Nevsun Reservoir deal shows M&A appetite for quality minesgreat article, everyone should read, including Tim and Blake!
Apr 25, 2016-there is appetite for high quality mining assets in stable countries and may be a harbinger of further industry mergers and acquisitions, executives involved in the deal said on Monday. Nevsun was one of many companies interested in acquiring Reservoir and Timok, Reservoir Chief Executive Officer Simon Ingram said. "There were lots of groups in the data room," he said in an interview.
"We should see more M&A in the marketplace.... There are various assets that are good quality that are financially burdened," Davis said in an interview. High price expectations among sellers are among factors that have inhibited mining acquisitions in recent years, but that may be changing, Davis said.
"They are getting more realistic and that will precipitate more M&A," he said.
The loss of Timok is not a "significant" negative for Lundin as it has several internal growth opportunities and is expected to pursue other acquisitions, RBC Capital Markets analyst Fraser Phillips said in a note to clients.
A drop in copper prices to seven-year lows below $2 a pound in January has created opportunities for miners with strong cash balances to acquire assets, added Nevsun Chief Executive Cliff Davis.
The commodity price drop has forced many debt-laden miners to look at selling off choice assets.
https://ca.reuters.com/article/businessNews/idCAKCN0XM2BK