Source: Financial Post - Crosbie

In the Gold Sector, 66 deals were completed in 2010 for a total value of $18.3 billion. This was significantly higher than both 2008 and 2009, as a wave of consolidation occurred with record gold prices. Notable in 2010 include Kinross’ takeover of Red Back Mining for $6.9 billion, securing what Kinross considers to be a new gold district in West Africa, and Goldcorp’s takeover of Andean Resources for $3.6 billion.

In terms of M&A multiples in 2010 based on a selection of deals, companies paid an average of $207 per ounce of gold for producing assets and $71 per ounce of gold for exploration assets. These numbers are obviously higher because of record gold prices combined with a very active M&A market in 2010.

The Metals and Mining Sector has a total of 112 deals completed in 2010 for a total transaction value of $12.3 billion. Base metal prices have rebounded from their lows which is shown in the number and total value of transactions, however 2010 showed a modest total value compared to historical numbers because of the lack of mega deals in the base metals space.

Notable deals include Quadra Mining’s $1.54 billion purchase of FNX Mining and China Sci-Tech Holdings’ $244 million acquisition of Chariot Resources limited. FNX Mining owned three producing base metal/precious metal properties near Sudbury, Ontario and was purchased for 0.87 Quadra common shares per FNX common share. Chariot Resources owned a copper development project in Peru, and its acquisition follows a recent trend where Chinese companies have been acquiring development-stage base metal projects to secure future supply.

Cliffs Natural Resources took over Freewest Resources in January 2010 for $250 million for its 40% share of the Big Daddy chromite deposit. It also took over Spider Resources in 2009 for $125 million to acquire 30% of Big Daddy, bringing its total ownership to 70%. Cliffs has scheduled production to begin in 2015, mining 1-2 million tonnes of chromite ore annually.