Constructive Dialogue: Copper M&A the Cupboard is Nearly Bare

RBC Mining & Materials Equity Team research report dated 2 December 2019 (if you are interested):

https://orocoresourcecorp.com/wp-co...building-momentum-going-into-2020_2.12.19.pdf

Appendix I from the above report has a Global Metals & Mining Summary Valuation & Recommendations.

Based on that report above, I also located an old RBC Report dated November 2018 covering Tier 1, 2 and 3 copper producers: Copper M&A the Cupboard is Nearly Bare



Interesting how RBC in that November 2018 report classify Tier 1, Tier 2 and Tier 3 copper assets. See pages 16-19. Some interesting reading on pages 42 to 51 on strategy for these Tier companies.

There is a good write-up of Sandfire Resources, on page 106, whom some on HotCopper speculated was interested in the Kalkaroo project.

Page 58 also has the average prices paid in M&A deals over the last 10 years:

Average Deal Value of US$196/tonne of Copper Equivalent Mineral Resources
The overall deal values are shown in Figure 37 and reflect the average price paid for the acquisition of company shares, and the acquisition of assets. The first chart shows these values over time and for copper equivalent resources the price paid has varied between US$119-254/tonne (US¢5-11/lb) for the past seven years.

The data is further sub-divided into four categories related to the stage of development of the underlying assets: Operating, Pre-production, Feasibility and Exploration. The overall average for the period 2008-2018 was US$196/tonne (US¢9/lb) of in situ copper equivalent Mineral Resource.

Figure 36 shows that the price paid for:

(a) operating assets has been US$307/tonne (US¢14/lb);
(b) pre-production US$211/tonne (US¢10/lb);
(c) feasibility US$193/tonne (US¢9/lb); and
(d) exploration US$74/tonne (US¢3/lb).

Kalkaroo provides Havilah shareholders with significant leverage to current high gold prices and future improving copper prices. It is a 100.1 million tonne JORC Ore Reserve (Proven - 90.2 million tonnes, Probable - 9.9 million tonnes) that contains 474,000 tonnes of copper and 1.41 million ounces of gold.

Per the PFS dated 18 June 2019, the Kalkaroo project has an estimated pre-tax NPV7.5% (net present value) of $564 million and an internal rate of return of 26% at USD2.89/lb copper, USD1,200/oz gold, AUD:USD0.75.

The Kalkaroo PFS valuation is also highly sensitive to commodity prices, with a 10% increase in metal prices resulting in a 48% increase in the pre-tax NPV7.5% to $835 million.

https://www.havilah-resources.com.a...pports_Large_Scale_Copper_Project_18Jun19.pdf

Dr Copper continues its upwards momentum:



Cheers

These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.