Copper M&A Update Report
This report reviews recent copper M&A activity, examines the key issues currently facing the development of new copper mines, and looks at copper exploration projects where future M&A activity could take place. This is our third annual report focusing on the copper industry activity.
Recent copper M&A activity has been low – but may be picking up: The amount of copper M&A activity in the market in recent years has been low and was just over US$6.0bn in 2021. However, this may be about to change following two large acquisitions announced recently by South32 and Sandfire Resources and the continued strength of the copper price.
A limited number of copper assets available: This report highlights a growing shortage of large-scale copper projects for future development by the copper industry. Many of the projects that are available are located in high-risk jurisdictions and/or are encumbered by increasingly tough environmental and permitting issues. This lack of opportunity continues to raise the value for those assets that are available.
Increased exploration but still limited development: Junior copper exploration companies have been helped by the higher copper price to finance increased exploration following generally renewed enthusiasm for commodities over the past 18 months. However, project development finance for juniors still remains challenging despite the renewed focus on energy transition metals. Generalist investors and Institutional asset managers shy away from mining and construction risk and even specialist mining investors are constrained by market capitalisation and trading liquidity limits, often typical characteristics of single asset junior mining companies.
Not all copper assets are the same: We have reviewed the copper projects database within slightly revised parameters and find that there are 65 development and exploration projects with resources of more than 2.0Mt contained copper and we believe that only 23 of these have the potential to involve third party M&A activity, however, not all of them are yet or likely to be attractive takeover targets for existing top tier copper producers.
Just 5 projects with a ‘High’ takeover potential: Based on our assessment and ranking of a number of project factors, including the potential size, economics, exploration progress, permitting risks, location and geopolitical risk, resource quality, the structure of existing shareholders, and other project issues, we conclude that there are just five projects with a ‘High’ possibility of a third-party acquisition in the medium term. These are: Cascabel, Viscachitas, Casino, Costa Fuego, and Santo Tomás.
Detailed project analysis and benchmarking: This report also examines and summarises the latest exploration developments of these projects and compares different parameters of the projects’ published feasibility studies.
To view the full report, please click here.
+44 (0)20 3440 6800
+44 (0)20 3440 6834