Gold M&A: B2Gold to Acquire Sabina Gold & Silver in $824 Million Deal

B2Gold Corp. will acquire Sabina Gold & Silver Corp. after settling on a C$1.1 billion ($823.66 million) deal that will allow the company to control its first Canadian mining asset. Analysts suspect that this transaction will likely improve the corporation’s portfolio. Immediately after the announcement, B2Gold’s shares dipped by 3.45% to $2.59 per share, while Sabina’s shares increased by a whopping 11.4%.

The takeover did not come as a shock, considering B2Gold’s chief executive officer’s announcement just a week ago. Clive Johnson, the CEO, explained how the company plans to diversify its operations beyond Asia and Africa by purchasing smaller precious metals producers that are currently struggling.

Just eight days ago, Newmont Corp. proposed a $16.9 billion offer to acquire Newcrest Mining Ltd. in Australia, which would be one of the largest gold buyouts in world history. Clearly, this offer sparked the conversation for other corporations considering their expansion strategies.

B2Gold isn’t new to the expanding game, though. Earlier this year, the company acquired Oklo Resources Ltd to expand its reach to Mali, West Africa. The acquisition of Sabina Gold & Silver Corp. will give B2Gold full ownership over the Black River Gold District, including 225 square miles with five mineral claims.

The most promising portion might be the Goose project, with the potential to yield 223,000 ounces of gold per year on average. To put this yield into perspective, B2Gold currently produces around 1 million ounces per year, which means the Goose project could boost production by nearly 25%.

This new access to the Black River Gold District should “grow production significantly,” Johnson explains. “The Back River Gold District has multiple high-potential mineralized zones, which remain open, and we are confident that the district has strong untapped upside with numerous avenues for resource growth.”

While B2Gold’s headquarters are in Vancouver, Canada, the company only operates in Mali, Namibia, Colombia, Finland, Uzbekistan, and the Philippines. Sabina’s headquarters are also in Vancouver, with its mines in Nunavut, Northern Canada, which includes the Black River Gold District.

During a conference call on Monday, Johnson revealed that both firms have been discussing the acquisition for nearly five years. Along with the shining cash offer, B2Gold will provide 0.38 of a share for every Sabina share, representing a 45% premium. Assuming all approvals go through, the deal should close in the second quarter of 2023.

Dealmaking seems to be a hot topic in the gold community as we enter 2023. Corporations sat dormant in the expansion game for a few years, but they began showing more aggressive tactics in recent months to strengthen the dwindling gold reserves while taking advantage of surging gold prices.

Gold prices in 2023 continue to climb as inflation soars and investors seek purchase protection amidst a doomed economy. Gold continues outperforming itself each month, and analysts expect to see exponential success for the rest of the year and potentially longer. Climbing gold prices mean one thing for the big gold manufacturers: it’s time to expand.

Last week’s news of Newmont Corp.’s $16.9 billion offer to acquire Newcrest Mining Ltd. is not the first expansion effort in this recent wave of dealmaking. Last November, Agnico Eagle Mines Ltd., and Pan American Silver Corp. acquired Yamana Gold in Canada with a $4.8 billion deal.

If more companies jump on this expansion trend, gold prices may increase even more. When fewer corporations control the market, the pricing environment becomes less competitive.

What does this news mean for investors? Most analysts predict that gold prices will continue rising throughout 2023 and potentially longer. As global economies continue struggling with extreme inflation rates, gold only gains more popularity, increasing its demand and boosting its prices.

Analysts from the London Bullion Market Association annual survey predict that gold prices will increase by 3.3% in 2023. The primary factors driving these predictions include Federal Reserve actions, inflation, and geopolitical actions. While a singular purchase like the B2Gold acquisition of Sabina may not directly create price volatility, it can contribute to rippling price effects down the line.

Most analysts have a positive outlook on gold’s performance in the upcoming year. Investors should consider gold’s primary investment use case being long-term purchase power protection when making their portfolio decisions. Gold typically yields the strongest results when held for decades.

While gold may experience price dips here and there, it typically moves upward over long periods. As always, investors should consult their financial advisors before making any final portfolio moves.

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