Following Avanco’s windfall this week, another Brazil-focused play may soon see its value appreciate, writes Barry FitzGerald in his weekly Garimpeiro column.
OZ Minerals had big wraps for Brazil as a mining investment destination earlier in the week, praising the country’s mineral prospectivity and its fiscal and regulatory regime.
No surprise in that, given OZ had just committed $442m in cash and scrip to acquire the ASX-listed Brazilian copper/gold specialist Avanco for a massive 116 per cent premium to its pre-bid price.
Despite the premium, analysts reckon OZ (ASX:OZL) is paying fair value for Avanco (ASX:AVB).
It seems that despite Avanco’s ownership of a producing copper/gold mine, and three advanced development projects, it had simply fallen off the investor’s radar, forcing its shares down to a point where a fair value bid came across as overly generous.
Falling off the radar is something that could also be said about the handful of ASX juniors that have made Brazil their focus.
Their hope now is that OZ has alerted the broader market to the attraction of the less-crowded Brazilian mining market.
