05 Nov 2014

Toronto and Montréal, November 5, 2014 – A new report from international firm Grant Thornton indicates that the mining sector will herald a new era in mergers and acquisitions (M&A) as a near perfect alignment of factors takes place. Following a slow period for transactions, in which last year’s deal volumes failed to breach the $90 billion1 mark, Grant Thornton’s research and analysis suggests that a fertile environment will lead to a doubling in the value of M&A in the mining sector compared to 2013.

Gathering Momentum, Grant Thornton’s new report, attributes the resurgence of M&A to the confluence of four main factors, identified through feedback from over 250 senior mining executives globally. The first is that with one-in-ten junior mining exploration companies likely to enter administration and a quarter of major mining companies anticipating challenges with financial covenants, the market can expect significant quantities of distressed assets and low valuations. There is also a ripe environment for matchmaking, with a third of executives at mining companies stating that they are likely to make an acquisition (35% junior mining exploration companies and 32% major companies) and approximately the same amount showing an appetite for sellingbelieving that their company will either be sold or undergo a partial sale (36% junior mining exploration companies and 27% major companies/other). Furthermore, lower commodity prices are identified by the report as a driver for M&A; pushing companies to band together to generate scale and lower productions costs in order to remain competitive.

Jeremy Jagt, National mining leader, Grant Thornton Canada, said: “The mining sector is ripe for a resurgence in M&A activity. We’ve started to see elements of this emerge already, for example BHP Billiton’s announcement that it will spin off assets. Executives at mining companies are telling us that they are in the market to make acquisitions and a near equal proportion say they will sell their mining company, or parts of it, this year. So there is plenty of opportunity for doing deals, especially for those looking to seize opportunities with distressed sellers ahead of any improvement in the metals market.”

Jagt continued, “What we’re also seeing in the market, adding to this demand, is the return of private equity interest. Funds have now raised large volumes of capitalaround $8 billionand they are looking for investment opportunities in mining. If these appetites persist I think that the value of transactions for 2014 will be double that of the previous year.”

Anand Beejan, Partner and mining sector leader at Raymond Chabot Grant Thornton, echoes these comments, “The situation in Quebec is relatively similar to that in the other regions surveyed around the world. There are almost as many mining companies that want to sell or buy assets (44% vs. 48%), and this partly explains the sense of optimism, despite weak global demand. The best example of this situation in Quebec is the acquisition of Osisko by Yamana and Agnico Eagle in April 2014.”

According to Grant Thornton, the financial downturn has been especially difficult for junior mining exploration companies with hundreds of companies still facing financial conditions that threaten their existence. 59% of junior mining exploration companies interviewed stated that they need to raise additional funds in the next 12 months and a third stated that as a result they were considering a corporate transaction or merger. It is likely that valuations will be low given the financial situation these companies find themselves in.

Beejan continued, “Financing is still untenable for junior mining exploration companies. We’re seeing more and more that mining exploration is not a priority in venture capital plans. Moreover, the decrease in exploration assistance offered by the tax credit for resources announced in the initial budget tabled by the Minister of Finance of Quebec, Carlos Leitão, sent a negative message to the industry.” He added, “We understand the Quebec government’s need to make choices to return to a balanced budget, however, this decision seems contradictory considering the government’s desire to revive the Plan Nord, a plan that is one of the rare options under its control to attract investments.”

Despite recent gloom, however, industry executives and suppliers expect the sector to bounce back. They express optimism for the future, viewing recent turmoil as a correction—a painful but necessary overhaul that will lead to a more robust future.

Jagt concluded, “Arguably the conditions that will drive M&A activity wouldn’t have come about without the correction of the past four years. But, just like a planetary alignment, these conditions won’t last forever. Buyers and sellers will need to take consideration of issues such as valuations and be prepared to execute stratégies decisively.”

Visit the following Web Site to get a copy of the report: www.rcgt.com/en/mining-report-2014.

About Grant Thornton
Grant Thornton is one of the world’s leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, forward looking advice. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients and help them to find solutions. More than 38,500 Grant Thornton people, across over 130 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.

About Raymond Chabot Grant Thornton
Founded in 1948, today Raymond Chabot Grant Thornton is a leader in the fields of assurance, tax, consulting services, business recovery & reorganization. Its strength is based on a team of more than 2,400 people including some 230 partners in more than 100 offices in Quebec, eastern Ontario and New Brunswick. For the past 30 years, Raymond Chabot Grant Thornton has been a member of Grant Thornton International Ltd providing its clients with the expertise of the member and correspondent firms in more than 130 countries.

About Grant Thornton LLP in Canada
Grant Thornton LLP is a leading Canadian accounting and business advisory firm, providing audit, tax and advisory services to private and public organizations. We help vibrant organizations achieve their growth potential by offering judicious and practical advice through a wide array of services. Together with the Quebec firm Raymond Chabot Grant Thornton LLP, we have approximately 4,100 people in offices across Canada.

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1 Source: ThomsonONE. Except for the merger of Glencore International and Xstrata.

