By Rachel Dally-Watkins
20 April, 2015
DESPITE an almost double year-on-year increase from 2013, gold and base metal asset acquisitions in 2014 were the third lowest in a decade.
According to the SNL Metals & Mining report Base Metals and Gold Acquisitions Activity, 2005-2014 there was a “welcome improvement” in mining asset transactions, but noted that the caution shown by mining companies in 2014 was surpassed only by results from 2013 and 2009.
“Since 2012 [mining companies] have bought fewer assets that require large capital investment,” SNL stated.
“Instead, companies have opted to maximise the value of assets they already own, and to enter joint ventures that reduce costs while at least maintaining production.”
According to the report, there were 73 acquisitions in 2014 that were individually valued at more than US$10 million, totalling US$21.56 billion, compared with US$11.88 billion in 2013.
“Last year’s jump in total takeover value came entirely from the acquisition of base metals assets (copper, nickel and zinc), which rose from 24 deals priced at only US$3.11 billion in 2013 to 29 deals priced at US$13.08 billion in 2014,” SNL stated.
“The total amount paid for gold acquisitions was essentially the same year-on-year at US$8.48 billion, in 44 deals compared with 61 deals in 2013.”
The report showed that spending on base-metals acquisitions in 2014 was three times higher than in 2013, at US$451 million; with copper deals accounting for 23 of the 29 base metal deals.
However, spending on gold acquisitions fell by 3 per cent compared to 2013, to US$8.48 billion.
“Of the combined 73 base metals and gold acquisitions in 2014, over one third (26) were by Canada-based companies, with these deals valued at over US$9.02 billion, representing 42 per cent of the total,” SNL stated.
“Another 13 deals, totalling US$7.52 billion, were by Australian companies, and seven deals, totalling US$1.32 billion, were by companies headquartered in China.”
The report showed Canadian companies spent an average US$347 million on acquisition transactions, compared to averages of US$578 million for purchases by Australian companies and US$188 million for purchases by Chinese companies.