On 11 May 2021, Fasken co-hosted a webinar with the Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSX-V) (together, the TMX Group) and the Johannesburg Stock Exchange (JSE). The overarching theme of the webinar was a retrospective and forward looking view of listings, capital raisings and M&A activity involving companies with mining assets in Sub-Saharan Africa taking into account the impact of the Covid-19 pandemic.
The panellists for the webinar were Graham Dallas, Head of Business Development at the TMX Group, Patrycja Kula-Verster, Primary Markets Business Development Manager (Equities Department) at the JSE and Dimitri Cavvadas, a partner at Fasken based in the Johannesburg office with capital markets and mining expertise.
Graham Dallas shared that the TSX and TSX-V remain active and involved in the mining sector in Africa. In the first quarter of 2021, five of the top ten financing transactions which took place on the TSX-V were mining companies, one of them being Orezone Gold Corporation which raised US$ 74 million in relation to its gold project in Burkina Faso.
Insights from Patrycja Kula-Verster included that mining has been the JSE’s largest focus and part of its DNA since its inception 134 years ago. She provided statistics and figures on the performance of mining (resource) companies and indicated that the total revenue generated by the South African mining industry at the end of the second quarter in 2020 grew by 4% with PGMs generating the largest revenue and demonstrating a 56% increase from the previous year.
Dimitri Cavvadas discussed certain recently concluded mining M&A transactions in Sub-Saharan Africa and considered whether such transactions could be indicative of certain trends emerging in the region. By way of example, Harmony’s acquisition of AngloGold Ashanti’s assets could be indicative of further consolidation in the gold industry, ZCCM’s acquisition of Mopani Copper Mines could demonstrate government intent to reacquire strategic mining assets in the region and the Anglo American Thungela Resources demerger demonstrates thermal coal exits in the region, taking into account Environmental, Social, and Corporate Governance (ESG) considerations and calls for decarbonization.
Dimitri also discussed the decline in M&A activity (in deal count and value) in the first half of 2020 (as efforts were made to save, pause or exit deals as a result of Covid-19) followed by a rebound in the second half of 2020 extending to the first quarter in 2021 when market certainty appeared to have resumed.
During the session there was consensus that ESG considerations have become a key driver in mining M&A leading to fossil fuel exits by the likes of South 32 Limited and Anglo American and Exxaro diversifying their portfolios to include renewable energy.
According to the polls conducted during the webinar, 47% of the attendees expected most M&A (acquisition/disposal) activity to be in gold and precious metals. Furthermore, 42% of the attendees were of the view that foreign investment, among other factors, is likely to be the most influential in driving mining M&A activity in Sub-Saharan Africa since the onset of Covid-19. The other factors polled included commodity prices (27%), distressed asset acquisitions and ESG considerations (12%).
The recording of the webinar is available via this link:
This bulletin was prepared by partner Dimitri Cavvadas, senior associate Thandiwe Nhlapho and candidate attorney Robin Monteiro.