The Cdn$840mn (US$792mn) all-cash offer by the Aluminum Corporation of China (Chinalco) to buy Peru Copper and its Toromocho deposit is a good bid considering the size and high capex of the project, two analysts following the deal agree.
"It seems like a pretty good bid and probably the only one out there," Kerry Smith, analyst with Haywood Securities, told BNamericas.
On Monday (Jun 11) Peru Copper made public its unanimous board approval of the Cdn$6.60/share Chinalco offer. The Vancouver-based company's stock was trading around Cdn$6.46/share Tuesday afternoon.
Meanwhile a shareholder go-ahead appears to be a given, Smith added, considering that since news of the deal hit the market investors have entered into lock-up agreements with Chinalco for roughly 50% of Peru Copper's diluted stock.
Two-thirds of Peru Copper stockholders must tender to the deal to ensure its success.
And although some feel the deal undercuts the Toromocho copper project's true value, its US$1.52bn capex and the involved risks in terms of development and commodity prices make the bid glisten, according to Smith.
Furthermore, Peru Copper as an exploration company does not have the means to acquire the capital or the expertise needed to bring Toromocho into production and needs the backing of a larger player, according to London-based Numis Securities analyst John Meyer.
"Small companies need the certainty of a larger balance sheet to overcome the potential for cost escalation that could delay a project," Meyer said in an interview.
Toromocho in Junín department is slated to churn out 270,000t/y of red metal in concentrate and cathodes and 5,400t/y molybdenum for 21 years.
豫公网安备41010502003434号