COLUMN-Mining M&A still waiting for the good times to roll – by Clyde Russell (Reuters Africa – April 19, 2016)
LAUNCESTON, Australia, April 19 (Reuters) – Wanted: One mine, just started or close to production, preferably gold, must be in secure country with high-quality ore body and low costs. Also, must be cheap.
The above shopping list was the most common response from investors when quizzed as to what they are looking for in the commodity sphere during last week’s Mining Investment Asia conference in Singapore. The near impossibility of satisfying the requirements probably explains why there aren’t that many mining deals actually being done, despite the low prices for many commodities.
While the big companies often grab the headlines with large acquisitions (think Rio Tinto buying Alcan, BHP merging with Billiton and later spinning most of it off in South 32), the engine room of the mining sector tends to be among the juniors.
It’s in this space that private equity, family offices and mid-tier miners play, looking for cash to develop projects either through deals or taking a punt on raising money through a public listing.
It was evident at the Singapore conference that there’s plenty of money looking for investment opportunities, but it was also equally evident that the bar for any decision is being set too high for the current market.
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