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NATURAL RESOURCES SECTOR

PricewaterhouseCoopers' Global Mining Deals Team calls 2008, the "year of what might have been" as deals that were not completed grabbed the headlines more than those that actually reached fruition.

In their annual "Mining Deals 2008 Annual Review", PricewaterhouseCoopers suggests that, while the short-term outlook for mining deal activity from western mining companies is subdued, mining companies with available funds "may well find 2009 to be a year where they can utilize their financial strength and achieve acquisitions at long-term bargain basement prices."

Many companies that had spent the earlier part of the year doing deals or resisting unwelcome overtures finished the year looking at overstretched balance sheets, preparing for write-downs and welcoming back potential buyers with open arms.

PwC also called 2008 "a year of extremes," as "mining shares went from rising star to falling asteroid status. Many fell to earth intact but some are burning up."

Nevertheless, PwC noted, "The largest share of resources targeted by 2008 mining deals continued to be in North America and, in particular, Canada." However, the region's total deal value of $32.8 billion in 2008 was down substantially from $77.1 billion in 2007.

PwC advised, "Continuing financial market uncertainty, economic slowdown and actual recession in many countries look set to provide the background to mining deal-making for the immediate future at least. In the foreground, depressed and, in some cases, collapsed share prices and an inability to access debt markets are causing immense distress for some mining companies. In contrast, others have relatively healthy balance sheets."

In their analysis, PwC predicted activity by private equity players, who are usually not investing in mining, may increase. However, PwC also noted that access to equity and debt has dried up for many small to mid-cap mining companies.

"The spate of impairment announcements and write-downs will intensify and, across all tiers of the industry, we are likely to see considerable sector reshaping as stronger companies seize opportunities to acquire assets at low prices," PwC concluded.

We provide diverse services to this industry:

  • NI 43-101 Technical Reports
  • NI 53-101 Technical Reports
  • Valuations and Related Fairness Opinions
  • Willingness to review and assess global projects in South America, Asia, etc.
  • Comprehensive assessments of properties and assets
  • Review of transactions and deal structuring

 

About the Firm:

RwE Growth Partners, Inc. is a specialized group of seasoned professionals providing strategic and tactical assurance and advisory financial services, as well as capital, to firms in a select set of industries. We focus on “helping companies grow” by first understanding your current and projected needs and finding practical business and financial solutions.

If you need investment banking (capital, strategic Investment, M&A etc.) or assurance services (business valuation, fairness opinion etc) we can assist you to move forward and separate your firm from the crowd.

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