Private equity firm Waterton Global Resource Management is finding the best investment opportunities are in industrial metals as surging gold prices give precious metal companies some “breathing room.”
The Canadian firm, whose billion-dollar investment fund focuses on North American mines, expects to do half a dozen base-metal deals this year as producers continue debt-reduction efforts after prices slumped, Chief Investment Officer Isser Elishis said. In contrast, gold’s 16 percent rally this year is taking pressure off miners to sell assets, at least for now.
“The opportunity set looks better at the base-metal side at this point, but that could change on a dime,” Elishis said in an interview at his Toronto office on Wednesday. “In the precious space, in North America especially, there are a few things that are actionable, but not as many as I would like.”
Some mid-tier gold miners with a market value of $500 million to $2 billion are even considering buying assets, as they worry production pipelines may not be wide enough to justify the recent run-up in their share prices, he said.
“We’re fielding a bunch of those inbound calls from people saying, ‘Hey, would you do a deal, would you sell?’,” Elishis said.
The BI Global Mid-Tier Gold Valuation Peers index has surged 60 percent this year, led by Golden Star Resources Ltd. and Resolute Mining Ltd., which soared more than 200 percent. In the same span, gold, silver and platinum prices gained 16 percent, 17 percent and 11 percent, respectively.
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