mining hunted tipped to be the hunters

We are no minnow in FML,so long as we stay below radar I am happy

Mining hunted tipped to be the hunters Mathew Murphy
November 24, 2010----the Age


AUSTRALIA'S mid-cap miners are tipped to be the predators in the mergers and acquisitions space next year with the top 50 companies in the sector cashed up and ready to strike, according to a PricewaterhouseCoopers report.

Strong demand for gold, copper and platinum, as well as high commodity prices, has sparked a 32 per cent rise in revenue growth for the mid-tier miners, from $8.5 billion in the year to June 2009 to $11.3 billion a year later.

OceanaGold, Perseus Mining and Sandfire Resources performed exceptionally well, all growing the market capitalisation of their respective companies by more than 300 per cent in the year to June 30. It is not surprising that two of those are gold companies, with the metal trading at more than $US1350 ($A1363) an ounce. In fact, gold companies represented 11 of the top 50 mid-tier miners and on average doubled their market capitalisation in the year to June 30. By comparison, mid-tier companies with an interest in other strong performing commodities such as copper and coal, had an average 45 per cent boost to market capitalisation.

Gold is such a market darling of late that the market capitalisation of those in the mid-tier 50 jumped another 76 per cent in the three months to September.

Tim Goldsmith, PwC's global mining leader, said $3.8 billion in capital raisings had helped the group build up a ''sizeable war chest'' of $7.3 billion in cash.

''A higher level of competition now also exists within Australia due to the significant cash reserves and lower debt levels of the mid-tier 50 companies. Their stronger cash position enables them to opportunistically seek acquisitions, rather than being the subject of them,'' he said.

While the strengthening Australian dollar is making local acquisitions more expensive for foreigners, the report shows a considerable increase in transactions.

''Since June 2009, the mid-tier 50 companies were named in 35 potential transactions, totalling $30.9 billion; of which approximately 30 per cent have been completed. The average deal value since June 2009 is $875 million, largely consistent with our November 2009 publication where the average was $890 million,'' the report said. ''The more notable difference is that the number of transactions have increased significantly from 10 in November 2009 to 35 in the current year.