Our 2018 Mining M&A forecast predicted that there would be an increase in Canadian mining M&A activity in 2018. It appears that our prediction may be correct: industry reports suggest an 86% increase in the value of the transactions in the first quarter of 2018 (Q1 2018), as compared to the first quarter of 2017 (Q1 2017). The increased value in deals was not accompanied by an increase in volume, however. The deal volume decreased by 16% in Q1 2018 compared to Q1 2017. While this does not perfectly follow the "small is beautiful" gold mining acquisition trend, it does track predictions that deals in lithium and cobalt, materials used in the making of electric car batteries, would lead the pack in 2018.
Additional industry reports suggest that replenishing reserves through small, opportunistic deals in gold mining is and will continue to be emphasized in mining M&As this year. This allows senior gold miners to refocus on growth. Additionally, much of the value in Q1 2018 was likely driven by some major merger activity in early 2018. This trend appears to be continuing in Q2 2018, as certain industry giants have recently announced intentions to merge.
The prospects continue to be optimistic for the remainder of 2018, as McKinsey reports modest increases in global mining productivity in 2018. This, coupled with an increase in price and demand for the lithium, copper and cobalt, suggests that while activity may solid moving forward, the "wait-and-see" mood persists.
The author would like to thank Kiri Latuskie, summer student, for her assistance in preparing this legal update.
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