Diggers attendees positive on M&A
KALGOORLIE (miningweekly.com) – A survey of delegates at the Diggers and Dealers conference has revealed that Australian miners were expecting to see a pick-up in merger and acquisition (M&A) activity in the next 12 months, driven by the current difficulty in accessing capital and discounted asset valuations.
The survey, conducted by MindsOnMines, found that 48% of respondents expected M&A activity and asset acquisitions and divestments to increase significantly over the next year.
A further 39% said they expected deal-making to increase somewhat from current levels.
The majority of respondents said they anticipated a wave of mergers and takeovers at the junior end of the sector would be the most common form of transactions in the next 12 months, as characterised by the recent merger of Minotaur Exploration and Breakaway Resources.
While 42% of respondents were tipping junior company mergers to lead the way, 32% of those surveyed said they expected asset divestments by the majors to be the most common form of M&A to occur in the sector.
A total of 61% of people surveyed said difficulties in accessing capital would be the central driver of upcoming transactions in the mining industry and 23% said discounted asset valuations would be the factor leading people to make acquisitions.
MinesOnline MD Liam Twigger, who is also the MD of parent company PCF Capital Group, said the results reflected the conditions prevailing in the mining industry.
“We are now at a stage in the cycle when the majors are looking to rationalise their portfolios and sell underperforming assets at a time when price expectations are at long-term lows.
“This presents excellent buying opportunities for juniors who can secure growth assets using scrip, royalties and deferred payments to limit upfront cash, whilst also resetting cost structures and delivering the much needed profit margin that eluded the seller,” Twigger said.
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