Ernst & Young: Private capital pursuing mining and metals

By Rob Starr, Content Manager, Big4.com

Financing for junior and mid-tier miners may be challenging but it is not impossible, according to Paul Murphy, Ernst & Young’s Australia and Asia-Pacific Mining & Metals Transaction Leader. Data to the end of September suggests full year 2012 capital raisings in the mining and metals sector globally could be the lowest since 2009, with a sizeable proportion of this year’s raisings from record corporate bonds issues from larger companies.

“Private capital is increasingly looking to take advantage of low equity valuations to take opportunistic or strategic non-controlling equity stakes in mining and metals assets at what they perceive as an opportunistic time in the cycle.”

Ernst & Young Debt Advisory practice joint leader Sebastian Paphitis says companies trying to find finance have their work cut out getting the right deal.

“Big or small, public or private, finding finance is no longer a simple equation but the good news is there are a bunch of alternative options that are available,” says Paphitis. “While the very largest players have the depth of internal expertise to navigate the options, for everyone else it can be a bit like trying to put together a 1000-piece jigsaw puzzle.”