TORONTO, MARCH 7 – Bankers and stock markets are signaling an upcoming wave of mergers and acquisitions among small and mid-sized miners, but financiers worry that companies have not learned from costly mistakes made in the last commodity boom.
In a “recycling of assets,” smaller miners bulked up in recent years as the world’s biggest operators sold a string of assets to repair debt-loaded balance sheets and ride out anemic prices.
“They’re not going to sit still,” said TD Securities deputy chair of investment banking, Rick McCreary, at a Toronto mining conference on Tuesday. “You’re going to see consolidation in the mid-tier and junior space to create platforms for growth going forward.”
In a push to improve its portfolio, Goldcorp Inc, the world’s No. 3 gold miner by market value, sold non-core mines in recent years, he said. That bolstered the smaller buyers: Tahoe Resources Inc, Primero Mining Corp , Leagold Mining Corp, and Peak Gold, later acquired by New Gold Inc.
Likewise, Australian producer Newcrest Mining Ltd sold assets that helped drive growth at Evolution Mining Ltd . Some investors also point to outsized stock market gains by small gold miners, with promising deposits and developments, as a sign of upcoming deal activity.
“The way they’re moving, I wonder if there’s something more behind it,” said Joseph Foster, portfolio manager and gold strategist at New York-based VanEck.
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