Lean balance sheets mean mining sector is ready to rumble GlobeBusiness
Shares of Agnico Eagle Mines, whose operations include the Meliadine gold development project in Nunavut, have fallen over the past 30 months. But it is a company ‘to keep on eye on because they have a good growth strategy and a number of mines coming on stream,’ one observer says.The ongoing megadeals in Canada’s gold mining sector signal better days for the country’s mining industry as a whole, industry expert Dean Braunsteiner says.
“I think the time is right now for the mid-tier to look at doing something similar. They’ve been given a blessing to go ahead and start those acquisitions because the majors are doing it.” Another company Mr. Braunsteiner feels is well positioned for a mining recovery is Lundin Mining Corp., which produces base metals including copper, zinc, lead and nickel. From November of 2017 to early January of 2019, Lundin shares have fallen by 45 per cent.
Growing demand has most metals prices creeping up, but he says the lull in production could provide a further price boost for the metals still in the ground.Bob Thompson, vice-president and portfolio manager at Raymond James in Vancouver, agrees that falling production and higher commodity prices will spur further merger and acquisition activity in the mining sector.
“Balance sheets were tested and that’s when you got companies that either go bankrupt or have to start shedding their assets heavily,” he says. Mr. Thompson says the recent stock mega-deals involving Barrick Gold Corp. occurred at about four on the mining clock. As the clock progresses, he says more cash deals will occur as mid-tier miners either merge or get swallowed.
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