Hungry overseas miners now see Aussie gold producers as cheap prey

It was always going to be good week for the fifteen or so ASX-listed gold developers with gold resources of more than 1Moz thanks to OceanaGold’s (TSX:OGC) agreed 44% premium (20-day) scrip and cash bid for Ausgold (ASX:AUC).

The $776M bid by the former Aussie-based OGC for Ausgold with its 2.44Moz Katanning gold project, a three-hour drive from Perth in WA’s southwest Yilgarn, naturally enough served to focus investor attention on the other gold developers.

Who would be next to receive a bid from a cashed-up producer? Are valuations of the gold developers too low when applying the metrics in the Ausgold bid to the current valuations of the other developers?

The OGC bid landed on Monday and there was a noticeable impact on the share prices of the other ASX-developers in the following days. It was welcome stuff given the sector has been drifting lower since March on weaker gold prices.

But the real push higher for the developers, along with the gold producers and explorers, came on Wednesday night when the gold price took off in response to intervention by the US Treasury to tame long-dated bond yields.

Treasury said it was “increasing, by at least double, the size of liquidity support buyback operations” for securities dated from the 10-year to the 30-year sector. A subsequent rally in bonds drove yields down, taking the US dollar down, and triggering a 4% rise in the gold price in the process.

Gold traded as high as U$S4,525/oz and in late Asian trade yesterday was holding at $US4,490/oz. It was only a couple of weeks ago that the gold industry was fretting about the prospect of the price falling below US$4,000/oz.

The combination of the rise in the gold price and the see-through valuation impact of OGC’s bid for Ausgold was a powerful tonic for the gold developers in Thursday’s market, with share price gains of 5-10% common.

Like the ASX-listed gold producers, OGC is enjoying bumper profits from its gold and copper operations in the US, New Zealand and the Philippines.

Once based in Melbourne, OGC’s return to the ASX market for growth amounts to a warning to ASX gold producers with swollen cash positions that the field of competition for advanced Australian gold projects now extends to overseas players.

Will the Aussies get caught napping while overseas players move in to the market to secure a bunch of 100,000 ounce-a-year plus projects in a tier one jurisdiction at the threshold of becoming producers?

Yes and no is the likely answer. Synergies remains a major consideration for local producers, most notably where an existing mill with expansion potential offers a cheaper development route for a gold project.

But as the OGC move demonstrates, with the gold price remaining at historically high levels, the rationale for a bid is not restricted to synergy benefits. Just thumping margins will do wherever they are.

BHP & Copper:

While OGC was helping out sentiment among the ASX gold developers, BHP was doing its bit for sentiment in the ASX-listed junior copper sector during the week.

The rise in the copper price to record territory made the metal BHP’s biggest earner in FY2026 at 54% of the total.

And as previously flagged, BHP intends spending up big - more than US$40 billion - to increase its attributable production of the red metal from 1.4mtpa to 2mtpa by the mid-2030’s from mines in South Australia and South America.

Underpinning the investment is BHP’s call that global copper demand will grow to more than 50mtpa by 2050, with non-traditional demand from energy transition and digitalisation to grow at a 6.5% CAGR from 2020 to 2035.

In a commodity outlook commentary accompanying its FY2026 profit report, BHP said copper mine supply is struggling to keep pace with expectations of robust demand as many existing mines face ore grade decline and reserve depletion.

It noted that the commodity forecaster CRU estimates that more than 2.5 million tonnes of uncommitted mine supply (i.e. not yet approved for development) is required by 2030 to keep the market in balance.

“This gap could widen up to 10 million tonnes in the coming decade,” BHP said.

AI is the big new driver in demand.

“Copper is essential to produce chips, and to build data centres and the electricity infrastructure to run them,” BHP said.

“We estimate that every additional US$200 billion of annual data centre investment requires the equivalent of a new 150kpta copper mine to supply the metal for computer hardware and power needs,” BHP said.

The biggest US hyperscalers are due to spend US$700–US$800 billion in CY2026 alone.

“On a peak annual spend basis, it is larger than broadband and telecom investment at the height of the dot-com capex cycle, and larger than the landmark Apollo and Interstate Highway System public investment programs,” BHP said. “Indeed, it is larger than all three combined.”

The huge supply challenge is reflected in copper’s advance to record price territory. And it is also reflected in the growing number of ASX-listed copper explorers/developers that have been taken over by producers looking to expand their development pipeline.

Hammer and Carnaby are two that have become the subject of takeovers in recent weeks. And before those two there was Xanadu, Rex Minerals, New World Copper and Cygnus.

All of those names have popped off at big premiums to the market too. So just as OGC’s move on Ausgold has demonstrated, valuations of the remaining copper juniors on the ASX are likely underdone in a big way.

BHP also made a contribution of sorts on that point during the investor call during its profit report, with CEO Brandon Craig saying it was cheaper for the company to build rather acquire growth in copper.

“It’s very hard to see value at the moment,” he said of M & A in copper.

He said the cost to build BHP’s organic growth options was anywhere from US$16,000 to US$30,000 a tonne.

That compares with pure copper companies which are being valued at US$85,000 a tonne, and well over US$100,000 a tonne with a takeover premium.

“So, if you have a look at that, organic is just so attractive that it can deliver really outsized returns for the business,” Craig said.

It suggests that the stepped up M & A activity in the junior copper space of advanced copper explorers and developers is set to continue as it has become too expensive for those looking to grow in copper by buying existing production.