Tiger burning bright
The horror year for copper miner Tiger Resources may have finally ended, with its new debt refinancing easing some of the concerns that have weighed on the stock not only in the eyes of investors but also of potential acquirers.
Tiger, which owns the Kipoi copper mine in the Democratic Republic of Congo, on Wednesday announced it had agreed terms with resources specialist Taurus Funds Management for up to $US162.5m in debt funding.
The funding will allow the company to retire its existing short-term debt facilities, extending the maturity date to the end of 2021.
Tiger’s distressed valuation in recent months — its shares have fallen from more than 35c to less than 6c — had already seen a number of groups sniffing around, with Tiger having appointed Macquarie as its advisors.
The Kipoi mine has a nameplate production capacity of 25,000 tonnes per annum, but it can be expanded to 65,000 tonnes at a relatively low cost. The expansion is off the cards for Tiger right now, given its balance sheet remains debt-heavy and the copper price is well off its highs.
The Chinese are shaping up as the obvious potential buyers of Tiger, given its distressed valuation and the recent record of investment in the DRC by Chinese firms. Numerous Chinese companies have picked up projects or entered joint ventures in the DRC in recent years, and Tiger may represent a simple path to production for any group looking for a foothold there.
Some of the smaller metals trading houses are also said to be taking a look. Gerard Metals already buys copper from Kipoi and has extended finance to Tiger, so would know the asset well, as would Trafigura.
Trafigura used to own 25 per cent of Tiger but sold the stake in September 2012 at 35c a share for $60.8m. In comparison, Tiger’s entire market capitalisation today is just over $100m, and the company now owns all of Kipoi as opposed to 60 per cent in 2012.
Among the local names, OZ Minerals is being spoken of as one possible buyer. New chief executive Andrew Cole has recast OZ’s M&A parameters since taking charge, removing size and country restrictions that would have previously ruled Tiger off limits.
Cole has said he is happy to look at assets others consider too small but it is not clear OZ can stomach the perceived risk associated with the DRC.
http://www.theaustralian.com.au/business/dataroom/tiger-burning-bright/story-fnjw8txa-1227429622493
