In survey of delegates at the Diggers & Dealers Mining Forum conducted by MinesOnline, 48% of respondents expect 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 Diggers & Dealers Mining Forum took place in Kalgoorlie, Australia from the 5 to 7 August and is an annual mining conference. This year it was attended by 2 400 delegates made up of bankers, brokers, investors, financiers, mining service companies, and mining and exploration companies. Liam Twigger, MD MinesOnline and its parent company PCF Capital Group, said the results reflect the conditions being felt in the mining industry. “We are now at a stage in the cycle when the majors are looking to rationalise their portfolios and sell under performing assets at a time when price expectations are at long terms 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 re-setting cost structures and delivering the much needed profit margin that eluded the seller,” Twigger said.
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. Australia’s mining industry expects to see a significant pick up in merger and acquisition activity in the next 12 months, driven by the difficulty in currently accessing capital and discounted asset valuations. MinesOnline is an online subscription based service which allows users to search listed projects for new opportunities and provides companies with the opportunity to market their projects to a wide range of potential acquirers. Perth-based investment banking and corporate advisory firm PCF Capital Group owns 50% equity in MinesOnline.