Wednesday, February 12, 2014

Copper M&A Heating Up: OZ Minerals Gets Approaches on $2.7 Bln Copper Project MUX TNR.v CU GDX

  Copper M&A is heating up and now Australia's largest unmined copper deposit is in play. Rob McEwen should be using this momentum now in the market place and put Los Azules copper deposit on the industry radar screens. TNR Gold and McEwen Mining will be very well positioned for this upturn in the market place. CRB index is breaking out and increasing M&A activity is signalling that the bottom is in place for the resource sector.  Meanwhile McEwen Mining has breaking out to the upside above CAD3.0 with Gold in a breakout mode.

Copper M&A: HudBay Eyes Arizona Copper Deposit With Augusta Offer TNR.v, MUX, HBM, AZC, LCC.v

 "Copper M&A is heating up and following Chinese quest for the long term secured supply of Copper Hudbay is bidding for one of the most promising Copper projects in the U.S. Increasing M&A activity confirms that the bottom for the mining stocks is in and industry insiders are looking for the best assets before the general public will drive the prices up.
  Glencore is talking about the higher Copper prices to come and they are not alone in this industry observation. McEwen Mining and TNR Gold will get now more attention to Los Azules copper project, as we have discussed yesterday, and Lumina Copper will be in M&A play as well with its Taca Taca copper deposit in Argentina."

Copper M&A: Glencore Plays Deal Or No Deal With China On Prize Copper Asset MUX, TNR.v, CU, GDX

"FT reports about very interesting developments around the Las Bambas Copper mine in Peru. To sell this prize copper asset was always the condition for Chinese approval of Xstrata and Glencore merger. Chinese are ready to put their hands on it, but now, apparently, Glencore is talking about higher Copper prices and better economics of the project, which can affect the sale.

  All this new information bodies very well for McEwen Mining and TNR Gold with their Los Azules Copper project in Argentina. Actually Xstrata was involved in that project as well. Timing of the deal on Las Bambas is very important  - before it was scheduled for September and now talks could be concluded this month. Copper market M&A is heating up and the major players are ready to make their bets already."

TNR Gold TNR.V is one of the most intriguing microcap stories I follow. cc:

Los Azules Copper - McEwen Mining And TNR Gold: Yamana Gold to invest $450 million in Argentine mine MUX, TNR.v, LCC.v

"It looks like the shift in Argentina for the better is happening for real this time. Rob McEwen has discussed it in his recent presentation and that in his opinion "we have seen the low in Argentina after  a lot of disappointment". Shevron special Shale Oil deal, repayment to Repsol and now Yamana Gold investment are certainly the things we would like to see now after elections. Lumina copper is holding above CAD5.00 these days and McEwen Mining and TNR Gold should benefit from Los Azules copper revised valuation now."

Copper M&A: Peru Officials Meeting Chinalco, Minmetals This Week on Las Bambas Bids MUX, TNR.v, LCC.v, CU, GDX

 "With Chinese economy in the recovery mode quest by Chinese companies for the best mining assets is ongoing worldwide. Lumina Copper is getting some bids today again and Los Azules copper will be getting on the investors' radar screens with the changing political landscape in Argentina again."

"Los Azules Copper ProjectArgentina (100%)

In September, McEwen Mining announced an updated PEA for the Los Azules Copper project. The results from the PEA demonstrate that Los Azules has the potential to become one of the largest, lowest cost copper mines in the world. In addition, there remains excellent exploration potential to further expand the size of the existing mineral resource. Highlights from the PEA are shown below:
  • Pre-tax Net Present Value of $3.0 billion (8% discount rate) and an Internal Rate of Return of 17.7%.
  • Annual copper production during years 1-5 to average 258,000 tonnes (568 million lbs), which would have placed it in the top 3%1 of copper mines in the world during 2012. Life of mine annual copper production to average 171,000 tonnes (377 million lbs) over 35 years.
  • Indicated resource of 5.4 billion pounds of copper (grading 0.63% Cu) and 0.8 million ounces of gold (389 million tonnes with a cut-off grade of 0.35% Cu) and Inferred resource of 14.3 billion pounds of copper (grading 0.46%) and 2.6 million ounces of gold (1,397 million tonnes with a cut-off grade of 0.35% Cu).
  • Initial capital costs to construct the mine and process plant have been estimated at $3.9 billionwith a payback on a pre-tax basis has been estimated at 3.8 years at $3.00/lb copper and$1,300/oz gold.
1 Based on internal market data.
The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.
The PEA has been filed under the Company's profile on SEDAR ( pursuant to the requirements of Canadian National Instrument 43-101 and is also available on the Company's website -"
All slides are from McEwen Mining presentations.


