Main menu button

Mrkt BUZZ Arctic Minerals: Increasing global M&A activity in mining

9 jul 2021

Read the entire commentary here:

Mrkt BUZZ Arctic Minerals July 09 2021


M&A Activity

During the first half of 2020, M&A activity in the metals and mining industry declined drastically. The activity recovered during the second half of the year. According to PWC, the metals industry continued to see a recovery during the first half of 2021. Activity exceeded that of the first half in 2020, and matched or exceeded the second half of 2020 in terms of volume and value.

Historically, there was a peak in M&A activity about ten years ago in the wake of the economic rebound following the 2008 financial crisis. There was a peak in the number of deals in 2011 and in the value of deals in 2012. After this, the number of deals per year as well as the value has been comparatively flat during 2013-2020 at a lower level. This is, in our opinion, a reflection of the overall metal prices. There is a correlation between metal price and deal values, though with about a lag of one year. As can be read from the graph below, there was a peak in metal prices in 2011 at an index level of 120. Prices have been revolving around a flat trendline of about 75 in 2013-2020.

If metal prices remain at a high level during this and next year, it is logical to assume that the total M&A deal value will follow with about a year or so of lag. If this is correct, 2022 could be a record year for M&A activity. Arctic Minerals might potentially make an exit from the Peräpohja joint-venture project in 2023, which should also be a year with a high M&A total value and valuations. The trend of high metals prices should be a tailwind for Arctic Minerals.

Read the initial coverage here.


Disclaimer

Carlsquare AB, www.carlsquare.se, hereinafter referred to as Carlsquare, conducts business with regard to Corporate Finance and Equity Research in which areas it, among other things, publishes information about companies including analyzes. The information has been compiled from sources that Carlsquare considers to be reliable. However, Carlsquare cannot guarantee the accuracy of the information. Nothing written in the analysis should be regarded as a recommendation or invitation to invest in any financial instrument, option or the like. Opinions and conclusions expressed in the analysis are intended only for the recipient.

The content may not be copied, reproduced or distributed to another person without the written approval of Carlsquare. Carlsquare shall not be held responsible for any direct or indirect damage caused by decisions made on the basis of information contained in this analysis. Investments in financial instruments provide opportunities for value increases and profits. All such investments are also subject to risks. Risks vary between different types of financial instruments and combinations of these. Historical returns should not be considered as an indication of future returns.

The analysis is not directed to U.S. persons (as defined in Regulation S of the United States Securities Act and interpreted in the United States Investment Company Act 1940) nor may it be disseminated to such persons. The analysis is also not directed to such natural and legal persons where the distribution of the analysis to such persons would result in or entail a risk of a violation of Swedish or foreign law or constitution.

The analysis is a so-called Commissioned Research Report where the analyzed Company has signed an agreement with Carlsquare for analysis coverage. The analyzes are published on an ongoing basis during the contract period and for a usual fixed remuneration.

Carlsquare may or may not have a financial interest in the subject of this analysis. Carlsquare values the assurance of objectivity and independence and has established procedures for managing conflicts of interest for this purpose.

The analyst Richard Ramanius does not own and is not allowed to own shares in the company analyzed.

Mrkt BUZZ Arctic Minerals: Increasing global M&A activity in mining