Big M&A deals likely to continue in mining sector - PowerOne Capital Markets' David D'Onofrio

Mergers and acquisitions should continue through 2024, said David D'Onofrio, CFO of PowerOne Capital Markets.

D'Onofrio spoke to Kitco Mining in early March at PDAC 2024 in Toronto, Canada. 

PowerOne Capital Markets is a diversified merchant bank, and notable mining investments include Collective Mining, enCore Energy and Neo Lithium. D'Onofrio is also CEO of White Gold, a Canadian gold exploration company operating in the prolific White Gold District located south of Dawson City in northwest Yukon, Canada. Backers include Agnico Eagle, Kinross and Eric Sprott. 

D'Onofrio admitted that critical minerals "totally capitulated" in 2023, but the setup for 2024 looks interesting. 

"You can almost have the best of both worlds where you have this continuation of precious metal price increases...and now a rebound of some of these critical minerals like lithium, nickel, copper, so I think we're setting up for an interesting year," said D'Onofrio.

Critical minerals had an awful 2023. D'Onofrio blamed a market that ran too far ahead of itself. 

"I think people were just buying to ensure they had the security of supply and that caused a bit of a squeeze," said D'Onofrio, adding that the high price levels for lithium were not "sustainable." 

"The overhang from the lithium run up is working through the system," D'Onofrio said. “It creates a glut and then we need to go through a destocking, and that's what we're seeing now.”

Asked about the some of the big transactions that kicked off the year in mining—Solaris Resources receiving $130 million from Zijin Mining Group for a 15% stake and Osino Resources being bought by Yintai Gold for $272 million—D'Onofrio said the dealmaking should continue. 

"There's a big value gap, and it's just a matter of people needing to understand why they should be looking at [investments] today versus tomorrow."

Coverage is sponsored by UEC (Uranium Energy Corp.), URC (Uranium Royalty Corp.) and GoldMining. 

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