Copper strength puts Aurelia Metals in sights

From The Australian, Data Room:

The strong offers that Glencore recently received for its CSA mine and the strength of the copper price have prompted some to turn their attention to Aurelia Metals.
Aurelia, chaired by the highly regarded former Oil Search boss Peter Botten, currently has a $588m equity value yet it is capable of generating substantial amounts of copper in the same area as Glencore’s CSA mine in Cobar, NSW that attracted offers of more than $1bn.
The share price has remained relatively stagnant since November last year.
Aurelia is an Australian gold and base metals mining and exploration company that owns and operates three underground mines and processing facilities in NSW.
These include its Peak mine, which produces gold, lead, zinc, copper and silver, along with its Dargues gold mine and its Hera Mine that produces gold, lead, zinc and silver.
For the six months to December, it generated $7.5m in net profit, down 62 per cent on the previous corresponding period, as it wrestled with a tight labour market amid a lower gold price environment.
For CSA, IGO and Metals Acquisition Corp offered top dollar.
Some sources believe this for both was around $US1bn, but others say that Metals Acquisition Corp offered about $US850m and IGO was offering about $US800m.
IGO walked away from CSA after due diligence, paving the way for a deal with the special acquisition purpose vehicle Metals Acquisition Corp, backed by well-known identities in the resources industry, Nev Power, the former Fortescue Metals boss, and ex Northern Star chairman Bill Beament.
Deal execution uncertainty was understood to have prompted advisers to initially anoint IGO as the winner of the contest, with SPACs known to take up to six months to shore up funding for a transaction.
CSA produces about 50,000 of copper and its copper is considered better quality to Aurelia’s.
Aurelia signalled that in the 2022 financial year, it would produce about 3,500 to 4000 tonnes of copper and 112,000 to 123,000 ounces of gold, more than 31,000 tonnes of zinc and at least 24,500 tonnes of lead.
But Aurelia also has sizeable organic copper exposure through its Great Cobar project, for which a pre-feasibility study has been completed showing initial mining and processing is expected to take place over about five-years to deliver a total of 47,000 tonnes of copper and 61,000 ounces of gold.
Meanwhile, Rio Tinto’s announced deal to buy out the minority shareholders in Mongolian copper miner Turquoise Hill Resources for $US2.7bn ($3.7bn) this week offers further evidence that copper is on the mergers and acquisitions agenda for big resource players right now, as it comes under strong demand for the growing trend towards electric vehicles.
The acquisition announced late on Monday was potentially the biggest yet under chief executive Jakob Stausholm, offering $C32 ($34.58) per share for the 49 per cent of Turquoise Hill that it does not already own.
Analysts are betting that major groups like BHP and Rio could line up for major acquisitions of mines that produce commodities used for clean energy in the coming months as commodity prices soar amid the war in Ukraine with Russia.