Following a flurry of big deals this spring, the mining world barely had a heartbeat. While that lull could have easily continued as the summer doldrums kick into high gear, miners dealt their investors some surprises over the past few days, injecting some life into the industry.
From the get-go, 2011 has been packed with deals. They first popped up in the right after the Christmas break, with acqusitions such as HudBay Minerals' purchase of Norsemont Mining, and then quickly escalated to Barrick Gold’s throwing $7.3-billion at Equinox Minerals Ltd. to win a convoluted bidding war. All of a sudden the market looked too pricey, just as commodity prices started falling, and miners started running for the hills.
During the lull, the Toronto Stock Exchange lost over 1000 points, and investors turned their backs on resource plays. Yet there’s been a quick turnaround, driven by a resurgence in metal prices. Silver is still down from its $50 (U.S.) per ounce peak, but has stabilized around $37. Copper, after falling all the way down to $3.90 per pound, is back up near $4.40. And gold is still super hot, resting around $1,550 per ounce.
The strength of the last two metals in particular is now driving deals like Stllwater Mining Co.’s $487-million bid for Vancouver-based. Peregrine Metals Ltd. Peregrine wholly owns a large copper-gold deposit in South America.
Yet the activity isn't confined to these metals, and deals are coming in at all sizes. Macarthur Coal Ltd. just announced that it just received a joint takeover offer from Peabody Energy and Corp. and ArcelorMittal worth about $5-billion. And in South Africa, Vale just announced that it would not submit a higher offer to top Jinchuan Group’s bid for Metorex. Jinchuan came in on top of Vale’s original bid and topped it by 20 per cent, offering $1.3-billion for the copper and cobalt producer.
In the small cap space, gold producer Claude Resources has approached St. Eugene Mining for a deal, and over in Australia, China's Sichuan Hanlong Group just offered to buy Australia's Bannerman Resources Ltd., which owns uranium mines in Namibia.