A new report by Deloitte, Between a rock and a hard place, discusses the current challenges facing the Canadian and global mining industry.
The report notes that due to high costs, price volatility, financing constraints and geographic risk, mining companies have experienced dropping share prices, impairments and management replacement. Concerns are being increasingly expressed by company boards of directors and regulators.
Deloitte notes that as mining company valuations have dipped, access to finance has become scarcer. This has been true in both the debt and equity markets, as suggested by the recent sharp decline in TSX mining equity financings and TSX mining IPOs.
Given this situation, Deloitte observes that mining companies must consider alternative sources of financing. These include private equity firms, which have not been historically active in the sector, but are showing greater interest through new resource-specific funds.
Reuters recently looked at this issue. The article’s interview with Isser Elishis, CIO at Waterton Global Resource Management, a leading mining-focused PE firm based in Toronto, sheds further light on this trend.
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