Gathering momentum—the resurgence of M&A

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The mining industry has always promised enormous potential rewards and equally dramatic risks. In recent years, however, there have been far more risks than rewards. Recession, economic uncertainty, and market volatility have forced many miners out of the industry and brought others to the point of insolvency. The downturn has been especially hard on junior miners and their important exploration activities. This has further slowed growth and jeopardised future mining projects. Major miners have recorded billion-dollar losses, as have industrial firms that supply the industry, for example, Caterpillar ended 2013 with sales down $11 billion. 1 But industry executives and suppliers expect the sector to bounce back. They express optimism for the future and view recent turmoil as a correction – a painful but necessary overhaul that will lead to a more robust future. One critical strategy in eventually making that future a reality will be mergers and acquisitions (M&A). After a slow 2013 and Q1 2014, the signs in our survey and the market point to an increase in the value of mining M&A deals 2,3 in the rest of 2014 and 2015. Global mining: the resurgence of M&A This report draws on data from our global mining study* and insight from Grant Thornton mining specialists. It explores the potential for the mining M&A market and the implications for mining executives looking to prepare for a turnaround. 1 Christopher Harress, "Caterpillar (CAT) ends an awful 2013 with $11 billion in losses amid a slowing global mining sector," International Business Times, Dec. 27, 2013. 2 Global Energy, Mining & Utilities Trend Report: H1 2014, Mergermarket, July 2, 2014. 3 ThompsonOne database *The Grant Thornton Global Mining Survey was conducted using an online questionnaire. There were 259 total respondents, with questionnaires received between November 2013 and January 2014. GLOBAL MINING REPORT 2014: THE RESURGENCE OF M&A 1

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