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M&A in Metals & Mining: Future Proofing Mine Portfolios

Companies and Markets

By Matthew Dolowy-Busch  |  May 17, 2023

Mining M&A activity has been substantially rejuvenated this year following a decade of persistently low transaction values (Figure 1). While the reasons are multi-faceted and nuanced to the footprints and commodity markets in which companies operate, the same factors that have led to a jump in acquisitions are front and center for many peer companies. This will likely shape mining M&A trends beyond this year. 

With that in mind we look to highlight rationale for transactions among early horses in the M&A race and trends to watch.

Figure 1: Complete & Pending Mining Acquisitions/Merger Transaction Values Where the Target is a Publicly Listed Company 


Source: FactSet

Flashback to 2012

Similar to the peak in 2012, it’s a proposed transaction from Glencore plc (GLEN-GB or “Glencore”) that’s driving transaction values higher. Back then it was the combination with Xstrata plc. Now it’s Glencore’s unsolicited offer for Teck Resources Ltd. (TECK.B-CA or “Teck”).

There’s now a new focus on how companies construct and manage their exposure to certain commodities and jurisdictions.

Teck’s proposed separation into two companies—one metallurgical-coal focussed and the other focussed on base metals—aimed to provide investors with exposure to either coal or the base metals needed for the green-energy transition. Glencore’s offer looked to build on this separation even further via the incorporation of its own base of assets into a similar split of two new companies. But while Teck’s proposed separation has been withdrawn for the time being and Glencore’s offer has been rejected, this year is showing that many other companies in the sector are opportunistically looking to improve their own asset portfolios and exposures via M&A (Table 1).

Table 1: Selection of Proposed Mining M&A involving Public Entities with Transaction Value Greater Than USD 300 mm from 2023


Source: FactSet

The uptick in mining M&A is agnostic to commodities, as companies in precious metals, lithium, and base metals seek to redesign their asset portfolios. Notably, Newmont Corp.’s (NEM-US or “Newmont”) recent definitive agreement to acquire Australian-based gold miner Newcrest Mining Ltd. (NCM-AU or “Newcrest”) which will create the largest gold-mining company in the world. Breaking out precious metal transaction values in Figure 2 the total proposed 2023 transaction value has already surpassed the 2019 total and looks primed to surpass the peak reached back in 2010.

Figure 2: Complete & Pending Precious Metals Acquisitions/Merger Transaction Values where the Target is a Publicly Listed Company vs. Average Gold Price 


Source: FactSet

Building And Exploring for Mines Is More Expensive

Exploring and developing a new mine has always been a difficult and capital-intensive endeavour with a myriad of risks. From remote locations and supply-chain implications to unique geopolitical considerations, building a mine on time, on budget, and without hiccups is rare. The global rise in inflation adds to the difficulty.

Figure 3: Mentions of “Cost Inflation” Within Company Related Materials Over the Last 10 Years for Metals & Mining Companies 


Source: FactSet

Developers with limited exploration budgets (funded by equity raises) often focus their efforts on a single project with the best chance of becoming a mine and providing the best return on their spend. Once a certain threshold of discovered in-situ metal and potential annual metal production has been met, they would ideally be acquired by a larger company with the engineering resources and experience to optimize value.

With the dearth of M&A as noted in Figures 1 and 2, developers in recent years have had to take on the onus of building out their projects themselves as producing companies have shifted the start-up risks onto junior developers to prove mine viability first. However, in a persistent inflationary environment, the risks of mine development have become even more acute.

Without existing cash flows from operating assets, overages in spend either lead to a return to capital markets for financing or a restriction in project scope. This leads to developers building mines in smaller phases, which are easier to engineer and advance but are a deviation from how a well-capitalized build-out of the project would normally proceed to maximize payback and NAV (Net Asset Value). Those developers facing inflationary headwinds and finding themselves in a capital constrained environment may become targets for M&A, such as Sabina Gold & Silver Corp. (SBB-CA or “Sabina”).

The trend of higher costs for exploration and development is also running up against the historical trend of lower exploration expenditures over the last ten years (see Figure 4). Only recently higher commodity pricing has incentivized companies to re-invest via the drill bit (having yet to reach the peak levels of exploration spend seen in 2012).

Underinvestment in those lean years means that companies seeking growth are increasingly looking to M&A. Already completed work is proving to be worth more than the inflated cost for new work to be started. The target is on companies that have continued to move projects forward in recent years.

