Analysts point to strong year for mining M&A and metals prices

The global mining sector will benefit from strong metals prices and a conducive environment for mergers and acquisitions in 2021, according to various analysts of the space.

Canadian firm Haywood Securities believes that Agnico Eagle Mines’ recent deal for TMAC Resources could ‘signal the potential for further consolidation among North American based mid-tiers over the nearer-term’.

Agnico tabled a US$226 million all-cash bid for struggling TMAC last week, trumping an earlier offer from China’s state-owned Shandong Gold Mining, which was blocked in the final weeks of 2020 by the Canadian government under a national security provisions act.

“We surmise prospective consolidation targets may include Pretium (high-grade production in Canada); Liberty Gold (growing resource in favourable jurisdiction), and Belo Sun (large-scale resource, awaiting permit re-instatement),” Haywood continued.

Elsewhere, BMO Capital Markets highlighted strong margins across precious, base and bulk metals against a backdrop of an industrial recovery from the COVID-19 crisis, in its 2021 commodity outlook.

“Typically, industrial commodity prices do well when global industrial production is accelerating, and from a previous forecast of 3.4% industrial output growth in 2021, we now expect 6%, the strongest since 2010,” the report read.

While BMO predicted a ‘strong cycle’ in the commodities space, it stopped short of forecasting a new supercycle.