Ladies / gents:

...something to interest you while we wait for the paint to dry, blister, and peel...

(From "Business In Vancouver" - 17 September 2013; page 34; by Sean Kolenko)

By Sean Kolenko Tue Sep 17, 2013 12:01am PST

Market uncertainty, volatile commodity prices and tens of billions of dollars in writedowns have forced the volume of mining M&A both in B.C. and globally to drop more than 30% in the first half of 2013.

According to a new mid-year global mining report by PricewaterhouseCoopers LLP (PwC), released September 5, global M&A activity by volume fell by 31% January to June 2013, with 649 deals completed in that period.

The value of global M&A deals fared much worse, plummeting 74% between January and June to nearly $22 billion.

B.C. M&A activity mirrored the global trends, with deal volume in the province dropping 33% and deal value falling 34%.

The most active M&A regions in 2013 were Russia and Kazakhstan. Russia accounted for 26% of M&A deals between January and June, while Kazakhstan accounted for 19%. Rounding out the top three was the United States at 11%.

Last year, Canada, the U.K., Switzerland and China were the busiest regions for deal activity.

Gold and copper projects are the popular targets, thus far, for M&A deals, with gold representing 36% of all transactions by value while copper accounted for 12% of deals by value.

Chinese demand for commodities, reads the report, will remain strong as economic growth in China is expected to grow between 7% and 8%.

This relative stability in the Chinese economy is good news for B.C., said Philip Heywood, a director of transaction services who focuses on mining deals with PwC.

“There was some concern about China’s slowdown, but with growth at 7% to 8% there is still a need for base metals and construction materials. There is still a lot of urbanization occurring in hina,” said Heywood.

“And a lot of the resources they need are in B.C.”

The first half of 2013 has seen a new player emerge in the M&A deals – private equity firms.

Heywood said private equity has been “kept on the sidelines” of mining acquisitions because equity values of mining firms have been high and there’s been a lot of competition for deals.

But there is much less competition in the current market and equity values have come down to more manageable levels and that’s a recipe that appeals to private equity firms, Heywood added.

“We’re going to see a renewed interest in the sector and more deals get done between private equity and mining,” he said.

“I think, in the current environment, private equity has the cash available to make deals.”

Other highlights of the PwC report

• Largest M&A deal was Russia’s Mikhail Prokhorov – billionaire owner of the National Basketball Association’s Brooklyn Nets franchise – selling his 37.8% stake in Polyus Gold International (LSE: PGIL.L) for $3.62 billion.

• Largest deal by a B.C.-based buyer was Capstone Mining’s (TSX:CS) $650 million purchase of BHP Billiton’s (NYSE:BHP) Pinto Valley copper mine in Arizona.

• Gold miners have taken write-downs totalling US$25 billion.

• The average deal value for the first half of 2013 was US$52.2 million, up from the average value of US$47 million over the same period last year. Last year’s average, however, does not include Glencore International’s (LSE:GLEN) US$54 billion takeover of Xstrata, the largest takeover in the sector.