Mining M&A Picks Up in February 2021

Canada’s share of the global metals and mining industry mergers and acquisitions deal value was totalled at 23.7% in February 2021. While the COVID-19 pandemic slowed some of the dealmaking over the past 12 months, (February marked a drop of 22.81% over the 12-month average), 2021 is proving to be a strong start for the industry on the road back to normal.

Heading in the Right Direction

Total M&A deal value was marked at $743.23 million for February, with the top five deals accounting for 93.2% of the overall value, or $164.08 million. The high concentration of these high-value strategic deals demonstrates the continued power of the major miners and their ability to expand portfolios and vacuum up market share.

Who’s Dealing?

The top five metals & mining industry M&A deals of February 2021 tracked by GlobalData were:

  1. American Lithium’s $125.38m acquisition of Plateau Energy Metals
  1. The $12.64m acquisition of 2333382 Ontario by Avalon Advanced Materials
  1. P2 Gold’s $10m asset transaction with Borealis Mining.
  1. The $8.41m acquisition of Garibaldi Resources by Eskay Mining
  1. Fancamp Exploration’s acquisition of ScoZinc Mining for $7.64m.

Source: Mining Technology

American Lithium and Plateau Energy Metals

American Lithium took the significant step of acquiring Plateau Energy Metals to consolidate two “significant and strategic” undeveloped lithium assets in the Americas. This deal is poised to take advantage of the rapidly growing demand for lithium as the electrification of the global economy continues to accelerate with vehicles and battery production. 

Avalon Advanced Materials Acquisition

Avalon signed the letter of intent paving the way for their ownership of 2333382 Ontario Inc., a private company that owns four industrial minerals properties and a demonstration-scale processing plant located in Matheson, Ontario. The total purchase price will be marked at $16 million, payable over two years in a combination of cash and common shares of Avalon. 

FanCamp Acquires ScoZinc Mining

The $7.64 million deal will allow Fancamp to indirectly acquire all of the issued and outstanding securities of ScoZinc Mining. Shareholders of ScoZinc will receive 6 common shares of Fancamp for every ScoZinc share held. The deal will give former ScoZinc shareholders a 33.7% stake in the outstanding Fancamp common shares.

Fancamp will get the benefit of ScoZinc’s Scotia Mine, a near-term cash-flow-generating asset. It will also allow the company to continue to advance its exploration and titanium technology strategies. The deal aims to bring the Scotia Mine to production using Fancamp’s strong balance sheet, accelerating the project’s timeline. 

A Rising Tide Lifts All Boats

The continued acceleration of M&A activity this year would be a boon for the industry overall, as numbers dropped across the board around the world in 2020. While domestic deals are still popular, large-scale cross-border deals have the biggest potential to drive larger M&A value over the coming months. The improving overall economy will also help the deal-making environment.

As companies continue to acquire, consolidate, and shore up operations, the sector will find itself concentrating capital in fewer winners every quarter. The companies holding a strong balance sheet now with a forward-looking strategy will be the ones lifting the tide for all the miners out on the choppy waters this year.   

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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