‘Auspicious’ time for M&A, yet difficult to secure capital – mining survey – by Henry Lazenby (MiningWeekly.com – June 6, 2016)


VANCOUVER (miningweekly.com) – There is a clear indication that mergers and acquisitions (M&A) activity among smaller players in the mining sector will increase this year, while the majors will increase divestitures to focus on core commodities.

This will, in turn, benefit some of the midtiers that are able to make acquisitions, a recent survey by international executive search firm Pedersen & Partners has found. Nearly 80% of the 114 executives surveyed by Pedersen & Partners suggested that M&A activity will likely be part of their 2017 strategy.

Pedersen & Partners commented on Monday that, internationally, transactions in 2016 were mostly on the divestment side as companies sought to reduce debt. Looking to this year, it appears that the sector will build slowly and begin to improve more rapidly toward the end of the year.

The research points to an increasing number of companies with market capitalisation (cap) rising above C$50-million for junior players in 2016, after several years of declining market caps and delistings for juniors. This follows several years of seeing large numbers of juniors with market caps under C$15-million.

Pedersen & Partners said the overall outlook appears to be one of cautious optimism, with most respondents predicting that 2017 will be an improvement over 2016, with only 6% expecting further economic contraction and 57% expecting to see growth in the sector.

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