Bolivia , Peru , Mexico , Guatemala and Argentina

LatAm-focused miners eye M&A opportunities, asset sales

Bnamericas Published: Thursday, June 17, 2021
LatAm-focused miners eye M&A opportunities, asset sales

Latin America-focused mining companies are continuing to seek out M&A opportunities amid signs of a pick-up in the sector.

But potential deals must compete with exploration and internal growth as well as optimization projects for cash, according to industry officials.

Analysts expect a glut in M&As this year and beyond, in part due to a shortage of growth projects, particularly among major producers.

Many companies are well-placed financially to acquire assets or companies, with cash flows boosted by the recent surge in precious and industrial metals prices.


Mining, along with the energy and utilities industries, continue to be the most active M&A markets in Latin America, according to Mergermarket, accounting for 32 deals worth US$9.4bn in Q1.

Proposed deals involving Latin American mining firms in the current quarter include Ganfeng Lithium’s planned offer for Bacanora Lithium, targeting full control of the US$420mn Sonora lithium project in Mexico, being advanced as a 50:50 JV between the two companies.

And Fortuna Silver, which has silver and gold mines in Argentina, Mexico and Peru, announced a planned merger with West Africa-focused Roxgold in April.


While exploration remains a key priority for Pan American Silver, particularly drilling aimed at extending the life of current mines, the company continues to consider external growth opportunities, Siren Fisekci, VP investor relations and corporate communications, told the John Tumazos Very Independent Research virtual conference.

“We do continue to look at new M&A opportunities for sizeable deposits, our preference being for silver, and things that would move the needle for Pan American,” Fisekci said.

The company’s current internal priorities include advancing the La Colorada skarn project in Mexico and restarting the suspended Escobal primary silver mine in Guatemala, pending completion of a consultation with indigenous communities by the energy and mines ministry.

Pan American also has the Navidad silver asset in Argentina, which has been held up by a ban on open pit mining in Chubut province.

Assuming a possible restart at Escobal and significant advances at La Colorada skarn, Pan American may look to sell assets in the coming years.

“We may look at other assets and determine if they’re still a fit for Pan American, if they’re still delivering returns for the effort that’s required, in the context of what other opportunities we may have identified by then as well,” Fisekci said.

One asset which has already been identified for divestiture is the La Arena II primary copper project in Peru. “It’s a big copper asset, which is not where we want to invest our capital,” Fisekci said.


Other mining companies are also planning M&As, including in Latin America.

Aris Gold is currently looking to expand after acquiring the Marmato gold mine and underground project in Colombia, with Mexico and Brazil among the favored jurisdictions, CEO Neil Woodyer told BNamericas this month.

Mexico-focused Torex Gold is also seeking to diversify away from single-asset status through M&As, while First Majestic Silver is considering selling suspended mines in Mexico, after acquiring the Jerritt Canyon mine in Nevada in April.


But other miners such as Alamos Gold, which has the Mulatos mine in Mexico and producing assets in Canada, are taking a different approach.

“We are very counter-cyclical,” VP investor relations Scott Parsons told the John Tumazos conference.

The company was busy on the M&A front amid weak gold prices in 2015-17, acquiring the Young-Davidson and Island Gold mines in Canada.

“During periods like now when M&A starts to heat up and it’s a lot more competitive process, this’s when you tend to see Alamos not participate,” Parsons said.

“We will continue to look and if we see good opportunities we’ll take a very strong look but we tend to take a counter-cyclical approach to M&A.”

The company has a fairly full plate with its current investment projects, including the US$137mn La Yaqui Grande project at Mulatos, which is due to begin production next year.

“We’ve got more than enough rope within our portfolio and very little stacks up with the types of return we have in these projects, particularly looking at companies or assets where you have to factor in acquisition costs,” Parsons added.

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