Minera Andes with its huge Los Azules copper deposit in Argentina is primed for M&A play with rising Copper price and Chinese appetite for commodities, will be interesting to see what will happen with TNR Gold's legal claims on part of the deposit and whether Rob McEwen will be ready to make a deal with this junior in order to consolidate the project and appreciate full upside of the valuation in any potential deal. He values Los Azules up to 375 Mil in his "imprecise estimate of value"
Latest Presentation from Minera Andes
"M&A fever hits the ground in Argentina and not only in Lithium, but in Gold today as well - we guess Copper is to follow. Somebody likes the story and Minera Andes breaks out to the upside today on a big volume. We are closely watching TNR Gold with its vast holdings of Lithium, Copper and Gold projects in Argentina. Los Azules legal case will be taking a new perspective with every tick to the upside in the copper price and any idea about M&A involving Minera Andes.
"In a Copper space we are following development of Los Azules with Minera Andes and TNR Gold lawsuit boardroom games. With every uptick in Copper price NPV of the los Azules is going up, keeping everybody involved closely watching the litigation outcome:"
Copper Fox Metals is another runner this season and, according to Globe, our expectations of M&A potential action here is not far stretched as well. Globe has reported about Potash primed for takeover in February this year and now we have BHP bid for it this Summer - not bad for the Globe with its crystal ball at all. Copper Fox is trading at 0.75CAD today.
"Copper Fox Metals is on the move up today with volume and maybe will break out finally out of 0.4CAD range. Another long term Copper play is back in the business after the crash. Story is very high leveraged to Copper price and any potential M&A deals."
Globe says Minera, others could be takeover targets
2010-09-15 06:40 ET - In the News
Also In the News (C-ANM) Antares Minerals Inc
Also In the News (C-AZC) Augusta Resource Corp (2)
Also In the News (C-CUU) Copper Fox Metals Inc
Also In the News (C-FWM) Far West Mining Ltd
Also In the News (C-NCU) Nevada Copper Corp
Also In the News (C-TRX) Terrane Metals Corp"
We can not find this particular article from The Globe and Mail, but maybe this article was the basis for Stockwatch announcement:
Tuesday, September 14, 2010 7:22 PM
The Globe and Mail:
Junior producers likely to benefit from China’s appetite for copper
What are we looking for?
China has a voracious appetite for copper. Demand for the red metal is traditionally a harbinger of economic strength and is used extensively in construction, transportation, electronics, plumbing and even in the currencies of nations themselves. China consumes 39 per cent of global production but has only about 6 per cent of the world’s reserves.
CIBC World Markets analyst Ian Parkinson has done an extensive review of junior copper producers that trade on the Toronto Stock Exchange, combing through more than 160 companies and more than 200 projects to determine which players are most likely to draw the acquisitive eye of large mining companies and sovereign wealth funds in China, India, Brazil and other developing economies. He says merger and acquisition activity is set to ramp up in the space and investors who choose the most attractive junior players will see substantial returns. “In very simplistic terms, we believe if you’re long what China’s short, you’re in a good position.”
Mr. Parkinson zeroed in on junior copper producers with “pounds in the ground” that he calculated would be on the radar screens of international investors.
He created a weighting formula to capture how the market values these firms. In the process he looked at historical transactions and total acquisitions costs, and he weighed resource criteria, including deposit size and grade as well as mining methods and proximity to infrastructure and markets. He assessed the grade of projects with the assumption that higher-grade products typically carry lower operating costs, and he calculated cash costs of production as well as capital expenditure required on a per-pound basis.
In terms of valuations, he used enterprise value divided by the amount of reserves. He also looked at market capitalization relative to the required initial capital in an effort to gauge how the market is valuing the likelihood of the companies actually building their projects.
What did we find?
At the top of the list of 25 stands Duluth Metals Ltd., which is in the advanced stages of mineral exploration and has completed preliminary economic assessments on a large underground site in northeaster Minnesota.
Number two ranked PolyMet Mining Corp. is developing a copper-nickel-precious metals project in northeastern Minnesota and owns a crushing and milling facility and other infrastructure nearby. The state government is close to completing an environmental review and the company will begin project construction upon receipt of permits, Mr. Parkinson says.
The third ranked firm is Western Copper Corp., a Vancouver-based entity spun out from Western Silver Corp. in 2006. It holds significant gold, copper and molybdenum resources and reserves in four Canadian properties, he says.
“We would say this group [of 25] represents some of the best junior Americas-focused copper names currently listed on the TSX and a basket approach with the group could be advantageous for investors,” Mr. Parkinson says.
CIBC Junior Copper Rankings
1. Company Ticker CIBC
2. Junior Copper Score Market Cap ($-mln.)
3. Overall Ranking
4. Strategic Partnership
Duluth Metals Ltd DM-T 4.95 218 1 Antofagasta has 40% interest in Nokomis
PolyMet Mining Corp POM-T 6.75 225 2 Glencore owns 6.3% and Cliffs Natural Resources owns 6.1%
Western Copper Corp WRN-T 7.65 105 3
Terrane Metals Corp TRX-X 7.85 639 4 Proposed acquisition by Thompson Creek Metals
Augusta Resource Corp AZC-T 8.75 360 5 HudBay owns 11% (13.6% fully diluted)
Antares Minerals Inc ANM-X 9.55 251 6
Far West Mining Ltd FWM-T 9.85 273 7 Quadra FNX owns 7.9% (14.64% fully diluted)
Copper Fox Metals Inc CUU-X 10.05 211 8
Minera Andes Inc MAI-T 10.85 262 9
Nevada Copper Corp NCU-T 10.95 165 10 Capstone owns 11.1% (14.4% fully diluted)
Coro Mining Corp COP-T 11.55 57 11
Redhawk Resources Inc RDK-X 11.65 49 12
Candente Resource Corp CDG-T 12.65 35 13
Baja Mining Corp BAJ-T 13.55 136 14 25% partner on Boleo with a consortium of South Korean companies
Source: Company reports and CIBC World Markets Inc.
View Full Table ..