Global major gold mining companies are currently entering a phase of extreme cash abundance. With debt largely eliminated and a round of dividends and share buybacks already executed, market observers note that the next core move for these mining giants will pivot toward acquiring new projects. Behind this trend are record-breaking profits driven by sustained high gold prices. Looking at recent market performance, gold prices hit a historical high of $5,597 per ounce in January this year. Although they recently pulled back slightly from an intraday high of $4,443.90 to $4,390.60 per ounce, the overall trend remains robust. Propelled by high gold prices, the entire gold industry chain is stepping into a new phase, with large-scale miners acquiring major projects expected to become the core theme of the next market rally.

Record profit margins have provided a solid foundation for corporate expansion. Data shows that in the first quarter of this year, the average all-in sustaining cost margin for gold reached a record high of $3,076 per ounce, surging 134% year-on-year. Meanwhile, net debt for major producers is nearly zero, leaving them with ample distributable cash. As the room for dividends and buybacks gradually peaks, rebuilding project pipelines has become an inevitable choice. Since the valuations of producers and developers have already reflected this reality, exploration companies currently at relatively low valuations present greater upside potential. The demand from major miners for external projects, coupled with the lagging valuation increases of exploration companies, creates a mismatch. This shift in market structure provides a broad stage for future M&A activities.

Although the mining industry faces continuous upward pressure on production costs, industry insiders do not view this entirely as a negative signal. The first-quarter all-in sustaining cost reached $1,785 per ounce, marking the 28th consecutive quarter of year-on-year increases. This rise in costs often indicates that mining companies are processing more low-grade ore to maximize gold output, rather than merely to polish quarterly figures. In addition to mining costs, taxes and royalties, such as government royalties, are also increasing, with a year-on-year surge of 85%, doubling their share of total costs to 12% since 2021. Furthermore, the escalation in energy and commodity costs is equally significant; recently, the average price of diesel in some regions hit a record high of $5.85 per gallon, and copper prices on the London Metal Exchange once climbed to $14,617 per ton, continuously refreshing historical highs. However, because the increase in gold prices has significantly offset the rise in energy and operating costs, the overall profit margins of mining enterprises continue to expand.

In the face of extremely high gold prices, many traditional challenges faced by mining companies are being mitigated. Issues such as low ore grades, poor metallurgical conditions, high strip ratios, and a lack of infrastructure can all be compensated for to a certain extent by high gold prices. However, project permitting remains a core obstacle that cannot be solved solely by price. At the same time, the risk of equity dilution for the companies themselves cannot be ignored; some junior miners have over-issued shares prior to sale, which may harm the interests of original shareholders. As the market environment improves, the financing window has reopened, allowing many companies that previously struggled to secure funding to regain access to capital. Exploration companies are actively drilling to deliver tangible results in order to seize current funding opportunities. Against the backdrop of abundant capital, the industry's traditional operating model is changing, and exploration companies are now beginning to possess the capability to directly acquire professional expertise and advance projects to the production stage.