A geologist examining the drill core at the Tampakan copper and gold mine project in the southern Philippines. The project holds 13.5 million tons of copper and 15.8 million ounces of gold. [Agencies]
Chinese miner Zijin Mining Group has made a $498 million takeover offer for Indophil Resources NL of Australia, a deal that would significantly bolster its gold and copper reserves and support raw material requirements for its 200,000 tons of copper smelting project.Additionally Zijin would also get a stake in Southeast Asia' largest untapped copper and gold deposit at Tampakan in the southern Philippines.
Fujian-based Zijin Mining would make a conditional cash off-market takeover bid for all of the issued shares in Indophil for A$1.28 ($1.18) per share, an 18 percent premium over the last closing price, said a statement issued yesterday by the Melbourne-based company.
"The acquisition will help Zijin to increase its gold and copper metal reserves by 2.06 million tons and 816,500 tons, up 21.4 percent and 11.6 percent respectively, " said Liu Zhuoping, an analyst with Dongguan Securities. "It will narrow the gap with China's largest copper producer Jiangxi Copper and also consolidate Zijin's top slot in gold reserves."
If the deal gets approved, Zijin's copper reserves would reach 11 million tons, close to that of Jiangxi Copper's 12 million tons.
By November this year, Zijin had the largest gold reserves, of around 7 million tons, followed by Zhongjin Gold Gorp with 3.2 million tons.
Indophil has a 34.23 percent stake in the $5.2 billion Tampakan copper and gold project, controlled by Xstrata.
The Switzerland-based mining group yesterday said it has agreed to sell its 19.9 percent stake in Indophil to Zijin for $1.28 a share.
The Tampakan deposit holds 13.5 million tons of copper and 15.8 million ounces of gold. It is currently undergoing the last stage of feasibility studies and expects to start production by 2016. Tampakan is expected to yield 340,000 tons of copper and 350,000 ounces of gold annually for the next 20 years.
The deal still needs regulatory approvals from both the Chinese and Australian governments.
The takeover comes at a time when metal prices have rallied globally as the dollar weakened.
Domestic copper prices soared past 40,000 yuan ($5,860) per ton in April and hovers at over 50,000 yuan per ton now.
Gold prices started the year a little above $880, and hit a record of $1,199 per troy ounce yesterday.
Zijin's resources strategy recently shifted from domestic acquisitions to overseas projects. Since then it has made several overseas investments in multi-metal projects in countries like Tajikistan, Myanmar, Vietnam, Russia and Canada, said Liu.
"The company will continue to diversify itself into a multi-metal producer," he said.
Zijin Vice-Chairman Lan Fusheng had in October said the company spent $300 million in the past five years for eight overseas projects.
The company's shares closed 7 percent higher at 10.72 yuan yesterday in Shanghai.
