Buyers' market for gold and iron ore projects

ACQUISITION values in gold and iron ore and transaction values for exploration and development projects have tumbled, according to new research.
Buyers' market for gold and iron ore projects Buyers' market for gold and iron ore projects Buyers' market for gold and iron ore projects Buyers' market for gold and iron ore projects Buyers' market for gold and iron ore projects

Liam Twigger

Brooke Showers

MinesOnline Market Metrics data, based on resource projects across 100 countries, revealed project acquisition costs in the resource sector had continued to tumble as poor market sentiment drove project values lower.

MinesOnline managing director Liam Twigger said the survey estimated average gold project acquisition costs over the past 12 months had a value of $A28 per ounce, while development projects were $35/oz.

“The recent acquisitions by Panoramic Resources of a 70 per cent interest in Matsa’s Mt Henry project for $13 per ounce of gold and LionGold’s acquisition of the Hellyer project at $6 per ounce of gold equivalent both confirm the sharp downward trend in gold project valuations,” Twigger said.

“The average value per ounce of the MinesOnline Market Metrics ASX-listed explorers’ index is currently hovering around the $36 per ounce level, which presents an attractive uplift for the Panoramic and LionGold acquisitions but is still well below the longer term average listed explorer value of approximately $50 per resource ounce.”

Twigger said the downward trend in project values had also extended to the iron ore market, in light of Dragon Energy’s acquisition of Murchison’s Rocklea project at approximately 7c per contained iron tonne.

“This contrasts starkly with the current 12-month MinesOnline Market Metrics estimated average price paid for hematite projects of 42c,” he said.

The MinesOnline data demonstrated attractive market opportunities for cashed-up companies or companies in production with strong balance sheets seeking to acquire assets at a significant discount.

“A bit like the boarder investment market, this is clearly a time when assets across the mining industry can potentially be snapped up for attractive prices,” Twigger said.

“Companies prepared to take a long-term view will no doubt see this as a unique time of opportunity.”

MinesOnline is a partnership between Perth-based PFC Capital and Canada’s TMX Group to connect resource projects with potential purchasers.

The site features rolling historical average project acquisition prices across a range of commodities and provides comparisons between companies listed on the Australian Securities Exchange and the Toronto Stock Exchange on a market capitalisation per ounce/tonne/pound basis.

Also available on the online marketplace is average data on project acquisition values for commodities including copper and nickel.