Canada regains top spot as number one destination for mining and metals deals: Ernst & Young

Q1 2012 value and volume down, but increased number of megadeals reveals appetite for deals

VANCOUVER, June 5, 2012 /CNW/ - Canada topped the global mining and metals sector as the number one target destination by total deal value in Q1 2012, says Ernst & Young.

"Canada is fast becoming a go-to destination for mining and metals transactions as companies around the world look for a secure and stable environment amid ongoing market and political volatility," says Richard Crosson, Partner in Ernst & Young's Transaction Advisory Services practice. "We've seen a number of deals, many being small domestic transactions targeting junior explorers and exploration properties."

While continued uncertainty saw global mining and metals deal volume and value decrease by 34% and 20% respectively year over year, a strong pipeline indicates mining companies are showing an appetite to do deals. In fact, mining and metals companies completed 10 megadeals — deals over US$1 billion — in Q1 2012, twice as many as in the same period in 2011.

"The global market is active at both ends of the transaction scale, with a greater number of megadeals in Q1 2012 compared to Q1 2011 but with a lower average deal size," says Crosson. "These deals are being driven by the scarcity of large, quality assets and fierce competition for them." The large number of smaller deals — the average deal size for the quarter being US$130 million, down from US$134 million in Q1 2011 — reflects an increasing interest in exploration projects.

"The need to secure raw materials, increase penetration in growth markets, achieve greater vertical integration and consolidate market share will continue to drive M&A this year," says Crosson. "Canadian mining and metals companies, unwilling to postpone their growth agenda, are prepared to act opportunistically and strategically."

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

For more information, please visit ey.com/ca.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

SOURCE Ernst

For further information:

Sarah Shields
sarah.j.shields@ca.ey.com
604 648 3607 

Julie Fournier
julie.fournier@ca.ey.com 
514 874 4308   

Jennifer Nascimben  
jennifer.nascimben@ca.ey.com 
416 943 7121

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