Aug
01
Minerals and Mining Transactions and Valuations
Minerals and Mining Transactions and Valuations
Between Q1 2020 and Q2 2024, over $380 billion was deployed across 3,799 M&A transactions in the minerals and mining sector, with an average deal size of $103 million. Companies in the mineral and mining sector typically trade at an enterprise value to revenue multiple range between 1x and 4x and an enterprise value to EBITDA multiple between 4x and 10x.
The majority of investments in minerals and mining were made by western economies like the US, Canada, and Australia to secure resources for technology, renewable energy, and security. These investments aim to ensure supply chain stability, economic growth, job creation, and innovation, and reduce foreign dependence.
The minerals and mining industry encompasses the exploration, extraction, processing, and distribution of mineral resources.
This industry is critical for providing raw materials used in a wide range of products including electronics, machinery, construction materials, and energy solutions. Key minerals include precious metals like gold and silver, base metals such as copper and aluminum, and industrial minerals like coal and phosphate. The sector is heavily regulated to ensure environmental sustainability and worker safety.
- The valuation multiples are based on a sample set of private M&A transactions and publicly listed minerals and mining companies in the sector. The data was collected on July 19, 2024.
- The sample set typically trades at an enterprise value to revenue multiple range between 1x and 4x, staying consistent in this range as the enterprise value of the business increases.
- Enterprise value to EBITDA multiples varied substantially, typically ranging between 4x and 10x. The average enterprise value to EBITDA multiple increased significantly as the enterprise value of the company surpassed $100 million.
- Achieving positive EBITDA in the minerals and mining industry is challenging due to its capital-intensive nature, requiring significant capital expenditure and long-term investment. The sector faces high operational costs, fluctuating commodity prices, regulatory compliance, geopolitical risks, and ongoing exploration and development needs, all of which impact profitability and operational efficiency. Consequently, significantly higher multiples are often placed on larger companies, having shown resilience and growth.
- Between Q1 2020 and Q2 2024, over $380 billion was deployed across 3,799 M&A transactions in the minerals and mining sector by global firms, with an average deal size of $103 million.
- Q2 2024 reflects the period with the most significant deployment of capital, $56 billion, while Q4 2021 experienced the highest deal count, 236.
- The average deal count has remained at approximately 200 transactions per quarter. Notable exceptions were seen in Q2 2020 and Q3 2020 in the early phases of the pandemic.
- The largest completed transaction was the full acquisition of Newcrest Mining by Newmont, for $26.6 billion, which was completed on November 6, 2023.
- Australia, the United States, and Canada were the top three countries for capital investment in minerals and mining M&A transactions, receiving 22% ($86 billion), 21% ($84 billion), and 20% ($78 billion) of the total capital invested, respectively.
- Canada, the United States, and Australia lead in the number of deals conducted, with Canada having the highest percentage at 22% (852 deals), followed by the United States at 21% (777 deals), and Australia at 15% (574 deals).
- Western markets such as Australia, the United States, and Canada have significantly invested in the minerals and mining sector, highlighting the strategic importance of securing natural resources. This trend shows their efforts to reduce dependence on other regions amid geopolitical instability, trade conflicts, and global resource competition. By investing heavily, they aim to ensure a stable supply chain for critical materials, essential for economic stability and technological advancement.
- The United Kingdom ranks fourth in both capital invested and deal count, with 13% ($50 billion) of capital investment and 8% (190 deals) of the total deal count.
- M&A transactions were the most significant type of transaction, leading in both capital invested ($341 billion) and deal count (2949 deals). M&A transactions were also the largest on average, with an average transaction size of $115 million.
- In the minerals and mining industry, M&A is favored likely for rapid resource acquisition, achieving economies of scale, and geographical diversification. These benefits enable quick access to valuable deposits, cost reduction through efficiency, and risk mitigation by operating across multiple regions, ensuring long-term sustainability and profitability.
- Buyout and leveraged buyout transactions recorded the second-highest capital invested at $48 billion across 616 deals with an average deal size of $77 million. This was followed by corporate divestiture at $39.48 billion capital invested across 587 deals with an average transaction size of $67 million.
- Secondary buyouts had a relatively low amount of capital invested at $7 billion but carried the second-largest average transaction size at $111 million.
Deal Spotlight:
BLACKROCK METALS
The Company
BlackRock Metals engages in mining iron, titanium, vanadium, and other commodities in North America. The firm was founded in 2008 and is based in Montreal, Canada.
Strategic Resources completed a reverse takeover of BlackRock Metals on March 31, 2023. As part of the deal, Strategic Resources acquired all of BlackRock Metals’ issued and outstanding shares. Consequently, BlackRock Metals has become a wholly owned subsidiary of Strategic Resources.
At the time of the deal, BlackRock Metals had an implied enterprise value of $102 million. The revenue of BlackRock Metals at the time of the acquisition was undisclosed but the EBITDA of the business was $29 million, resulting in an enterprise value to EBITDA multiple of around 3.5x.
