At just under $60-billion, the value of completed and pending M&A activity in the mining industry was close to rock bottom in 2009. Now it's time to cue the comeback.

"We expect to see a rebound in the dollar value of the transactions in the mining space in 2010, said Paul Burchill, analyst, Dundee Securities.

"Producing companies are currently enjoying healthy cash margins at their operations and in many cases balance sheets have been strengthened and share prices have recovered."

Mr. Burchell said most of the CEO's he has spoken to favour organic growth over acquisitions as a means to create shareholder value. But history shows that isn't always the quickest and best way to replenish depleting asset bases.

Alternatively many producers are taking an equity stake in a basket of junior companies, a strategy known a trap-lining. Once again, Mr. Burchell believes this approach is not as effective as M&A, saying it is time consuming and rarely turns into a something significant.

"We declare that the signs are there that hunting season is open and it is simply a matter of time before we begin to see some sizeable deals take place."

In the gold industry, Mr. Burchill said Osisko Mining Corp., San Gold Corp. and Andean Resources Ltd. all have targets on their back, as do Allied Nevada Gold Corp., Gammon Gold Inc., Aurizon Mines Ltd. and Minefinders Corp.

Other base and precious metals companies that he said could attract interest from senior producers include Baffinland Iron Mines Corp., Noront Resources Ltd., Sabina Gold & Silver Corp. and Peregrine Diamonds Ltd.

"We remain sceptical that much will change in respect of M&A activity in socially or politically challenging jurisdictions," he said.

"Most producers will accept technical challenges over sovereign risk issues since the latter are extremely difficult to predict and often times impossible to manage."

David Pett