Market Chatter: Maven Says Share Slump to Spur Merger Boom
Catherine McLeod-Seltzer, one of Canada's top mining dealmakers, is forecasting an increase in mergers and acquisitions because of a shortage of financing, Bloomberg reported.
It noted mining stocks are trading close to a three-year low as commodity prices decline on concern that growth is slowing in China, the largest metals consumer. McLeod-Seltzer says that as investors shun equity offerings and banks shy away from making loans, more mine developers will be bought by larger competitors looking to add output and reserves.
"I see these downturns as opportunities," she said in an interview in Toronto. "The company that's going to create value for shareholders today is the one that's not timid."
McLeod-Seltzer, who sits on the boards of five miners including Toronto-based Kinross Gold Corp. (K.TO), says that during her 28-year career she has raised more than $600 million for new companies searching for mineral riches. She has co-founded exploration startups including Arequipa Resources Ltd., which was bought by Barrick Gold Corp. (ABX.TO) for almost $1 billion after three years, and Peru Copper Inc., sold for about C$776 million ($757 million) within three years of its initial public offering.
"She's been very effective," Rob McEwen, founder of Canada's Goldcorp Inc. (G.TO) and the chief executive officer of Toronto-based McEwen Mining Inc ( MUX ), said in an interview. "She's curious, and she's one of those people who seems to have a good eye for mineral deposits."
Bloomberg said the world of mineral exploration comprises hundreds of ventures in Canada alone that are trying to bring deposits into production. In return for assuming the risk of evaluating and developing projects, often in remote regions, the payoffs, when they come, can be enormous.
Mineral prospectors and promoters are "some of the most optimistic people on the planet," McLeod-Seltzer says. "We're like cockroaches -- we've survived a lot of nuclear winters."
The S&P/TSX Global Mining Index (TXGM) has fallen 31% in the past 12 months. The cost to build and operate mines is rising. Smaller companies are having difficulty accessing capital after equity markets cooled and European banks, the biggest providers of mining project finance, curbed lending amid economic turmoil at home.