M&As Will Benefit the Mexican Mining SectorBy Paloma Duran | Thu, 10/29/2020 - 13:31
Seals & Associates Mexico reports that the mining sector is leading M&A activities in 2020. Its September report shows that 22 national mining transactions represent 24 percent of the year’s total. The firm reported that in 2020, volume transactions have decreased by 30 percent compared to 2019 transactions. The COVID-19 pandemic has increased the instability in the metals market due to an increase in prices and the suspension of activities, reported BNamericas.
Daniel Linkser, Partner at Control Risks , told BNamericas that COVID-19 is generating higher tensions that will trigger a wave of M&A activity, in which wealthy companies will seek to save other enterprises with liquidity problems or their assets.
In May of this year, Minera Alamos reported its acquisition of the Cerro de Oro gold project in Zacatecas as part of the company’s gold pipeline project. The company’s director, Darren Koningen, mentioned that Minera Alamos will continue searching for complementary acquisitions to benefit shareholders.
In July, the mining company Silver Spruce Resources announced an agreement with Colibri Resource to acquire 50 percent of Yaque Minerales, which has the El Meziquite gold project in Sonora. The company committed to pay US$210,000 this year and spend more than US$600,000 in exploration activities within a four-year lapse.
In early October, the Mexican Minera Frisco belonging to Grupo Carso asked to carry out an extraordinary assembly on Oct. 23, in which the plan to merge with Minera CX was discussed. A capital increase for this new project was also proposed to investors. Earlier this week, Minera Frisco’s shareholders approved the merger with one of its business units. According to Reuters, Frisco announced that the operation will begin in November.
CAMIMEX’s annual report mentions that fusions can provide liquidity increases and reduce general costs like last year’s transaction between Leagold Mining and Equinox Gold. It was emphasized that the size of the company, its portfolio’s diversity and liquidity are the main factors to decide if a company is attractive for investment.
The constant fall in gold reserves has accelerated M&As in the mining sector, says CAMIMEX. The chamber’s report highlights that an international decline in mine supply and high-quality projects is expected. However, these conditions and an increase against 2019’s operations could favor new agreements.