The following research article is an extract of the quarterly State of the Market: Mining report which provides analysis into the market for mining, capital raising, mining deals and exploration.
In the December quarter, there were three deals valued at over US$1.0 billion, compared with none in the September quarter, two such deals in the June quarter and one in the March quarter. In the latest period there were also two deals valued at over US$200 million. Three of the top five deals were for copper assets, with one for diamonds and one for gold.
The largest deal announced during the three months to end-December was the US$2.20 billion acquisition by South Africa’s Sibanye Gold Ltd. of Stillwater Mining Co., which is the only U.S. miner of platinum group metals, and is the largest primary producer of PGMs outside of South Africa and the Russian Federation.
However, the deal, which was transacted through Thor U.S. Holdco Inc., is subject to legal action. In mid-December a Maryland-based law firm, Brower Piven, initiated an investigation into possible breaches of fiduciary duty and other violations of state law by the board of Stillwater Mining. Brower Piven is investigating whether Stillwater’s board adequately pursued alternatives to the acquisition and sought the best possible price.
The second largest transaction, valued at US$1.45 billion, was Moscow-based Otkritie Holding JSC’s pending agreement to acquire the Grib diamond mine in Russia from Lukoil Oil Co. Lukoil has a license to export diamonds, with production reported to have started in 2013.
Also pending is the US$1.19 billion deal, announced in early November, by China-based Bohai Industrial Investment Fund Management Co. to acquire a 24% interest in the Tenke Fungurume copper mine in the Democratic Republic of Congo from Toronto based Lundin Mining Corp.
The deal was arranged through Beijing-based Bohai Harvest RST (Shanghai) Equity Investment Fund Management Co. (BHR). In November, China Molybdenum Co. completed its US$2.65 billion acquisition of a 70% stake in Tenke Fungurume, announced in the June quarter last year, and the company subsequently agreed to support BHR’s acquisition of the Lundin equity. The DRC’s Mining Minister, Martin Kabwelulu, has confirmed that state miner Gecamines SARL, which holds a 20% stake in Tenke, had withdrawn its objections to the equity transfers.
The largest gold transaction during the December quarter was the completed US$268 million deal by Johannesburg-based Gold Fields Ltd. to acquire a 50% interest in the Gruyere project from Perth-based Gold Road Resources Ltd. The project, which will now be operated as a 50/50 joint venture between Gold Fields and Gold Road, includes the Central Bore, Attila and Alaric deposits, and the YAM14 and Toto prospects, comprising 144 km2 in Western Australia.
Gold Road will retain 100% ownership of the remaining North Yamarna tenements, an area of about 2,300 km2. The company will also assume liability for up to a 10% overrun on the Gruyere initial development program and a budget of A$507 million, subject to exceptions such as overruns due to a force majeure event and agreed scope changes.
The third copper deal in the top five transactions was Melbourne based EMR Capital Pty Ltd.’s US$210 million agreement in December to acquire the Golden Grove mine in Western Australia from MMG Ltd., which is also based in Melbourne. In January, MMG confirmed that all conditions related to the sale of Golden Grove had been met, and the deal is expected to close
Feb. 28.
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