https://www.jsmineset.com/
Posted On: Friday, April 11, 2008, 4:32:00 PM EST
Major Companies Certain to Target Juniors in Search For New Resoures
Author:
Jim Sinclair
Dear CIGAs,
With the world's mineral resources being depleted by unprecedented demand from developing nations, mining companies and end users are desperately looking for new sources of supply.
That being said, is it any wonder that some of the most pre-eminent names on the global mining scene (Homestake, Placer Dome, Inco and Falconbridge to name a few) have simply disappeared - gobbled up by competitors who realize that buying mineral resources on the open market is a lot easier than discovering the resources themselves.
Given the high capital cost and risk associated with exploration in virgin territory, most of these predatory companies are looking closely at established mineral belts where mines have been found and are still being discovered. It's not rocket science but just common sense.
What we've seen so far on the merger front is only the tip of the proverbial iceberg. In the coming years, companies with good land positions in the world's most prolific mineral belts will reap the rewards of their efforts at premiums that will shock you by today's standards. In fact, the targeting process is happening as I speak.
Mega mergers ahead for mining industry
Fri Apr 11, 2008 6:13pm BST
By Ignacio Badal - Analysis
SANTIAGO (Reuters) - With metal prices holding in what many call a super cycle, the global trend toward mergers and acquisitions will continue among miners, according to analysts and executives who attended the CRU/Cesco copper week in Santiago this week.
Small and medium-sized miners, and juniors who are still in the exploration stage, are the easiest targets for bigger companies, but the acquisition wave won't likely stop there, they said.
Mining analysts agree the market will soon see more huge takeover bids announced, like the failed attempt by Brazilian mining giant Vale for more than $90 billion.
Executives say acquisitions will continue because global copper demand is growing and supplies are tight, so new supply has to be brought on line. The easiest way to do that is to buy existing producers.
Companies will be on the lookout for producing assets and smaller players won't have the same access to financing to bring new output on line.
"(Mining) costs have skyrocketed in recent years, with the subprime crisis and the disappearance of securitized debt markets ... it is increasingly difficult to finance, meaning only the best capitalized players can afford to invest," said Bart Melek, a Toronto-based analyst with BMO Capital Markets.
More...