Information:

Francis Letendre
Senior Consultant – Public Relations
Raymond Chabot Grant Thornton
Tel.: 514-390-4201
[email protected]

Mishka Alarcon
Marketing Manager, National, Industries
Grant Thornton LLP
Tel.: 416-607-2672
[email protected]

For more information about the report, contact:

Carol Briggs
International Marketing Manager
Grant Thornton International Ltd
+44 (0)20 7391 9511
[email protected]

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04 Nov 2014

2015 will mark the 20th edition of the Tour CIBC Charles-Bruneau. For the occasion, a promotional video featuring little Éloïse and the Raymond Chabot Grant Thornton team has just been launched to encourage companies to support the fight against pediatric cancer.

Éloïse’s courage: a source of motivation and engagement

Remember that the Raymond Chabot Grant Thornton cycling team was created to help sick children, and especially to support little Éloïse, daughter of Nicole Parent, Senior Consultant, Strategic and Performance Consulting, at the Montréal office. Éloïse has been battling leukemia for two years, undergoing weekly chemotherapy. We are delighted to announce that her treatments were completed last summer, when her test results showed she was in remission!

In conclusion, the Raymond Chabot Grant Thornton cycling team has participated in the event for the past two years, raising $35,000 in 2014 and no less than $65,000 over a two-year period! The objective of the Tour’s 20th edition is to raise $3 million. We thank the members of Raymond Chabot Grant Thornton’s extended family, who have become engaged and made an effort in some way, and who will continue to do so in the future!

About the Tour CIBC Charles-Bruneau

The Tour CIBC Charles-Bruneau is one of the biggest fund-raising activities in Quebec. Thanks to its major partners and its many committed participants, the event raised $2.85 million this year for its 19th edition. This event raises funds for the Fondation Centre de cancérologie Charles-Bruneau, dedicated to the fight against pediatric cancer. Its mission is to fund research and support the development of projects to improve the lives of thousands of children living with cancer in Québec.

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29 Oct 2014

On October 8, 2014, Emilio B. Imbriglio, President and CEO of Raymond Chabot Grant Thornton, along with Lynda Coache, Partner in Charge of the St-Jean-sur-Richelieu office, spoke to a group of business people during a breakfast conference organized by the Chambre de commerce du Haut-Richelieu.

Nearly 200 people were in attendance to listen to the two experts. Lynda Coache first spoke about the Haut-Richelieu region’s vitality and opportunities. As an individual committed to the firm, her profession and her community, she passionately stated, “I want to be a part of change, I want to make things happen!”

Lynda Coache

According to Lynda, the region has all the potential it needs to take on its growth challenges successfully. She closed her speech by inviting all region players to contribute to its economic development, “Let’s make the most of opportunities as a community. We’re the 11th largest city in Quebec, but numbers are just numbers. Let’s become the strongest city, too.”

Emilio expounded upon the ideas the firm thinks are key to boosting the province’s economic growth, creating jobs and making our society even more competitive.

He opened his speech by stating, “We sometimes forget just how strong Quebec’s potential is. Our society is bursting with talent. Our labour force is trained and very bilingual. We have experienced entrepreneurs, ambitious decision-makers, plentiful natural resources, and abundant, clean and renewable energy sources. But despite these advantages, Quebec needs to do far more if it wants to take a place among the most competitive, innovative and productive regions in the world. Our public debt is hindering our growth. Taxpayers, whether citizens or companies, are tired of having to constantly dip into their pockets.”

As a reminder, here are the four major ideas outlined by Emilio that include specific measures:

1. Encourage entrepreneurship through tax incentives

  • Make it fair from a tax point of view to sell a business, whether selling to family or foreign interests.
  • Hold a public consultation to measure the impact of reducing or eliminating corporate taxes for SMEs, and define clear rules without reducing the government’s tax base.

2. Take advantage of export opportunities

  • Take advantage of the soon-to-be official free trade agreement with Europe to develop new markets. Canada will be the only country in the world with free access, baring a few exceptions, to the two largest markets on the planet. Including North American consumers, Quebec has a potential market of over 900 million people!

3. Train and attract talent more effectively

  • Start teaching basic concepts at the high school level about credit, public debt, the cost of public services, and the importance of creating a budget.
  • Improve the process for selecting and integrating immigrants by creating other agreements, such as the France-Quebec agreement, to recognize the qualifications of professionals from other regions.

4. Exploit natural resources respectfully and sustainably

  • Develop a framework that supports long-term investments and infrastructures, specifically in terms of ports and railways.

Harold Vachon, Lynda Coache, Emilio B. Imbriglio, Stéphane Legrand

From L to R: Harold Vachon, President of the Chambre de commerce du Haut-Richelieu, Lynda Coache, Assurance Partner at the St-Jean-sur-Richelieu office, Emilio B. Imbriglio, President and CEO, and Stéphane Legrand, General Manager of the Chambre de commerce du Haut-Richelieu.

Consult the October 16 article published in Canada Français (article in French only), reporting on the conference.

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27 Oct 2014

 

Following the sale of half of the DIX 30 complex to an Ontario pension fund (Oxford Group), the Argent channel show “À la une” interviewed Frédéric Labrie, Partner, Real Estate Consulting Group at Raymond Chabot Grant Thornton. He was invited to speak on the impacts of this major real estate transaction and DIX 30’s success.