Private Equity Groups Exercising Patience With Mining Industry – EY Mining Leader – by Alex Létourneau (Kitco News – March 21, 2014)

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(Kitco News) – While there’s been quite a bit of talk regarding private capital finding its way into the mining sector, there hasn’t been the kind of movement expected yet.

Media reports over the last few months peg a total of $8 billion to $10 billion in private capital available and ready to be pumped into the industry, but these private equity groups are exercising patience before jumping in to any deals, according to Bruce Sprague, Ernst & Young’s Canadian mining and metals leader.

“We’re seeing more and more of these private capital groups, astute mining entrepreneurs and leaders that are amassing really substantial pools of capital that are out there and looking for deals,” Sprague told Kitco News over a telephone interview. “I’d stress the word, and its patient capital.

“They’re not really in a hurry to do a deal. They’re going to be methodical, they know the sector quite well — tried and true industry veterans with the benefit of good teams that can really do their requisite financial and technical due diligence,” he said. “If they find the right opportunity, they certainly have more than adequate access to capital.”

Paul Burton, managing director at Piran Mining Research, sees the same.

“There does seem to be private money coming in or prepared to come in from new funds set up by industry veterans,” he said.

Among those veterans are Mick Davis, former Xstrata chief executive officer; Aaron Regent, former Barrick Gold Corp. chief executive officer; Michael Scherb and Lloyd Pengilly, both formerly from JP Morgan; and Verne Grinstead, managing partner of Appian Natural Resources Fund.

Sprague said that Ernst & Young has been hearing mining transaction talk regarding the industry, but stressed that these private equity groups won’t simply make a deal for the sake of making a deal.

For the rest of this article, click here: http://www.kitco.com/news/2014-03-21/Private-Equity-Groups-Exercising-Patience-With-Mining-Industry-EY-Mining-Leader.html

 

 

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