Canada is again leading worldwide mining deals. In the first half of the year, Canada topped the global mining sector as the leading buyer and target destination for merger and acquisition activity, according to Ernst & Young (E&Y).
Tom Whelan, leader of E&Y’s national mining and metals practice, said there have been fewer deals in 2011’s first half than a year ago, but the value of the deals has increased substantially.
“Despite the drop from 573 deals in the first half of 2010 to 511 deals in the first part of this year, the total deal value of mining transactions from January to June more than doubled to US$96.3 billion from US$47.9 billion,” Whelan said.
E&Y said the average mining company’s debt is at an all-time low while cash flow and profitability have reached record highs.
The increase in demand worldwide for natural resources has also increased in the number of new companies entering the mining sector.
E&Y said the number of mining and metals sector IPOs globally increased 30% to 73 in the first six months of 2011 compared with 56 last year.
The B.C. mining sector has seen a rash of deals recently targeting Vancouver companies.
On Monday, Northgate Minerals (TSX:NGX), owner of the Kemess South mine in Northern B.C., agreed to a $1.46 billion takeover deal with Toronto’s AuRico Gold (TSX:AUQ). (See “Northgate agrees to $1.46b takeover, dumps Primero deal” – BIV Business Today, Aug 29.)
Last week, Saskatchewan’s major uranium producer, Cameco (TSX:CCO), tendered a $520 million hostile bid for Vancouver’s Hathor Exploration (TSX:HAT). (See “Cameco launches hostile takeover bid for Hathor” – BIV Business Today, Aug. 26.)
And earlier this month, Swiss mining giant Xstrata bought Vancouver’s First Coal for $147 million.
Joel McKay
Twitter:jmckaybiv