24 LEXPERT
|
2017/18
|
WWW.LEXPERT.CA
PHOTO:
SHUTTERSTOCK
THE BEST COMPANIES know that adapting
is the key to turbulent economic times, a principle
that's as true for the mining industry — majors,
mid-tier and juniors — as it is for anyone else.
Classic strategy has the major concerns buying
out the junior exploration outfits when they've
reached a certain stage of exploration and de-
velopment. While this strategy remains overarch-
ing, today's economic environment has instilled a
mentality of caution in the buyers.
Still, it's important to understand the market
in context. "e majors have thresholds for take-
overs, and the truth is, for example, that gold min-
ing projects with the minimum 10 million ounces
don't come along very oen," says Brian Abraham
in Dentons Canada LLP's Vancouver office.
But even when the threshold is met, "caution"
is the underlying buzzword. "e last two to
four years has seen the majors take a much more
disciplined approach, and while they obviously
continue to understand the need for acquisitions,
I'm not seeing an 'any deal at any cost' mentality,"
said Linda Misetich Dann in Bennett Jones LLP's
Toronto office.
Majors have also been willing to do minority
investment with explorers and then work with the
explorers to develop assets, as evidenced by New-
mont Mining Corp.'s May 2017 US$109-million
purchase of a 19.9-per-cent interest in Continent-
al Gold Inc. by way of supporting the Buriticá and
three other gold exploration assets in Colombia.
"Explorers are trying to sell a little later, so we're
not just seeing straight take-outs," says Michael
Boehm in Fasken Martineau DuMoulin LLP's
Ottawa office. "e explorer ends up getting more
value, and the major gets a hard look at the asset."
More particularly, majors are taking a closer
look at locales in which they already have mines.
"We're seeing more majors adopting the philoso-
phy that the best place to look for a new mine is
INDUSTRY STRATEGY
THE MOTHER
OF INVENTION
WITH ONLY A
TENTATIVE RECOVERY
IN MINING, JUNIOR
EXPLORERS ARE
RESORTING TO CRE-
ATIVE STRUCTURES
LIKE STREAMING IN
ORDER TO STAY IN
BUSINESS. MAJORS,
MEANWHILE, SEEM
CONTENT TO PLAY
THE WAITING GAME
BY JULIUS MELNITZER
