Conditions are ripe for more hostile takeovers in mining as buyers capitalise on share prices that plunged last year, while targets hold out for more amid a glimmer of recovery.

“For a lot of people, when their prices are low, they don’t want to do a deal,” says Derek White, CEO of the international unit of KGHM Polska Miedz, a Polish copper and silver producer. “For that reason, you are going to see more hostility because people see value and they want to try and capture that.”

There have already been four unsolicited or hostile bids for mining companies announced this year, with a total value of $4.54-billion, compared with $594.4-million for the whole of 2013, according to data compiled by Bloomberg. Goldcorp’s C$2.94-billion ($2.65-billion) offer for Osisko Mining, announced on January 13, was the largest unfriendly bid for a mining company since First Quantum Minerals bought Inmet Mining for $4.7-billion in November 2012.

Mining companies, especially smaller explorers and developers that do not generate revenue, declined last year and struggled to sell shares to fund operations after commodity prices had fallen. While valuations have started improving since the start of 2014 as gold rose 11% and equity offerings increased, the Bloomberg World Mining Index of 102 companies was still down 32% in the last two years.

KGHM, based in Lubin, Poland, is focused on investing in exploration and development companies and their projects, rather than acquisitions for now, says White.

Boards and management at these companies do not want to sell at current prices, says David Garofalo, CEO of HudBay Minerals, which made an unsolicited bid last month for Vancouver-based Augusta Resources.

“They still have share prices in their head that are much higher than where they are on an absolute basis right now,” says Garofalo, who also sees the possibility of more hostile bids. “It’s possible that, in frustration, some of the more senior companies, more established producers, might go over the heads of the board and management in order to bring it directly to shareholders.”

Augusta’s situation is more a coincidence than the start of a new trend in the industry, Augusta CEO Gil Clausen says. HudBay has limited capability to pay fair value, and Augusta sees “no chance of the bid succeeding in its current form”, he adds.

Hostile bids are tricky in the mining industry, says Coeur Mining CEO Mitchell Krebs.

“One of the disadvantages of going into a hostile situation is that you don’t really get a chance to do any diligence,” he says. “In this industry, it’s got to be a pretty unique situation for you to feel that comfortable about something to the point where you don’t need to do any diligence.”

Goldcorp, which is seeking control of Osisko’s Canadian Malartic, mine in Quebec, says it agreed to settle a lawsuit filed by the smaller company seeking to stop the bid. Osisko, which has rejected the offer as too low, will allow Goldcorp full access for due diligence by April 1, Vancouver-based Goldcorp says. In return, Goldcorp agreed not to take up and pay for shares tendered in the bid before April 15, unless Osisko announces a transaction with another party.

The deal gives Osisko more time to consider alternatives to the Goldcorp bid, CEO Sean Roosen said yesterday in a statement.

Dealmaking activity in the mining sector slowed last year, dipping below $100-billion in total value for the first time since 2005 and with the fewest number of deals since 2006.

In addition to the Goldcorp-Osisko and HudBay-Augusta bids, Minerals Technologies has made an unsolicited bid for Amcol International, a producer of bentonite clay whose products are used in metal casting, construction and drilling, topping an agreed offer from Imerys. Waterton Global Resource Management also has made an unfriendly bid for Chaparral Gold.

Hostile bids that are successful can help boost mergers and acquisitions in the sector more broadly, says Isser Elishis, managing partner and chief investment officer at Waterton, a Toronto-based private-equity firm that invests in precious metals assets and companies. Waterton has offered C$57.1-million for Chaparral, an exploration company with assets in Nevada. Chaparral rejected the bid as too low.

“Eventually, every market gets locked when buyers and sellers can’t agree," Elishis says. “Usually, in my opinion, what kicks it over is you get a couple of hostile bids that go through, the market revalues itself, not only on price but on rationalisation of the transaction, and then the market starts to function normally.”