Large gold producers combining forces — like Newmont Mining buying Goldcorp and Barrick Gold scooping up Randgold Resources — are “on the right track,” Tony Makuch, who runs competitor Kirkland Lake Gold, told CNBC on Thursday.
In a “Mad Money” interview, Makuch reminded CNBC’s Jim Cramer of how his own company was formed: via a three-way merger in 2016 that combined what was then known as Kirkland Lake Gold with competitors Newmarket Gold and St. Andrew Goldfields.
“We were able to put ourselves in a position where we could now invest differently and look at our mines differently. We were able to close some mines that were non-profitable and take a step back and reinvest in them. We had the capital resources available to us. We had more money,” the CEO explained. “I think that goes for the larger players as well.”
Makuch, who is president and CEO of Kirkland Lake, added that with gold itself performing strongly, lower growth companies can, perhaps, unlock some of the “valuable growth” that smaller players like Kirkland have been enjoying.
“There’s lots of things that can happen. You can change your approach in terms of how you can move the business forward by doing these mergers, and I think they’re on the right track,” he told Cramer.
“I can’t say that there’s anything wrong with it because you look at the example at Kirkland Lake Gold and the success we’ve had, and you have to see that these people and these groups can be successful too,” Makuch said.
Kirkland Lake’s stock gained 1.5 percent on Thursday, settling at $27.04 a share. Gold prices slipped slightly amid dollar strength.
But Kirkland Lake shareholders don’t have to worry about gold prices, Makuch said.
“This is a pretty exciting company and it’s also a very valuable investment,” he said. “And you don’t even have to watch what the price of gold’s doing, you just have to watch what the company’s doing.”