Big drop off in Q1 Canadian mining deals

Original article by Matthew Hill published in Mining Weekly on 9 May 2012.

The value of Canadian mining mergers and acquisitions plunged 50% in the first quarter compared to the prior three months, with only one deal topping $1-billion.

Gold accounted for 60% of deal volume and value for the period. During the three months ended March, KPMG counted 25 deals worth more than $10-million in the Canadian mining sector, which was comparable to the December quarter’s deal volume.

The biggest deal was Pan American Silver buying Vancouver’s Minefinders for $1.5-billion, which saw gold re-establishing its place as the key driver behind Canadian mining deals. In a distant second place was Xstrata’s $500-million buyout of Talisman Energy’s British Columbia coal properties.

Stock market volatility

Copper deals, meanwhile, decreased to a total value of $600-million during the March quarter.

While deal making quietened down in Canada during the period, it was up globally by 130% to $90-billion, compared with the December quarter, mainly on the back of the proposed marriage of Glencore and Xstrata.

Stripping out that $53-billion mega-merger, the figure drops to $37-billion, a “typical” value for quarterly deals in 2011.

Stock market volatility continues to make valuations tough, though it also means raising equity finance is also difficult, making exploration companies easy targets.

Original article by Matthew Hill published in Mining Weekly on 9 May 2012.

David Okwara

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