Is Gold Price Trending Upward?… Australian Gold Miner Northern Star Acquires Competitor for 4 Trillion Won

Boom in Mergers and Alliances Among Gold Mining Companies

As the price of gold, a safe-haven asset, reached an all-time high this year, global gold mining companies have actively acquired competitors to secure additional production capacity. Analysts believe the gold mining industry is betting on the long-term upward trend of gold prices.

On the 1st (local time), The Wall Street Journal (WSJ) reported that Northern Star Resources, Australia's largest gold mining company, decided to acquire its peer De Grey Mining for 5 billion Australian dollars (approximately 4.5 trillion KRW). De Grey Mining owns the largest undeveloped gold mine, and Northern Star Resources will secure an 80% stake in De Grey Mining. Following this news, De Grey Mining's stock price surged more than 27% compared to the previous trading day on the Australian stock exchange.

Northern Star Resources had set a goal in 2021 to produce 2 million troy ounces of gold annually by the 2026 fiscal year, about 25% more than the current level. Tonkin Stewart, CEO of Northern Star Resources, predicted, "By acquiring De Grey Mining, we expect to increase gold production to approximately 2.5 million troy ounces annually by the 2029 fiscal year."

Recently, major gold mining companies have been actively engaging in mergers and acquisitions within the industry to secure more production capacity amid soaring gold prices. Gold Fields announced in August that it would acquire Osisko Mining for about 1.6 billion dollars, and AngloGold Ashanti announced in September that it would acquire Centamin for about 2.5 billion dollars. The gold price, which has risen more than 30% this year, surpassed $2,800 per ounce at the end of October. The rise in gold prices is attributed to interest rate cuts by major countries worldwide and escalating geopolitical tensions.

Although the upward trend in gold prices slowed recently due to the re-election of Donald Trump as U.S. president, the mining industry is believed to be betting on the long-term rise in gold prices. Investment bank Goldman Sachs forecasted last month that gold prices would surpass $3,000 per ounce by the end of next year due to gold purchases by central banks of major countries worldwide.