Figure 4: Historical Exploration Expense for Current Publicly Listed Precious Metals Companies vs. Average Gold Price


Source: FactSet

Improving Commodity & Jurisdictional Exposure

Throughout the rest of 2023, further mining M&A will also be justified either by strengthening or divesting away production exposures in favor of specific commodities and jurisdictions. For example, diversifying revenue in the energy-transition process by adding key metals such as copper (which Newmont is doing with its Newcrest acquisition).

Alternatively, companies could adjust exposure away from commodities with ESG baggage, such as metallurgical coal (which Teck was doing with its proposed split). Companies also have the opportunity, through consolidation, to reframe their commodity exposure to better fit the requirements of existing investors and appeal to prospective investors who prioritize ESG. Companies with clear, focused commodity-exposure profiles provide cleaner correlations to their commodities, allowing investors to manage the commodity-risk exposure in their portfolios.

In addition to commodity exposure (and arguably as important), jurisdictional exposure continues to drive mining M&A. Jurisdictional and political headwinds in some countries have widened as inflationary pressures and uneven post-pandemic economic recovery has changed the social contract between mining companies and the countries in which they operate.

Regulatory changes are also presenting more risk in certain jurisdictions around the world. This is because governments would like to reap some of the windfall of higher commodity prices. Examples of policies that may be enacted include new taxation, royalties, or project ownership requirements, import/export restrictions, or even nationalization of certain commodities such as lithium.

Miners with large concentrations of NAV in riskier jurisdictions may want to mitigate that with M&A in more stable jurisdictions, which can help spread the risk and dilute concentration via geographical diversity.

We see this illustrated in Figure 5, where B2Gold Corp. (BTO-CA or “B2Gold”) highlights better geographical diversity with its Sabina acquisition and in others such as Hudbay Minerals Inc.’s (HBM-CA or “Hudbay”) move to acquire Copper Mountain Mining Corp. (CMMC-CA or “Copper Mountain”). The latter builds a stronger presence in Canada over its primary jurisdiction of Peru, which has experienced uncertainty due to protests and road blockades.

Figure 5: B2Gold’s Pro Forma NAV by Jurisdiction After Acquisition of Sabina - Feb 13-2023 


Source: Company Reports

In addition to diversifying away from riskier jurisdictions, further M&A activity may also build larger footprints in preferable jurisdictions with less risk. With the ability to leverage regional experience and savings by pooling resources and talent in mining districts and countries, operators could double down M&A activity in jurisdictions where they have experience and could scale their business.

We highlight the footprint of mining properties for both Newmont and Newcrest in Figure 6, where the rationale for their combination is a stronger footprint in Canada and Australia. That enables them to realize operational and supply-chain synergies in their quest to counteract cost inflation.

Additionally, in Figure 7 we highlight the shared operational footprint of Allkem Ltd. (AKE-AU or “Allkem”) and Livent Corp. (LTHM-US or “Livent”), where synergies help at mine-site level and vertical integration in the refining of lithium in their recently proposed merger of equals.

Figure 6: Mining Property Locations of Newmont Corp. and Newcrest Mining Ltd 

Newmont Corp. (NEM-US) – Mining Property Locations


Source: Prospector, FactSet

Newcrest Mining Ltd. (NCM-AU) – Mining Property Locations


Source: Prospector, FactSet
Figure 7: Highlighted Value-Add via Vertical and Site Integration for the merger of Allkem Ltd. (AKE-AU) and Livent Corp. (LTHM-US) - 10-May-2023 


Source: Company Reports


 The recently proposed large-scale transactions in metals and mining have brought activity back to the sector following a decade of lower exploration spend, commodity pricing and M&A activity. With the details of continued inflation, geopolitical risks, and commodity supply and demand coming into view, further consolidation in the space is likely to follow. New growth has inflated costs, and a scarcity of assets in “safe” jurisdictions brings forward a need for geographic diversity (or consolidation) among operator portfolios.

A trend of further consolidation will also do well to bring back generalist investment into the space, with only a handful of large companies of suitable liquidity available for the larger asset managers to invest in. Further M&A activities could enable investment inflows needed to develop the supply of metals for the green-energy transition—and offset the depleting assets and higher costs of harder-to-mine deposits.


This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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Matthew Dolowy-Busch

Senior Manager, Deep Sector Content – Metals & Mining

Mr. Matthew Dolowy-Busch is a Senior Manager for Deep Sector content at FactSet. In this role, he focusses on improving our Deep Sector content offering in the Metals & Mining sector. He joined FactSet in 2023, and prior to that he worked for over five years at a buyside firm that specialized in investing in the natural resource space, specifically in Metals and Mining. Mr. Dolowy-Busch holds a Bachelor of Applied Science in Mineral Engineering from the University of Toronto.


The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.