Resource demand spurs M&A deal surge


By Javier Blas and William MacNamara
Financial Times, London
Friday, August 20, 2010

The rise of China and India has sparked a renewed surge in aggressive dealmaking in the resources sector, with more than $50 billion in proposed take­overs this week alone wagering on continued strong commodities demand.

BHP Billiton on Friday tabled formally its $39 billion hostile take­over for PotashCorp, the world's largest listed fertilised producer, ahead of a statement from Sino­chem, the Chinese-state owned chemical group.

In the first concrete signs of Beijing's interest in the deal, Li Qiang, a spokesman for Sino­chem, said the company was paying "close attention" to the takeover battle, adding that it was "interested in overseas potash investment opportunities."

... Dispatch continues below ...


Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property

On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.

Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."

For complete information on Sona Resources Corp. please visit:

A Canadian gold opportunity ready for growth

The Canadian company told its shareholders "not to take any action regarding the offer" from the Australian mining group of $130 a share, with many bankers betting on a counter-bid emerging from China.

The rise in deal activity is the clearest sign that executives believe that the "commodities supercycle," driven by the industrialisation of emerging countries, is sustainable.

Raw materials prices have risen 35 per cent since the depths of the financial crisis in early 2009, led by a recovery in crude oil, copper and iron ore.

Natural resources companies, including miners, oil, and natural gas producers and fertiliser makers, have launched $316 billion so far this year in M&A deals, the largest for the opening eight months of the year, according to Dealogic, the data provider, and on course to beat the annual record of $384 billion of 2006.

The battle for PotashCorp comes in a week in which Vedanta, the London-listed mining group, sought to take a majority stake in Cairn India, and KNOC, the South Korean national oil company, launched a hostile takeover for UK-listed Dana Petroleum. Agrium, the Canadian fertiliser company, has also agreed to buy Australian grain trader AWB.

A senior industry executive said: "Companies with a strong balance sheet, coming out of the downturn one year ago, were frightened to act in case we still faced Armageddon." But an improved environment has led some companies to renew old ambitions. "A lot of companies practised for these types of deals in 2008.  . . .  Now they are ready to move faster."

* * *

Join GATA here:

Toronto Resource Investment Conference
Saturday-Sunday, September 25-26, 2010
Metro Toronto Convention Center, Toronto, Ontario, Canada

The Silver Summit
Thursday-Friday, October 21-22, 2010
Davenport Hotel, Spokane, Washington

New Orleans Investment Conference
Wednesday-Saturday, October 27-30, 2010
Hilton New Orleans Riverside Hotel

* * *

Support GATA by purchasing a colorful GATA T-shirt:

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit:


Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource

Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.

For Prophecy's complete press release about its production plans, please visit: