Mining M&A Frenzy Continues

The only certainty in an uncertain market is that the wave of mining takeovers will continue. That's the opinion of mining analysts at Citigroup Global Markets, who cite a number of reasons why: soaring cash balances, few reinvestment opportunities, frictional barriers to new capacity, and aggressive forays by sovereign investors.

They calculated that mining companies have more than US$300-billion available for M&A, about half of which would come from borrowings. That alone is about 36% of the entire sector size.

But who will be buying, and who will be bought? The analysts have compiled a list of companies most likely to fall in each area. Interestingly, serial dealmaker Xstrata PLC (XSRAF.PK) is at or near the top of both lists. The other likely "hunters" include Teck Cominco Ltd. (TCK), Newcrest Mining Ltd. (NCMGY.PK) and Cia. Vale do Rio Doce (RIO). The "hunted" include Anglo American PLC (AAUKD), First Quantum Minerals Ltd. [FM/TSX], Freeport McMoran Copper & Gold Inc. (FCX), and NovaGold Resources Inc. (NG).

"We think the most likely targets are those that offer commodity/geographical diversification as well as the potential for large-scale production growth to a company with greater access to capital," the analysts wrote in a note to clients. They added that a scarcity of of target companies means there will likely be "strong competition" in any deal.

Comments

[growthvalue:]

IGRU.PK Should do well with their deposits in the ground.

intlgold.com

2008 Jan 17 06:39 PM

[growthvalue:]

IGRU.PK is having a investor call next week....should shed light on this gem set to double maybe more

2008 Jan 22 10:57 PM

[Sunnyside:]

Keep an eye out for Polymet 12-18 months

2008 Feb 05 07:36 AM

[sunrises:]

Agree. Which company & when is to be seen... In midst of this uncertainty, here is further information to share to those who are able to invest in these times.
FCX has a PE11.4, PEG .19 with a five year growth of 50.8%, Mcap ~34.5B, and good divd. PCU has a PE 12.69, PEG 10.68, high divd, Mcap ~28B and trading @95. TIE has a PE 12.76, PEG .57, zero debt, Mcap ~3.59B, and a small divd. All three, Fcx, Pcu and Tie are possible good investments to consider.

2008 Feb 11 01:06 AM

[sunrises:]

To the above one more name/symbol for consideration:

MT has a PE 8.78, PEG .85, Mcap ~ 93.5B, relat good divd, and share buy back plan. Goodluck :)

2008 Feb 11 09:25 AM

[sunrises:]

MT Q4 earnings report beat analyst expectations. Net income rose to 2.44B from 2.37B. Beat the 2.39B estimate expectations.

Hope this helps for those who invested.

2008 Feb 13 09:30 AM

[sunrises:]

Some have asked when they can buy these securities. For FCX, PCU, and MT, a good entry point could be when they pullback to $80s.

Tie is in the mid 20s and if it pulls back buy few points. All of these four are possibly very good investments.

2008 Feb 27 07:22 PM

[sunrises:]

Correction:

Perhaps, when MT pulls back to $60s is relatively a good entry point :)

2008 Feb 27 07:54 PM

[sunrises_4all:]

Hi FP:
Some pullback points that may balance the double digit losses that many of us have in this market and reiterate…if those who have spare money left:

Fcx, Pcu: excellent companies: if these pullback to $70s.

MT:solid company & pe among the lowest in industry: pullsback to $60s

another name/symbol to consider:

X: PE 17.09, PEG ~1.11, Mcap 13.49B, divd. US steel is having an excellent run. If pulls back to low $90s. Keep an eye on the earning reports here.

goodluck

2008 Mar 27 02:42 PM