Chris Stackhouse, CPA

AUGUSTA (Rosemont mine) vs HUDBAY Feb 2014 Augusta rejects $HBM's hostile offer of C$540M, subsequently implementing a PP defense. Few months later Augusta agreed to a marginally improved offer @ C$555M (~10%) Unfortunately the Rosemont provided HBM shareholders value to date

NORONT vs WYLOO May 2021, Wyloo announced unsolicited bid for Noront valued at C$133M Noront immediately implemented a PP defense A bidding war for Noront ensued between BHP and Wyloo. Wyloo eventually successful in Dec 2021 with a $610M offer - 460% over the initial bid!✅

Last week Twitter’s Board responded to Elon Musk’s $41B hostile take-over offer by adopting a “poison pill” defense. For this weeks 🧵 I show examples of poison pills used in the mining industry - and the significant value creation they’ve generated for shareholders. Lets go!👇

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I also track total days to close deals (from initial announcement to formal closing). The average for the dataset is 93 days. I was curious if “days to close” had any correlation to post-closing share performance. Take-aways here are anecdotal at best, but interesting to see.

Acquirers in the dataset returned +23% share performance 12 months post-closing (unweighted) Graph shows % of time 12-month share performance range was returned in the data set (disaggregated by consideration type). Depressingly, almost ~50% of tx's had negative returns

Deal consideration type - cash, shares or combination. I did plot GDX/J over this graph, thinking there may be a correlation to issuing paper in stronger markets, but didn’t provide any meaningful insights.

Deals by size. You will note trend recent trend for larger deal sizes. Again, I believe this will be a continuing trend, as majors and mid-tiers look to acquire additional advanced development and operating staged assets.

Not all deals make it over the line. Some don’t receive shareholder approval, others get outbid. Over the past 4 years approximately 12% of transactions were unsuccessful in closing.

Total deal value by quarter. This further illustrates the benefit of being able to move projects int he Au space. Also worth noting recent pickup in Cu and Li transactions. I think this will be a growing trend in the coming years.

OK, let’s look at some numbers First, total transaction count (including current open deals), by commodity You see the Au space has a lot of liquidity relative to other metals In the other commodities - historically Co’s have needed to advance projects further on their own