COVID-19 a blow to mining deals

The COVID-19 pandemic has caused a $5.3 billion ($7.4 billion) drop in the total value of mining deals during the second quarter of this year.

This led to a 30.5 per cent, or $US2.9 billion, decline in mining M&A values during the period following a “flat” first quarter of 2020, according to GlobalData.

The amount of capital raised by mining companies during the second quarter also experienced a 25 per cent drop, amounting to $US3.7 billion.

GlobalData senior mining analyst Vinneth Bajaj however said that the number of asset transactions rose by 85 per cent, with a $US1.3 billion increase in value.

“Eight of the top 10 asset transactions deals involved gold,” Bajaj said.

“Topping the list was Mudrick Capital Acquisition Corporation, which acquired an equity interest and assets from Hycroft Mining Corporation for a consideration of $US537 million to form Hycroft Mining Holding Corporation.”

Australia and three other countries – Canada, the United States and the United Kingdom – together accounted for over 90 per cent of the total deal volume and over 50 per cent of the total deal value.

The second quarter delivered 1411 deals, up from 860 in the first quarter. It was also accompanied by a 53 per cent increase in the volume of completed capital raising deals.

Newcrest Mining’s $US788 million raising was one of the largest completed deals during the second quarter. Out of this, $US653 million was used to fund the purchase of Fruta del Norte financing facilities in Ecuador and the remainder to fund developments at the Red Chris operations in Canada and Havieron project in Western Australia.

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