Issue link: http://resourceworld.uberflip.com/i/229125
"The market is primed to jump in once it has evidence of a major new discovery" Theoretically, a lot of the costs should start to ease as service providers lower their prices in a bid to attract business. "If the slowdown in the mining sector continues, the companies that survive may find themselves in a better position to negotiate more competitive rates from their service providers – to the extent the service providers are themselves not fully utilized," Mason said. It is also the time to deliver bad news, alter guidance or restructure business models. "Look at your guidance, get it back on track and make it realistic for 2014. Have a look at your balance sheets and if you have projects that are disconnected to DECEMBER/JANUARY 2014 RW December 2013.indd 33 their actual value then take the hit now," he added. Companies should also revaluate their project portfolios. "If you can't raise money for the whole business program then focus on what's essential: the key project that will achieve value down the road and put the company on track for the upswing," he said. "Projects that fail to fit with the central business model might be better suited to being joint-ventured or divested." Teaming up with other companies in similar circumstances is unlikely to help. "Putting a bunch of companies together that don't have the cash is not going to solve anyone's problems," Mason said. "For the most part, the money is on the side lines and will only come in for the strategic projects with high potential." Mixed message M&A Unfortunately, finding possible partners or buyers that are able and willing to engage can be exceedingly difficult. Most seniors have frozen mergers and acquisition (M&A) activity as they too grapple with a miserable year, one that has witnessed several eye-watering write-downs and impairments. Barrick's $8.7 billion after-tax impairment charges in Q2 was, perhaps, the most striking example of www.resourceworld.com 33 12/11/2013 6:12 PM