One more M&A candidate from CIBC report is gone now. The Next Leg of Growth In The Copper Supply has highlighted quite a few companies and projects we are following here.
Los Azules copper project in Argentina is among the most interesting after Minera Andes, operator on the property, has announced new PA with NPV standing at 2.8 billion dollars now.
TNR Gold: Minera Andes Updates Preliminary Assessment for Los Azules Project, estimates $2.8-billion Los Azules NPV
This new deal in copper M&A space bring new dramatic increase to the valuations of the projects and price paid per pound of Copper in the ground. We have run some numbers before for Los Azules based on First Quantum Minerals deal to buy out Antares Minerals with US4¢ paid per pound of copper resource.
TNR Gold: Los Azules: New benchmark for valuation: First Quantum to buy Antares Minerals for C$460 mln.
Now market will be taking US13¢ per pound of copper resource as a new benchmark for the new deals. All projects are different, but this deal could be a tipping point and ignite rush for the new deals to secure Copper Supply for Chinese growth.
"News from Los Azules are getting better and better - now we have a new PA with increased NPV of this project from just under 500 million to 2.8 billion us dollars! Two out of five planned drills will be on the site shortly and deposit will grow even more in its size.
Now we can realise why TNR Gold was so determined in its legal fight for the back-in right into this deposit. At stake now is up to 15% of the project (12.5% technically, but with high grade core on the former TNR Gold - Xstrata land) with value of 420 million dollars, according to this latest estimations from Minera Andes. There is a legal risk in every lawsuit and our position is that the court should always decide about the property ownership between TNR Gold and Minera Andes, but for the junior with market cap just over 20 million CAD it could be a very important development - the higher the value of the prise the higher the chances of out-of-the-court settlement. We will be really surprised if Rob McEwen will drag this project along into the court battle - which date is set for the June 2011 - increasing its value further with announced drilling program.
George Macintosh Q.C. is leading TNR Gold litigation team. His personal engagement and new twist in litigation strategy, "that "production of a feasibility study, whether produced within 36 months or some other time, was a condition solely for the benefit of Solitario (TNR Gold sub - S.), and as such, could be waived" - provides nessesary support that TNR Gold legal claims to the part of 2.8 billion NPV story of Los Azules should be taken seriously.
"30 NOVEMBER 2010
Best Lawyers, the oldest peer-review publication in the legal profession, has named George Macintosh, Q.C. as the “Vancouver Best Lawyers Bet-the-Company Litigator of the Year” for 2011.
“The lawyers being honoured as “Lawyers of the Year” have received particularly high ratings in our surveys by earning a high level of respect among their peers for their abilities, professionalism, and integrity” states Best Lawyers.
To view a copy of George Macintosh’s biography please click here."
The recent professional award shows that TNR Gold shareholders are in the right company to defend thier property rights in this legal case, which some people are already calling "MAI's bullying tactics are on trial here. It is truly a 'David and Goliath' case." We will address you to the Statement of Defence by TNR Gold and Los Azules propery maps on the links below to make you own conclusions, as always.
"TNR Gold Corp.'s litigation in the Supreme Court of British Columbia related to the LosAzules project in Argentina, involving TNR, Minera Andes Inc., MIM ArgentinaExploraciones S.A. (Xstrata) and related entities, has been joined for hearing and scheduled for a new trial date of June 20 to July 15, 2011. The trial will be held in Vancouver."
"It is important to remember, that now, according to this NR, all litigation around Los Azules between TNR Gold, Minera Andes and Xstrata is joined in one trial and TNR Gold will seek, according to the Statement of Defence above, not only rectification of the option agreement to reflect its true intentions - without 36 months condition, but that "production of a feasibility study, whether produced within 36 months or some other time, was a condition solely for the benefit of Solitario (TNR Gold sub - S.), and as such, could be waived".
Also at stake is Escorpio IV property:
"We did not understand why Minera Andes did not accepted the back in right by TNR Gold and lost opportunity to consolidate the project and secure a very important Escorpio IV property, where according to Minera Andes mining plan part of mining facilities supposed to be located, but Rob McEwen must has his own strategy. With this kind of presentation it will be not cheap any more to settle out of the court, but it is always better then drag such a project in litigation for years to come."
"Los Azules emerges in this light as a very important Copper deposit with a lot of upside in its valuation among the leaders in this particular quality, relatively high CAPEX requirements, but in the solid middle or to the higher band in a lot of different investment metrics compare to the other juniors in the analysis provided by CIBC."
It is very important that, according to CIBC report page 42, legal claims of TNR Gold are communicated properly within the industry now. Junior can fully rely on its litigation strategy, court decision or potential out-of-the-court settlement, should Minera Andes decide to clean the house before calling the real estate agents.
We will always leave it to the lawyers and court to decide - who owns what in this case in its proper time.
Copper is going up and the deposit is growing - we guess that nobody is in a hurry here. Argentina will become more fluent in Mandarin and the value of every lb of Copper in the ground will go up - to reflect fundamental picture described in the CIBC report."
Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advise on this blog and there is no solicitation to buy or sell any particular company here. Always consult with your qualified financial adviser before making any investment decisions.
Peter Koven January 11, 2011 – 10:00 am
HudBay Minerals Inc.’s friendly takeover offer for Norsemont Mining Inc. sets a high benchmark for future copper deals, according to Northern Securities analyst Matthew Zylstra.
He calculated that the $520-million deal values Norsemont at close to US13¢ a pound for copper resources, a hefty price that is well above other recent deals in the sector.
By comparison, he noted that First Quantum Minerals Ltd.’s $460-million takeover of Antares Minerals In. valued Antares at US4¢ per pound of copper resources, and NovaGold Resources Inc.’s $34-million bid for Copper Canyon Resources Ltd. is worth US8¢ a pound.
It is interesting to see Northern Securities opine on HudBay, as Northern’s CEO Vic Alboini played a key role in blocking the company’s controversial offer for Lundin Mining Corp. in 2009."