First Quantum to acquire Lumina Copper for $420 mln (updated)
17/06/2014 20:10
(Adds details from sources, background, share price move)
By Euan Rocha and Nicole Mordant
TORONTO/VANCOUVER, June 17 (Reuters) - First Quantum
Minerals Ltd FM.TO said on Tuesday it has agreed to buy Lumina
Copper Corp LCC.V for about C$456 million ($420 million), in a
bid to win control of Lumina's Taca Taca copper project in
Argentina.
The cash-and-stock deal values Vancouver-based Lumina at
about C$9.71 a share, a premium of nearly 25 percent to the
company's closing price on the TSX Venture Exchange on Monday.
The Taca Taca asset, located about 120 kilometers (75 miles)
east of the world's largest copper mine Escondida in Chile, has
estimated mineral resources of 21.15 billion pounds of copper.
The deal is a vote of confidence in Argentina, which in 2012
seized Spanish oil major Repsol's REP.MC 51 percent stake in
energy firm YPF YPFD.BA . This year Repsol reached a $5 billion
settlement with Argentina over the dispute. ID:nL6N0LU4FK
A source involved in the Lumina takeover said First Quantum
is not too concerned by the situation in Argentina.
"These things ebb and flow, and their sense is that things
are going in the right direction in Argentina," said the source.
The acquisition comes at a time when the price of copper has
fallen by a third from highs above $9,900 a tonne in February
2011. Copper was last trading just above $6,700 a tonne on the
London Metal Exchange. ID:nL5N0OY2NR
The global copper market is seen flipping into a surplus
this year and next after four years of apparent deficit as new
mine supply outstrips demand. ID:nL5N0MU2ZS
But beyond that the market is widely expected to revert to a
production shortfall as the pipeline of new supply has been
significantly diminished by lower prices and the
shareholder-mandated austerity among the world's top
miners. ID:nL6N0NK39S
GROWTH PIPELINE
The takeover underscores the continued interest in copper
assets given the longer-term outlook for the industrial metal.
Canadian miner Hudbay HBM.TO has been trying for months to
buy rival Augusta Resources AZC.TO , in a bid to acquire its
Rosemont project in Arizona. And in April, a Chinese consortium
agreed to buy the Las Bambas copper mine in Peru from Glencore
Xstrata GLEN.L for $6 billion.
Sources familiar with the situation say Aston Bay BAY.V , a
mineral exploration company, is also about to clinch a deal with
a major copper producer that will see its partner invest in and
fund its Storm project - a copper-zinc asset in the Arctic - in
return for the right to earn a 70 percent stake in the asset.
ID:nL1N0OC0FM
First Quantum said Taca Taca is at a stage where it can
apply its resources and development expertise to realize the
project's full potential.
Shares in Lumina were halted early Tuesday, but jumped 22.7
percent to C$9.57 in afternoon trading after the stock reopened.
First Quantum shares fell 2.7 percent to C$21.10 on the TSX.
The deal has been approved by the boards of both companies.
Holders controlling some 33 percent of Lumina shares, including
its officers and directors, have agreed to vote their shares in
favor of the deal, which is subject to regulatory approvals.
RBC and Fasken Martineau DuMoulin acted as First Quantum's
advisors on the deal. Raymond James and Borden Ladner Gervais
acted for Lumina.
(Reporting by Euan Rocha and Nicole Mordant; Editing by Jeffrey
Benkoe and Cynthia Osterman)
((euan.rocha@thomsonreuters.com)(+1 416 941 8185)(Reuters
Messaging: euan.rocha.reuters.com@reuters.net))
Keywords: LUMINA COPPER MERGERS/FIRSTQUANTUM