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Black Hawk Mining Bulletin Articles: Aus

Mining Continues Growth

• A recent survey conducted in Australia shows that

although their mining sector is enjoying a boom, services

sector is in an opposite condition. Most of the contraction

was caused by a decline in new orders among the

various players in the services sector while sales and

prices also fell.

•

• Just 2 out of 9 sub-sectors (namely, personal and

recreational services and finance and insurance)

included in the survey has grown during the month. The

increased activity in the mining sector is not positively

affecting the remaining sectors of the local market.

The chief executive of the Australian Industry Group (AI

Group) said that the contraction in the services industry just

shows how narrow is its base of development in the broad

market.

Several stability in financial states abroad in a period of few

months will be favorable for allowing consumer and

business confidence to improve, resulting in a gradual

increase in spending.

More than half of the world’s mining acquisitions in 2011 has

involved projects located in US, Australia and Canada. Other

buyers include China, India, Russia and Brazil, all of which

increased their acquisitions by 42% since 2006.

In terms of gold, the average deal is valued at USD 41

million where a premium is almost 50%. Propelling the

lucrative market is Australia with 15%, United States with

14% and Canada with 49%.

Considering the bigger picture of the industry, PwC seems to

be expecting that this year will see record M&A valuations

and volumes in the mining sector worldwide.

According to the company, sovereign wealth funds tend to

have more advantage in winning transactions because of

their low cost of capital.

PwC is assuming that non-miners like sovereign wealth

funds, large pension funds and private equity might

reassess their approach to the industry and begin to

participate more in M&A.