worldwide have the proven capability to find, develop, build and operate mines at the highest standards. In such a complex business, the scarcity of top-tier management is a real structural risk; poor leadership destroys value at every stage of the mining cycle.

For equity investors, effective management of assets can potentially enhance the visibility and quality of companies within the investable universe. This might be most effectively achieved in the small-cap and mid-tier space, where opportunities to capture synergies, particularly among geographically proximate operations, can be most compelling.

We also see natural limits to scalability in this industry. Even exceptional teams can lose focus as organizations grow too large and talent becomes stretched, ultimately eroding performance. In mining, bigger isn’t always better, but stronger certainly is. The sector faces a wide and constantly shifting range of risks, and long-term value creation largely depends on management’s ability to eliminate, reduce or manage those risks from discovery through production.

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