Message Sam 16 Juil 2011 23:12

Share of the week: Metorex

Share of the week: Metorex
Takeover target Metorex's share price has been gyrating vigorously in response to the dynamic situation surrounding its sale.
The company, which owns copper and cobalt assets in the rest of Africa, especially the DRC and Zambia, is the subject of a takeover bid by Jinchuan after Brazilian mining group Vale pulled out after it felt it would be overpaying for it.

Vale pulled out of the fight recently after Jinchuan raised its $1.1-billion bid. The Rio de Janeiro-based company said: "Vale has no intention to match the terms of the recently announced offer for Metorex."

Jinchuan has made a firm cash bid of 890c a share. According to the Mining Review website, the purchase of Metorex would give Jinchuan control of the Ruashi open-pit mine in Congo and the Chibuluma copper project in Zambia.

Jinchuan last year bought Vancouver-based Continental Minerals for $447-million and Toronto-based nickel producer Crowflight Minerals for $140-million. This year, the company acquired 45% of Wesizwe Platinum, an SA platinum explorer, with the China-Africa Development Fund.

The rapid expansion of Jinchuan is in line with the Chinese approach to buying what it deems strategic companies to secure its mineral feedstock for its ravenous factories.

Cadiz mining analyst Peter Major believes the transaction undervalues Metorex. He calculates that Jinchuan is essentially paying around US13c/lb for all the copper that Metorex has in resources in the ground.

Copper is currently trading at nearly $4.40/lb or $9700/ton. From that point, Metorex is going cheap.

Metorex has put in all the spadework, the permits, infrastructure, licensing and government agreements, these past 10 years. Plus there's over $15-billion of cobalt that has not even been taken into account in the calculation.

Adding in the cobalt lowers the effective price to perhaps US9c/lb for the copper Jinchuan is buying.

The share price was trading at R8.45 on Wednesday afternoon, marginally changed from Tuesday's close of R8.45. This was, however, much higher than the 52-week low of R3.40 in July 2010.

The race between Vale and Jinchuan for Metorex has brought into sharp relief the new scramble for Africa's resources.
Ce que l'on conçoit bien, s'énonce clairement, Et les mots pour le dire arrivent aisément. BOILEAU