dj carmichaels places a buy up to 1.19

COPPERCO LTD (CUO)
CUO have announced a proposed merger with Mineral Securities Ltd (MXX)to create a diversified mining group (New CopperCo) with interests in copper, lead, zinc, platinum and gold. The merger is by way of a scrip offer to Mineral Securities (Minsec) of 2.2 CUO shares for every MXX share with the merged entity owned 54% by CUO shareholders and 46% by MXX shareholders.

However, it s still business as usual for the copper mine at Lady Annie, that is now on a forshortened expansion schedule to produce 30,000tpa copper cathode. Our analysis looks at both outcomes the continued operation of CUO as an independent entity and the expanded New CopperCo under the merger proposal.

KEY POINTS
As a stand alone, un-merged entity basis, we re-iterate our BUY recommendation for CUO with a new price target of $1.19 ($1.33 previously) reflecting the increased
number of shares issued under the recent capital raising; a reduction in mine life from 8 to 7 years due to an the increased production; and a reduction in cathode
production as a result of a slightly slower ramp up during the first 9 months of FY08.

The merger proposal between CUO and MXX is designed to produce a mid-tier diversified mining company having a larger scale and market presence, which we believe would attract attention from larger suitors. Under this scenario we value the New CopperCo at $1.14 per share, taking into account the increased number of shares and our valuation of the MXX asset base.
Either way, we see compelling value in CUO at current levels. We believe that the merger proposal offers CUO shareholders exceptional value in a range of projects
with near production opportunity in an asset mix that will deliver very healthy cash flows for the combined group.

The key assets of MXX are their 18% holding in Platmin Limited, a Platinum Group Metal (PGM) development company with 4 PGM projects in the Bushveld Complex in South Africa; a 28% holding in Tianshan Goldfields who have their flagship Project, Golden Mountain in a pre-feasibility study and 25% of the Lady Loretta zinc/lead
deposit in Queensland, also in a feasibility study phase with a development decision expected by 2Q08.

We re-iterate our BUY recommendation on CUO with a price target between $1.14 and $1.19 per share. We believe continued exploration success will deliver upside to
mine life at the Lady Annie Project and would expect a re-rating of Platmin during the 1HCY09 as production nears, increasing the value to shareholders.