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.