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“One of the private equity guys actually has an armed guard who takes him from his car to his office—not because he’s worried about anything, but there are so many mining executives just trying to give him their prospectuses, trying to get him before he gets into his office…. These guys are very hard up for cash and there’s very few places to go and that’s why we think private equity is in a perfect position to take advantage of this.”
One of the private equity guys actually has an armed guard who takes him from his car to his office—not because he’s worried about anything, but there are so many mining executives just trying to give him their prospectuses.—Kenneth Hoffman of Bloomberg Industries Global Metals and Mining Research, in an interview with Equedia
Eventually both sides will recognize the “perfect marriage,” Hoffman said. Once that happens, it will “bring investor interest back into the industry and hopefully that’s what can get this industry back on its feet.”
Foreign giants taken in by take-outs
If the majors have suffered different afflictions than the juniors, some Canadian investors might still have benefited. In a Good Friday Globe and Mail column, Eric Reguly addressed foreign takeovers, asking, “So who got hosed?” He mentions Rio Tinto’s $38-billion purchase of Alcan, now written down to about $30 billion. “For his sins, Rio CEO Tom (Honey, I Shrunk the Equity) Albanese was fired this past January,” Reguly pointed out.
“Albanese was not alone in the bonehead department. Many foreign takeovers of Canadian companies made between 2006 and 2008—the bubble years—have come to grief, with write-downs galore. Indo-European steel giant ArcelorMittal vastly overpaid for Hamilton’s Dofasco. Ditto U.S. Steel for Stelco, Xstrata [XSRAF] (now merging with Glencore [GLNCY]) for Falconbridge and Brazil’s Vale [VALE] for Inco. Bloomberg has estimated that the global mining and steel industries have taken $50 billion in write-downs in the last year alone. Dud Canadian acquisitions would account for a big chunk of those losses.”
Whether the sell-offs were prompted by insight, foresight or short-sighted greed, Reguly credited Canadians for “making chumps of the foreign buyers.”
B.C. mine refusal taken to court
After the curious British Columbia government rejection of its proposed mine, Pacific Booker Minerals TSXV:BKM lawyered up. On Wednesday the company filed a petition asking the B.C. Supreme Court to send its Morrison copper-gold-molybdenum project back to the politicos for reconsideration. Last September two provincial cabinet ministers refused to grant the project an environmental assessment certificate, even though it passed the environmental assessment.
Pacific Booker also petitioned for costs and “such further and other relief as this court considers just and appropriate.” The company stated it spent approximately $30 million on the project, with over $10 million on the 10-year environmental assessment process. Pacific Booker shares closed at $14.95 on October 1, the day before the company announced the government decision. The October 2 close was exactly $10 less, relatively near its April 5 close of $4.99.
Following a 2009 ban on uranium and thorium exploration, the B.C. government eventually paid Boss Power TSXV:BPU an out-of-court settlement of $30 million. The company’s sunk costs were estimated between $4 million and $5 million.
Morrison is Pacific Booker’s sole asset.
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