LEXPERT MAGAZINE
|
MARCH 2017 53
| MINING |
zone, and increase Reservoir's interest in
the lower zone, of its joint venture in the
Timok copper-gold project in Serbia.
Reservoir was represented on the ROFO,
consideration of financing alternatives and
consummation of the takeover by Nev-
sun by Blake, Cassels & Graydon LLP.
busy with those the past year, including Af-
rico, Alloycorp and Migao. ere are com-
panies that once went public, have a con-
trolling shareholder in commodities where
there has not been a resurgence in price and
these are being privatized."
In other words, much depends on price,
in any of these four categories. Pletcher of
BLG follows the commodity prices care-
fully, which is no small feat. He comes away
from all of that with a most vivid word of
caution: "I wouldn't call it a resurgence yet,
rather the patient has come off life support
and le the hospital under her own power,
albeit with the aid of a cane."
Pletcher explained, "Commodity prices
are certainly not as bleak today as they
were in January of 2016 — which seemed
to mark the nadir of the bear cycle. But, I
don't think any commodities analysts are
calling this the return of a secular bull
market. Yes, precious metals performed
well through the first half of 2016, but the
rally faltered in the third quarter and the
downtrend (surprisingly) accelerated aer
the US election result." is is where a rise
in precious metals prices may mean some-
thing quite different than a rise in com-
modity prices.
Precious metals, gold especially, are
oen the investment of choice for those
who are hedging their bets against the dol-
lar economy. Base metals, by contrast, are
the choice for those who are betting on it in
practical terms, in this case, especially the
infrastructure promises of the US Presi-
dent, Donald Trump. ey believe spend-
ing will go up. By the way, Trump's com-
petitor in that race, former US Secretary of
State Hillary Clinton also promised Infra-
structure spending — arguably at a higher
level than President Trump did.
Did the market in 2016 invest in base
metals figuring that, either way, there
would be positive returns due to infrastruc-
ture spending in the US? It's a popular nar-
rative among Canadian mining lawyers.
Yet how does President Trump's "America
First" policy persuade against that narra-
tive? It would seem that even if the current
president puts America first, it can't be the
only country involved in vast infrastructure
construction. As Dubé explained, "there
isn't enough copper, for example, located in
the US." Moreover, such projects take years
to ramp up. As he added, "on base metal
Nevsun was represented by Stikeman El-
liott LLP.
Privatizations
Apart from these deals, Kellerman noted
"there have also been a number of privati-
zations in the sector and we have been very
JAY KELLERMAN
STIKEMAN ELLIOTT LLP
"Given the significant
resurgence in commodity
prices since 2015, there
has been increased interest
in the mining sector. …
[There's been] increased
corporate finance work
as companies are able to
actually raise money; the
beginnings of an IPO market;
ongoing M&A activity; and
a number of privatizations."
