Mining Companies & Deals Flashcards
What are two big deals which BMO’s mining & metals team has been involved in?
1) BMO acted as financial advisor to New Gold to sell its Mesquite Mine in California for US$158 million in cash to equinox
2) BMO acted as an exclusive financial advisor for Nevsun on Nijin Mining takeover bid.
What are the main points of the BMO New Gold deal?
1) Announced September 19th
2) Under the terms of the Agreement, New Gold will receive $158 million in cash upon completion of the transaction.
3) Closing 4th quarter 2018
4) The proceeds of the transaction will be used to strengthen the balance sheet and enhance the overall financial flexibility of the Company. The transaction is subject to customary closing conditions, including completion of the debt and equity financings by Equinox, but it does not require an Equinox shareholder vote.
Mesquite has generated significant value for New Gold, averaging more than 135,000 ounces of gold per year over the last 10 years since Western Goldfields, a predecessor to New Gold, brought the mine back into production,” stated Renaud Adams, President and Chief Executive Officer of New Gold. “On behalf of New Gold, I would like to thank the Mesquite team for their tremendous contributions to New Gold’s portfolio of assets, and we wish them continued success as they join the Equinox team.”
What are the main points of the BMO Nevsun & Nijin Mining deal?
1) The transaction was in response to a hostile bid made by Lundin Mining on July 28th. Basically a hostile is when a company makes an unsolicited offer to buyout another company and force them to accept the offer (based on shareholder approval) sometimes like in this instance another company can swing in and make their own offer
2) And so Bmo helped Nevsun review the bid and provided a “fairness opinion” (that’s what we call it)
3) Deal as for C$1.86B
How has Barrick reduced their debt?
Effectively reduced debt:
- 3.1B in 2015
- 2B in 2016
- 1.5B in 2017
- 1.5B in 2018
Benefits of the Randgold deal
The deal creates sustainable profitability and superior scale as compared to Senior Gold Peers:
- Lowest cash cost position $538/oz
- Highest adjusted EBITDA margin (48%)
- Largest reserve base 78Moz
- Robust annual production 6.5Moz
- 5/10 of the world’s top Tier One gold assets by total cash cost per ounce
- 2 Additional Tier One assets
- Goldrush, formile and TR
- Positioned for Growth on many of the world’s most prolific gold districts
- US$18.3Bn aggregate market capitalization
How will the new company be divided?
Under the terms of the Merger, each Randgold Shareholder will receive 6.1280 New Barrick Shares for each Randgold Share. Following completion of the Merger, Barrick Shareholders will own approximately 66.6 per cent and Randgold Shareholders will own approximately 33.4 per cent of the New Barrick Group on a fully-diluted basis.
Where are Randgold’s assets?
DRC
Mali
Cote D’Ivoire
Senegal
Where are B2Gold’s assets?
Mali
Burkina Faso
Namibia
Philippines
Columbia
Nicaragua
Canada
Which mine did B2Gold just opened? Why is this important?
Fekola added 420k – 430k oz of production
Closest largest production is Otjikoto mine in Nambia 165-175k oz and Masbate in the Philipeans
What are the key points of B2Gold as an investment case?
Profitability and growth
Strong financial position
Extensive management experience
World-class exploration, construction and operations teams
Who is the CEO of B2Gold?
Clive T. Johnson
What are the top 5 largest mining companies by revenue?
- Glencore
- BHP
- Rio Tinto
- China Shenhua Energy
- Vale
Who is the CEO of Glencore?
Ivan Glasenberg
Who is the CEO of Newmont?
Gary J. Goldberg
Who is the CEO of Vale?
Fabio Schvartsman
