Mining deal value fell by over US$18 billion in first half of 2020; number of deals up

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Global mining deal value, suffering from an unanticipated shock from the COVID-19 pandemic, fell by over US$18 billion when compared to the first half of 2019 to US$46.6 billion in the first half of 2020. An expected slump in the global economy, steered by a series of challenges, has kept investors away from long-term financial instruments, resulting in a 12.7% year-over-year fall in the capital raised by mining companies, according to UK-based GlobalData, a leading data and analytics company.

Mining mergers and acquisitions (M&As), despite a decent first quarter owing to deals involving gold, fell by 51.6% during the first half of 2020. Overall, the majority of the impact was evident on the completion rate, as there was a 41.7% year-over-year fall in the completed deal value.

Seven of the top 10 asset transactions deals involved gold. Topping the list was Mudrick Capital Acquisition Corp., which acquired an equity interest and assets from Hycroft Mining Corp. for a consideration of US$537 million to form Hycroft Mining Holding Corp. The remaining three involved cobalt, coal and copper.

Vinneth Bajaj, Senior Mining Analyst at GlobalData, commented: “The largest of the completed deals was the acquisition of Detour Gold by Kirkland Lake Gold Ltd. for US$3.79 billion.”

Bajaj added: “The total volume of deals increased from 1,811 in H1 2019 to 2,271 in H1 2020 owing to a 79.7% increase in the total number of announced capital raising deals in that period. This was accompanied by a 28.4% increase in the volume of completed M&A deals. Canada, US, Australia, China and India accounted for nearly 87% of the total deal volume and over 72% of the total deal value.”

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