As the price of gold nears $3,500 per ounce, investor interest in gold companies remains high. However, soaring stock market valuations have complicated mergers and acquisitions. In this environment, Endeavour Mining, the largest gold producer in West Africa, has slowed its project acquisitions, opting instead for organic growth while distributing more than $1.4 billion to shareholders since 2021.

In an exclusive interview with Ecofin Agency, Oliver Blagden, a gold analyst at the British firm CRU, explains why this strategy is a sound approach in the current market cycle. He also discusses the exploration environment in West Africa, addresses the growing presence of Chinese companies in countries like Côte d’Ivoire and Ghana, and identifies the key projects to watch in the coming years.

Ecofin Agency (EA): While some West African gold companies are betting on acquisitions for growth, Endeavour has chosen to prioritize organic growth. How do you interpret this strategic difference in the current market environment?

Oliver Blagden (OB): In the region, some companies are clearly focused on acquisitions to fuel their growth. The most recent example is Resolute Mining, which acquired the Doropo project in Côte d’Ivoire this year—a mid-sized gold project with projected production costs well below the average. Globally, however, the trend for mergers and acquisitions has remained fairly limited. One reason for this is that when prices go up, companies become more expensive to acquire. Current owners also expect higher valuations in the future, which makes deals difficult.

Globally, however, the trend for mergers and acquisitions has remained fairly limited. One reason for this is that when prices go up, companies become more expensive to acquire. Current owners also expect higher valuations in the future, which makes deals difficult.

Endeavour isn't the only company putting acquisitions on hold for now. I’m sure they have a number of projects they're looking at internally, but the environment simply isn't conducive. On the other hand, focusing on organic growth is a very sound strategy. Exploration budgets have decreased, and future production has to come from somewhere, primarily from current greenfield projects. If no one invests now, there certainly won't be enough gold projects in 10 to 20 years. So, if a company has good projects that can support its medium-term growth, organic development is a solid approach. As business conditions change, acquisitions may return, but for now, Endeavour’s approach seems quite reasonable.

EA: You mentioned the need to invest in new exploration projects to support long-term gold production growth. How do you see the current gold exploration environment in the sub-region?

OB: You have a lot of junior exploration companies out there looking for as much gold as they can find. It’s the "gold rush" effect. When prices go up, everyone rushes to find gold. But compared to 20 years ago, overall exploration spending is lower, so funding is harder to come by.

The reality is that juniors don't have the same capital as major producers. To turn a small, low-budget exploration into a producing mine, the project will almost always have to be acquired by a larger company with more production experience.

To turn a small, low-budget exploration into a producing mine, the project will almost always have to be acquired by a larger company with more production experience.

West Africa has a lot of potential, with many opportunities and relatively underexplored deposits compared to places like Canada or Australia. A good example is Resolute’s acquisition of the Doropo and ABC projects from AngloGold Ashanti in Côte d’Ivoire. These projects showed good drilling results, and after Resolute’s difficulties in Mali, it was a much-needed win for their portfolio. Investors seemed to agree, as the company’s share price has almost doubled since the end of last year. The sub-region should continue to attract both large and small players, and with its geological potential, it will inevitably draw more foreign investment and exploration to secure future production flows.

EA: Chinese companies are increasingly present in West African gold. What could be the consequences of this growing influence for the sector?

OB: Zijin Mining's acquisition of the Akyem mine for $1 billion last year is a testament to the wave of Chinese investment in the sub-regional gold sector. The project's reserves are currently projected to last until 2027, but this transaction could stimulate new exploration and drilling to extend the mine's life. More broadly, Chinese investment brings liquidity to the region through taxes, royalties, and jobs. And Chinese mining companies tend to be more aggressive than their Western counterparts, with faster construction timelines. They can sometimes build in a year what might take Western companies two years to complete.

Many Chinese companies use Chinese subcontractors for construction, which means fewer local jobs and a more limited impact on local economies.

But there are trade-offs. Many Chinese companies use Chinese subcontractors for construction, which means fewer local jobs and a more limited impact on local economies. While this isn’t the case for every project, it is a pattern we've observed regularly. At the same time, competition is expected to intensify. Western and Chinese companies are vying for the same limited number of exploration projects after years of underinvestment. We could see a race for licenses and acquisitions, leading to increased head-to-head competition in the region.

EA: Looking ahead, what are the main factors that could influence gold investment in West Africa, and what projects should we be watching in the coming years?

OB: The gold price forecasts from major banks and firms like CRU remain reasonably bullish, and that's a key driver. However, one potential downside risk could be renationalization. Mali, for example, has taken a tough stance with foreign mining companies, including Resolute and Barrick, which creates significant risk for investors in the form of asset or stake seizures. Investors don't want to lose money that way, and it can push them toward other destinations. The climate of distrust created by these risks is a real challenge for the investment community, and breaking that perception is essential for success.

The climate of distrust [...] is a real challenge for the investment community, and breaking that perception is essential for success.

More broadly, investment locations depend on government stability and a strong history in the mining sector. Jurisdictions like Ghana and Côte d’Ivoire are good examples: they are more stable and mining-friendly, which reassures investors. Over the next two to three years, I anticipate growth. Some projects take longer to materialize, but the timelines are clear. Resolute, for instance, now plans to have the Doropo project in Côte d’Ivoire in production by 2028. In Ghana, the Ahafo North project will boost production from Newmont’s operations by the end of the year. If gold prices remain high, more exploration projects will advance, and companies will be ready to invest. High prices always create momentum: when gold is valuable, everyone wants to take part.

Interview in French by Emiliano Tossou,

Adapted in English by Mouka Mezonlin