Friday, 4 May 2012

Lawrence Roulston on Junior Mining Mergers and Acquistions

A long article covering likely M&A activity from Lawrence Roulston of Resource Opportunities.

Linked in full Here

To Quote
So, back to the important question: Is this the right time to invest in mining?
Absolutely, yes. The downside risk from the current price levels in minimal. The upside is huge. Just remember that there is enormous diversity in the quality of companies in this sector.
Investors must be selective. The objective should be to own companies with high quality projects that will become takeover targets. Management is critically important. Companies that have cash are in a much stronger position than companies that will have to raise cash in a bad market.
Areas with low perceived risk will be more popular in the near term: Canada, parts of US, parts of Latin America. For example, the recent coup and pending civil war in Mali has further impacted the value of companies throughout Africa.
There are good projects in risky areas: you just have to weigh the risks against the potential rewards.
Importantly, you should diversify and you should get some professional input in evaluating companies. There is still further downside risk. In the meantime, high quality companies are adding value and the takeover binge continues. Another of the companies that we follow received a takeover bid last week, again at a substantial premium to the market price. There will be many more such offers, regardless of whether investors come back to mining.
By Lawrence Roulston

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