The Aluminum Corporation of China (Chinalco), has entered into a definitive agreement with Peru Copper Inc. in which Chinalco will acquire a 34 percent stake in Peru Copper for CAD $840 million ($791.30 million), Peru Copper announced yesterday.
The acquisition has been arranged on the basis of a CAD $6.60 ($6.22) per-share-price, 21 percent more than Peru Copper's 20-day volume-weighted average trading price of CAD $5.45 ($5.13) on the Toronto Stock Exchange, which ended on May 23. Chinalco will cash finance the share acquisition.
As part of the same agreement, Chinalco has also agreed to a concurrent private placement of CAD $70 million ($65.95 million) to purchase 13.2 million Peru Copper shares at a per-share-price of CAD $5.30 ($4.99) in order to develop the Toromocho Project. The share price has been agreed at 2.75 percent less than the above mentioned 20-day volume-weighted average trading price.
"Since November 2005, Peru Copper has been reviewing the options on how to maximize the value of the Toromocho Project. We are delighted that a company with the financial and technical strength of Chinalco is going to help the Toromocho Project to reach the next stage of development," Dr. David Lowell, Chairman of Peru Copper, said.
Xiao Yaqing, President of Chinalco, commented that "Peru Copper has done an exceptional job in identifying resource potential in the Toromocho Project and advancing the project towards the definite feasibility stage. We are extremely excited by the prospect of working with the existing Peru Copper employees, the local government and people of Peru to develop this world-class mining project to its full potential."
"The project is an important part of Chinalco's 'going out' policy to expand operations in other countries, and will also grant us the opportunity to advance the Toromocho Project. We look forward to identifying further investment opportunities in Peru and around the world," Xiao added.
The deal will be subject to certain customary conditions and relevant regulatory approvals.
In addition to aluminum, Chinalco has long been attempting to get its hands on copper assets, Beijing Antaike Information analyst, Li Yusheng, said. Chinalco has already acquired several copper smelters and fabricators, including Dayi Nonferrous Metals Co. Ltd. and Luoyang Copper and Shanghai Nonferrous Metals Co. Ltd. It has also approached other leading copper smelters including Yunnan Copper, Jiangxi Copper and Tongling Copper for merger discussions.
The Toromocho Project will be Chinalco's first copper mine project. Chinalco previously bid for the Wulugetu Mountain copper-molybdenum mine project in Hulun Buir League in the Inner Mongolia Autonomous Region's Xin Barag Right Banner, but recently lost the bid to the China National Gold Group Corporation. Chinalco intends to become a world-class enterprise with assets including aluminum, copper and rare earth metals, Li said.
Peru Copper is listed on the Toronto Stock Exchange, the American Stock Exchange and the Bolsa de Valores de Lima, and specializes in the acquisition and exploration of copper deposits in Peru.
The Toromocho Project, located in central Peru's Morococha mining district, is a potentially open pit, porphyry copper mineral deposit. In June 2003, Peru Copper entered into agreement with Empresa Minera del Centro del Peru S.A. (Centromin), a Peruvian state-owned mining company, to acquire the Toromocho Project.
Chinalco's largest current asset is its 40.46 percent stake in the Aluminum Corporation of China Co. Ltd. (Chalco), China's largest aluminum producer.
Chalco, Chinalco's listed subsidiary, suspended trading in Hong Kong and Shanghai today, due to the possible acquisition of Baotou Aluminum Group assets by its parent Chinalco affecting share prices.
Shanghai-listed Baotou Aluminum Co. also suspended trading today, upon the request of Chalco, a Baotou Aluminum securities department official told Int
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