OZ Minerals Ltd. (OZL) will consider selling a majority stake in its planned A$3 billion ($2.7 billion) development of Australia’s largest unmined copper deposit after receiving approaches from potential partners.
Major copper producers have been involved in “early stage discussions” on the Carrapateena project in South Australia, Chief Executive Officer Terry Burgess, who will be step down within the next 12 months, said today on a media call after reporting the company swung to a full-year net loss of A$294 million. The shares rose to a four-month high in Sydney.
Any partners would be taking a stake amid forecasts global copper supplies could become constrained after producers delayed or canceled development of new mines due to weaker prices. Glencore Xstrata Plc (GLEN), Trafigura Beheer BV andFirst Quantum Minerals Ltd. (FM) may be among those interested in acquiring a holding in Carrapateena, David Coates, a Sydney-based analyst at CIMB Group Holdings Bhd. (CIMB), said by phone.
“There’s only a handful of local mining companies that could do this” such as BHP Billiton Ltd. (BHP), Rio Tinto Group and Newcrest Mining Ltd. (NCM), CIMB’s Coates said. “I don’t think any of those are on the cards.”

Source: OZ Minerals Ltd. via Bloomberg
A map shows OZ Minerals Ltd.'s Carrapateena copper-gold project in South Australia, in...Read More

Melbourne-based OZ Minerals, the nation’s third-largest copper producer, rose 13 percent to A$3.83 in Sydney, the highest since Oct. 16.
Baar, Switzerland-based Glencore and closely held Trafigura both declined to comment in e-mails on whether they’ve held or are seeking talks with OZ Minerals. Vancouver-based First Quantum didn’t immediately respond to e-mails seeking comment sent outside usual office hours.


The board will look for a new CEO to succeed Burgess within the next 12 months, Chairman Neil Hamilton said in a statement. This will allow a new management team to “capitalize on our encouraging growth prospects,” Burgess said in the statement.
“There may be an expectation that a new CEO can come in and might be more aggressive, and convince the board to be more aggressive,” Sydney-based UBS AG analyst Jo Battershill said by phone. “In a way, the company has missed an opportunity over the last few years.”
Some parties have signed confidentiality agreements to access more information on Carrapateena, where an initial study is due to be completed this half, OZ Minerals said today in a statement.
“There are a number of large companies, including large foreign companies that are in the copper business, who are talking to us,” Burgess said. “If a large producer came in, it would probably make more sense for them to have the controlling interest and be the operator.” Some discussions include the company’s Khamsin deposit, close to Carrapateena, and neighboring exploration areas, he said.

Photographer: Carla Gottgens/Bloomberg
Terry Burgess, chief executive officer of OZ Minerals Ltd., poses for a photograph in Melbourne.

Possible Shortage

About 4.5 million metric tons of new production capability is needed from projects to meet demand by 2022, according to Wood Mackenzie Ltd. Copper may return to shortage in 2016, spurring the need for new projects, Macquarie Group Ltd. said in a Jan. 15 note.
Carrapateena may contain as much as 6.3 million tons of copper and 8.4 million ounces of gold, according to a November filing. Khamsin, 10 kilometers to the west, may be a similar copper-gold system, the company said today in a separate statement.
Carrapateena has a potential valuation of A$1 billion and the possible sale of a 50 percent interest for A$300 million to A$500 million “cannot be dismissed as unrealistic,” Credit Suisse Group AG analysts led by Michael Slifirski said in a Feb. 10 note.
The project may cost A$2 billion to A$3 billion to build and produce as much as 110,000 tons of copper a year with a mine life of 20 years, the company said in a May presentation.

Photographer: Carla Gottgens/Bloomberg
The logo for OZ Minerals Ltd. is displayed in the lobby of the company's headquarters in Melbourne.

To contact the reporter on this story: David Stringer in Melbourne
To contact the editor responsible for this story: Jason Rogers

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