Considering M&A? Here’s what to ask

A large copper miner in Chile only found it had been overpaying a royalty by a significant amount after three ownership deals and 20 years of operation, lawyer Greg McNab told a mining conference in New York.

“They took it in under the umbrella of an M&A exercise and they just assumed that ‘we'll just keep doing it the way the company had been operating,’” the partner at Dentons in Toronto said. “So, you actually should just read that stuff.”

It was just one of the due diligence tips to emerge from a panel at the event run by the Society for Mining, Metallurgy & Exploration. Others were about partnerships, price and closure costs. The May 21 discussion also mentioned mine plans, management and the environment. Three experts from SRK Consulting, which has 45 offices globally and has operated in more than 150 countries, filled out the panel.

It’s important talk early and often to partners such as companies, communities, Indigenous groups or governments and research them on social media, Jeff Parshley, an SRK consultant on the environment, mine closure and reclamation, told the panel. It can improve insight about them when time is short in a potential deal’s data room, he said.

“That can give you some idea of whether you have supportive partners or not,” Parshley said. “And what the current buzz is on the project.”