M&As and Investments Decreased in the Mining Industry in Q2 2012

Friday 27 July 2012, Amsterdam

The new Mining Quarterly Deal Analysis: M&A and Investment Trends - Q2 2012 report is a reliable source of essential data and analysis of mergers and acquisitions (M&As) and financing in the mining industry. The report provides detailed information on M&As, equity/debt offerings, private equity (PE), venture financing and partnership transactions registered in the mining industry in Q2 2012. The report offers detailed comparative data on the number of deals and deal values in the last five quarters segregated into deal types, segments, and geographies. Besides, the report furnishes information on the top PE, venture capital (VC), and advisory firms in the mining industry.

The data presented in this report comes from proprietary in-house Mining eTrack deals database, and through primary and secondary research.

M&A Activity Decreased In The Mining Market In Q2 2012

M&As, which include change in ownership and control of companies (the report does not consider this value as a new investment in the market), in the mining industry recorded a decrease in Q2 2012. The number of merger and acquisition (M&A) deals in the mining industry registered a decrease of 9% in Q2 2012 with 152 deals, as compared to 167 deals in Q1 2012. However, the deal value registered an increase from $16.6 bn in Q1 2012 to $18.4 bn in Q2 2012, indicating an increase of 11%. Barrick Canada’s acquisition of Equinox Minerals for $7.48 bn and China Shenhua Energy’s agreement to acquire a stake in China Shenhua Coal Liquefaction and Shaanxi Shenyan Coal for $7.1 bn were some of the high-value transactions that led to a substantial increase in the deal value.

North America reported a decrease in the number of M&A deals and deal values with 46 deals worth $2.3 bn in Q2 2012, as compared to 59 deals worth $4.8 bn in Q1 2012. Asia-Pacific reported an increase in M&A deal activity in Q2 2012 with 59 deals worth $13.7 bn, as compared to 56 deals worth $8.4 bn in Q1 2012. Europe, Middle East and Africa, South and Central America registered a decrease in the number of deals in Q2 2012 with 48 deals, as compared to 53 deals in Q1 2012 however, the deal value registered an increase from $3.4 bn in Q1 2012 to $6.7 bn in Q2 2012.

Of the 152 deals, 70 deals were recorded in the gold mining market, indicating 46% of the total deals, followed by 37 deals in the copper mining market, constituting 24% of the total deals. According to Senior Analyst Kumar Nishant, “Future uncertainty in the gold prices may lead to consolidation in the gold mining industry with some small gold mining companies to merge with their bigger counterparts.”

New Investments Increased Mining Industry In Q2 2012

New investments in mining companies, including financing through equity offerings, debt offerings, private equity and venture financing, registered a substantial decrease of 57% in deal value with $17.8 bn in Q2 2012, as compared to $41.6 bn in Q1 2012 and a decrease of 18% in number of deals from 687 in Q1 2012 to 566 in Q2 2012.

The majority of investments came from the debt market with $12.5 bn in Q2 2012, which accounted for 70% of new investments in the mining industry. Global debt offerings, including public and private debt placements, registered a decrease of 33% in the number of deals and 65% in deal value with 53 deals worth $12.5 bn in Q2 2012, as compared to 79 deals worth $35.4 bn in Q1 2012.

Global equity offerings, including initial public offerings (IPOs), secondary offerings, and private investment in public equities (PIPEs), registered a decrease of 15% in the number of deals and 13% in deal value with 509 deals worth $5.3 bn in Q2 2012, as compared to 599 deals worth $6.1 bn in Q1 2012. North American had a majority share of equity offering deals with 315 deals worth $3.2 bn in Q2 2012, followed by Asia-Pacific with 169 deals worth $1.8 bn.

Asset Transactions Declined In The Mining Industry In Q2 2012

Asset acquisition in the mining industry registered a decrease in the number of deals and an increase in deal value with 267 deals worth $2.7 bn in Q2 2012, as compared to 330 deals worth $2 bn in Q1 2012. Some of the high-value asset acquisitions in Q2 2012 were Isaac Plains Coal Mine in Australia, El Cubo and Guadalupe y Calvo Projects in Mexico.

