June/July 2011

Metals Monitor

Metals Economics Group Strategic Report

By The staff of Metals Economics Group

Base metals and gold 2010 acquisitions spending totals $50.7 billion

The 2010 dollar volume of large ($25 million minimum) acquisitions totalled $50.7 billion – the third-highest annual total in ten years – a whopping increase of 260 per cent over 2009’s $14 billion and 23 per cent over 2008’s $41 billion. According to Metals Economics Group’s (MEG) recent Strategic Report, the 2010 total signifies a general return of confidence to the industry after a period of significant strategic retrenchment and caution due to the worldwide recession, and sharply lower metals prices that began in late 2008 and lasted into early 2010.

Data analyzed from MEG’s Acquisitions Service shows a very significant rebound in both base metals and gold acquisitions spending. The total price paid in base metals deals (copper, nickel and zinc) increased 220 per cent to $21.8 billion in 2010 (43 per cent of the year’s total), and gold jumped 298 per cent year on year to a historical high of $28.9 billion (57 per cent of the 2010 total).

Distribution of the 66 base metals acquisitions targets considered in 2010 is almost even among all regions; however, Africa dropped from 22 per cent of 2009’s total acquired base metals in situ value to seven per cent in 2010. The acquired value of reserves and resources in 2010 base metals transactions totalled $668.4 billion, with copper company and project acquisitions accounting for $371.4 billion of the total. Each region, except for Europe, hosted at least one very large deal in terms of in situ value.

Of the 60 primary gold transactions, the Australia-Pacific region was tops with ten deals containing $75 billion of in situ value – 33 per cent of the $222.7 billion gold total. It was followed closely by North America (mostly Canada) with 11 transactions accounting for 31 per cent of the total.

The price paid as a percentage of in situ value in 2010 averaged 13 per cent for the 60 gold deals – a 71 per cent increase over 2009. The most expensive region for gold acquisitions was Africa at 26.9 per cent. The least expensive region for acquiring gold in the ground was North America, with prices averaging only three per cent of in situ value.

MEG’s Acquisitions Service gives clients a competitive edge by reporting and analyzing current and historical transactions involving advanced-stage base metals and gold projects, operating mines and companies.

MEG’s Strategic Report provides informed, insightful analysis for mining industry planners, analysts, executives and exploration managers. Published since 1982, the Strategic Report draws on MEG’s wealth of knowledge and insight in a bimonthly compilation of timely, informative and analytical articles on critical supply-side issues facing the global mining industry. In addition to original research, articles are drawn from MEG’s flagship MineSearch database, Corporate Exploration Strategies, Reserves Replacement studies, and Acquisitions and Exploration Activity services.

For more details on MEG services and subscription information visit the MEG website at www.metalseconomics.com; T.: 902.429.2880; Fax: 902.429.6593; email: sales@metalseconomics.com.

Metals Economics Group is a trusted source of global mining information and analysis, drawing on three decades of comprehensive information and analysis, with an unsurpassed level of experience and historical data.

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