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Mining Companies: How Majors Are Selling Off Assets

Benjamin, having just gotten back from this year’s SME conference, starts off by discussing a concept that kept on coming up: how are majors going to manage selling off assets? Traditionally
  • 1 min Read

By Benjamin Cox

Managing Director of Oreninc Prior to founding Oreninc, Mr. Cox served as a senior analyst at the D.E. Shaw Group and as a consultant with the GLG Group, where he worked directly with 15 Wall Street teams in the mining deal space. Currently, he holds the position of Chief Executive Officer of Roche Bay plc, an iron ore mining company with leases in Nunavut, Canada. Mr. Cox is also the Chief Executive Officer and a Director of Aston Bay Holdings Ltd. (TSX-V:BAY), a copper and zinc company with properties in Nunavut, Canada. Mr. Cox has researched and developed business, financial, and shipping models for every major global iron ore project. He is also an expert on mining industry market dynamics and metals, with a focus on raw materials including base metals, iron ore, platinum group metals, and industrial materials such as potash and lithium. Mr. Cox holds a B.S. from Brandeis University and an M.B.A. in Finance from Portland State University.
Managing Director of Oreninc Prior to founding Oreninc, Mr. Cox served as a senior analyst at the D.E. Shaw Group and as a consultant with the GLG Group, where he worked directly with 15 Wall Street teams in the mining deal space. Currently, he holds the position of Chief Executive Officer of Roche Bay plc, an iron ore mining company with leases in Nunavut, Canada. Mr. Cox is also the Chief Executive Officer and a Director of Aston Bay Holdings Ltd. (TSX-V:BAY), a copper and zinc company with properties in Nunavut, Canada. Mr. Cox has researched and developed business, financial, and shipping models for every major global iron ore project. He is also an expert on mining industry market dynamics and metals, with a focus on raw materials including base metals, iron ore, platinum group metals, and industrial materials such as potash and lithium. Mr. Cox holds a B.S. from Brandeis University and an M.B.A. in Finance from Portland State University.

Benjamin, having just gotten back from this year’s SME conference, starts off by discussing a concept that kept on coming up: how are majors going to manage selling off assets? Traditionally what is done (and what they should be doing) is buying assets in bear markets, and selling them in bull markets, but the reality is that they do the opposite.

Benjamin contends that there are two options: divesting them to their shareholders, or liquidating them for cash. All stakeholders must be looked at, and management may not always be doing what is best for their shareholders. Benjamin states that the best way for management to get good value for their shareholders is for Majors to spin out unwanted assets into a new junior or mid-tier company, as opposed to liquidating them into private equity funds. This would not only be good value for shareholders, but it would be much better for the industry.

 

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