North America registered a decrease in the number of deals and deal value with 144 deals worth $680.6m in Q2 2012, as compared to 195 deals worth $1.1 bn Q1 2012. Asia-Pacific reported an increase in deal activity with 62 deals worth $858.9m in Q2 2012, as compared to 52 deals worth $313.9m in Q1 2012. Europe, South and Central America and Middle East and Africa recorded 62 deals worth $1.1 bn.

Gold mines topped the asset purchase activity with 178 deals worth $1.1 bn in Q2 2012, constituting 67% of the total deals. The mining industry reported a decrease in the number of copper asset acquisition deals and deal value with 98 deals worth $504.5m in Q2 2012, as compared to 109 deals worth $539.8m in Q1 2012.

Canada topped the number of asset acquisitions by location, accounting for 36% of the total assets sold in the last four quarters, followed by Australia (19%) and United States (14%). Gold Fields’s agreement to acquire 60% interest in Larder Lake gold project from Bear Lake Gold, Cameco’s agreement to acquire 70% interest in Halliday and Stewardson projects from Uravan Minerals were some of the top asset acquisitions recorded in Canada and Timeone Holdings’s acquisition of 50% interest in Cockatoo Island project from Pluton Resources, Mitsui Matsushima International’s acquisition of 20% interest in Doyles Creek project from NuCoal Resources were some of the top deals registered in Australia.

Capital Raising Through Debt Offerings Increased In Q1 2012

The raising of capital, through debt offerings, registered a decrease in deal activity in Q2 2012 with 53 deals worth $12.5 bn, as compared to 79 deals worth $35.4 bn in Q1 2012. The substantial decrease in the deal value could be due to greater number of more than $1 bn value deals in Q1 2012. Freeport-McMoRan Copper & Gold’s offering of notes for $2 bn, Newmont Mining’s offering of notes for $1.5 bn were some of the high value deals registered in Q1 2012.

Public offerings in the debt market registered a decrease in the number of deals and deal values in Q2 2012 with 21 deals worth $8.9 billion, as compared to 45 deals worth $30 bn in Q1 2012. BHP Billiton’s offering of 2.125% bonds for $1.6 bn and 3% bonds for $958m, Anglo American’s offering of bonds for $942.6m were some of the high value deals recorded in Q2 2012 in this category.

Private placements registered a decrease in the number of deals and deal values with 32 deals worth $3.6 bn in Q2 2012, as compared to 34 deals worth $5.4 bn in Q1 2012. Inmet Mining’s offering of notes for $1.5 billion and Hindalco’s offering of non-convertible debentures for $$560.8m were some of the high value deals recorded in Q2 2012 in this category.

Deals Decreased In North America And Asia-Pacific In Q2 2012

North America registered a decrease in deal activity with 550 deals worth $11.6 bn in Q2 2012, as compared to 665 deals worth $20.3 bn in Q1 2012.

M&As in the North American mining market registered a decrease in the number of deals and deal value from 59 deals worth $4.8 bn in Q1 2012 to 46 deals worth $2.3 bn in Q2 2012, indicating a decrease of 21% in the number of deals and a decrease of 52% in the deal value. Asset acquisitions in North America registered a decrease in the number of deals and deal value with 144 deals worth $680.6m in Q2 2012, as compared to 195 deals worth $1.1 bn Q1 2012

Asia-Pacific registered a decrease in the number of deals and a marginal increase in deal value with 334 deals worth $22.7 bn in Q2 2012, as compared to 346 deals worth $22.6 bn in Q1 2012.

Asset purchases in Asia-Pacific recorded an increase in deal activity with 62 deals worth $858.9m in Q2 2012, as compared to 52 deals worth $313.9m in Q1 2012. M&As in Asia-Pacific registered an increase in the number of deals and deal value with 59 deals worth $13.7 bn in Q2 2012, as compared to 56 deals worth $8.4 bn in Q1 2012. The increase in deal value could be due to China Shenhua Energy’s agreement to acquire a stake in China Shenhua Coal Liquefaction and Shaanxi Shenyan Coal for $7.1 bn and Celframe Arx Resources’s agreement to acquire Grimsby Investments for $4.3 bn.