Canada top country for mining deal volume in 2014

Deals continue to decline globally overall compared to 2013, says EY

TORONTO, March 2, 2015 /CNW/ - In 2014, Canada was the most prolific buyer of mining and metals assets in terms of volume, and a close contender in terms of value. Despite that, overall deals globally continued to decline on both a volume and value basis in the sector compared to 2013.

"A few big deals in Canada in 2014 put us at the top in terms of deal volume," says Bruce Sprague, EY's Canadian Mining & Metals Leader. "But the reality is that the majority of the deals were junior-level strategic mergers aimed at conserving cash."

According to EY's Mergers, acquisitions and capital raising in mining and metals: 2014 trends, 2015 outlook, Canada had the top gold deal in 2014, with the joint acquisition of Osisko Mining Corp by Yamana Gold and Agnico Eagle Mines for $3.6b. The next largest gold deal was the UK's Polymetal International's acquisition of Kazakhstan's Altynalmas Gold (Kyzyl gold project) for $619m.

"Gold remains the most-targeted commodity by volume," says Sprague. "We saw that play out right here in Canada. The majority (88%) of gold deals, however, were valued at less than $50m, reflecting distress among gold juniors on the back of squeezed margins."

Still, in its outlook EY says long-awaited funding from private capital funds should begin to deploy across the sector as sellers align their value expectations with the market, and assets continue to be sold by the large cap producers in search of optimum portfolios.

"The deals we're seeing now are a lot of mergers between equals and consolidation opportunities benefiting both parties," explains Sprague. "The large cap producers are more focused on looking to either sell or spin off non-core assets."

EY says current market conditions are putting mining companies in a quandary – investing for the next stage of growth is potentially unpopular with shareholders, but it could prove to be a masterstroke if they want to fully capitalize on the next uplift in the cycle.

"For the past few years, companies have been focused on cost-reduction programs, internal capital allocation and productivity measures," notes Sprague. "Moving forward, they need to have a broader focus on total shareholder return and make capital decisions that will support long-term value creation."

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY is proudly celebrating 150 years in Canada. For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

EY refers to the global organization and may refer to one or more of the 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. For more information about our organization, please visit ey.com.

SOURCE EY (Ernst & Young)

For further information: Erika Bennett, erika.bennett@ca.ey.com, 403 206 5157; Julie Fournier, julie.fournier@ca.ey.com, 514 874 4308; Sasha Anopina, sasha.anopina@ca.ey.com, 416 943 2637

RELATED LINKS
http://www.ey.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890