PDAC: Bull Market Signals Spate of Mining Deals

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"This year the world's biggest mining convention could turn into a bonanza for dealmakers."

This year the world's biggest mining convention could turn into a bonanza for dealmakers as eager mining companies look for ways to take advantage of a raging bull market for metals.

The dealmaking that PDAC could stir up this year may very well shift into overdrive as the industry responds to a number of powerful, intersecting trends.

Prices of base metals are near record highs, while surging demand is only expected to accelerate, fueled by the building booms of China, India and Latin America. At the same time, major producers are expecting their production to contract unless replacements can be found.

Gold and silver miners are benefiting from one of the biggest sustained rallies in modern history, driven by inflation concerns, political turmoil, an uneven U.S. economic recovery and the European sovereign debt crisis.

That means junior miners and explorers—those with assets that are close to going into production—have never had it so good. Established miners are motivated buyers willing to pay top dollar for high-quality properties that can be developed quickly.

"I think deal activity is going to intensify, because companies' cash flows are enormous and lots of companies aren't replacing their production," said Donald Coxe one of Canada's most influential money managers.

For a major producer shopping around or a junior looking to sell, the PDAC convention in Toronto is a must-attend showcase.

"If you have a property you want to get rid of, or put into a company, or if you are a company looking for properties it is the best place you can go," said Terry Schorn, an adviser to an exploration company.

The annual PDAC event attracted more than 22,000 attendees last year, and with metal prices soaring, an even larger audience is expected this year.

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