DENVER, Colorado (miningweekly.com) – The three months ended June 30 saw global mergers and acquisitions (M&A) activity rebound from disappointing lows in the first quarter, but Canada was host to the most significant gold deals by a large margin, professional services firm KPMG said.

The firm’s ‘Mining M&A Quarterly Newsletter’ reported that Australia, China and Indonesia had also contributed M&A activity in other sectors such as iron-ore, mineral sands and copper.

On a global level, deal values more than tripled quarter-over-quarter from $2.9-billion to $9.8-billion. There were five more transactions in the second quarter than the 18 transactions recorded in the prior quarter and, of the 23 transactions announced in the latest period, three exceeded the $1-billion level.

Mining equity indices rose significantly and gold and copper prices were also climbing at quarter-end. Largely because of gold deals, Canada was the top acquirer and top target country in the quarter. Australia ranked second as a target country, while China was second as an acquirer.

“So complete was Canada’s domination of gold activity in the second quarter that every leading global gold transaction above $200-million in the quarter was Canadian. A total of 12 Canadian gold transactions, accounting for $4.6-billion in deal value, were announced in the period, rising substantially from eight gold transactions for a deal value of $500-million in the first quarter,” KPMG Canada mining industry leader Lee Hodgkinson wrote in the newsletter.

This activity was anchored by one blockbuster deal – the $3.6-billion friendly joint offer for Quebec-based Osisko Mining by Yamana Gold and Agnico Eagle Mines.

The next-largest gold transaction was the friendly $543-million offer for Australia’s Papillon Resources by Vancouver-based midtier B2Gold. In another friendly gold deal, Peru-based Canadian gold miner Rio Alto Mining made an offer to acquire Sulliden Gold for $296-million.

Rounding out gold transactions, TSX-listed Mandalay Resources made a friendly offer to acquire fellow Canadian Elgin Mining for $58-million.

Meanwhile, Canadian gold royalty and streaming firm Sandstorm Gold had acquired its sister company, Sandstorm Metals & Mining, for $52-million in a transaction that would enable Sandstorm to focus on gold, while offering shareholders the benefit of additional revenue from nongold royalties.

COPPER RUNNER-UP

KPMG noted that copper transactions carried their modest strength into the period at a deal value of $1.5-billion, despite deal volume being relatively sparse, with only two copper transactions announced during the quarter.

The largest copper transaction involved an unsolicited bid by China’s State-owned Guandong Rising Assets Management for Australia’s PanAust. Guandong Rising, which already owned 23% of PanAust, was willing to pay A$2.30 a share, or A$1.1-billion, to acquire the remaining 77%. This offer represented a 46% premium to the last closing price of PanAust shares on the ASX. PanAust immediately rejected the bid as too low, but allowed Guandong access to complete its due diligence.

The world’s next-largest copper deal in the second quarter was Vancouver-based Lumina Copper being bought by Canada’s First Quantum Minerals for $395-million.

IRON-ORE ON THE UP

After nearly disappearing from view in the first quarter, iron-ore transactions staged a comeback, with three transactions announced during the second quarter. These deals accounted for $1.3-billion in deal value compared with only $100-million in the first quarter, when only one transaction was announced.

In another bid by a Chinese State-owned company for Australian resources, steel producer Baosteel partnered with Australian rail company Aurizon Holdings to acquire 80% of ASX-listed iron-ore developer Aquila Resources. Baosteel was already Aquila’s largest shareholder with 20% ownership before the bid. Should the transaction close successfully, Baosteel would retain 85% of Aquila while Aurizon would own the remaining 15%.

MINERAL SANDS MAKE A RARE APPEARANCE

KPMG noted that after several quarters without any significant M&A activity, the mineral sands sector generated two transactions in the second quarter that accounted for $1-billion in deal value. “One of these deals was large enough to create an impact,” Hodgkinson noted.

In the quarter, Australia-based Iluka Resources announced that it had made a $780-million offer to Kenmare Resources, based in Ireland. Kenmare’s flagship asset is the Moma titanium mine, in east Mozambique.

Moma would have a mine life of more than a century and was currently producing mineral sands at 900 000 t/y, yielding mostly ilmenite with some zircon.

MEDIUM-TERM OUTLOOK

KPMG expected the general trend in mining M&A activity and some other industry indicators left some room for optimism. Compared with this time last year, global M&A activity was starting to reawaken as companies started looking to future opportunities. Mining equity indices and commodity prices had also been showing some stability. China and other emerging countries were gradually regaining their potential as major markets and industry players.

“We will see if this trend can be sustained over the longer term,” Hodgkinson commented.