Zijin group buys Peru mines in HK$1.4b deal

PUBLISHED : Tuesday, 06 February, 2007, 12:00am
UPDATED : Tuesday, 06 February, 2007, 12:00am

A consortium led by Hong Kong-listed Zijin Mining said yesterday Monterrico Metals, the owner of still untapped Rio Blanco copper and molybdenum mines in Peru, accepted a #94.6 million (HK$1.4 billion) takeover offer, furthering China's control over important natural resources.

The mainland consortium, in which Zijin has a 45 per cent stake, will pay 350 pence a share in cash for Monterrico, which is listed on London's junior Alternative Investment Market.

The offer represents a 34.1 per cent premium to Montericco's closing price of 261 pence on October 19, the last business day before the start of the offer period by the mainland group.

China's second-largest copper producer Tongling Nonferrous Metals has a 35 per cent stake in the venture, while Xiamen C&D, a Shanghai-listed investment company, holds the remaining 20 per cent.

Beijing has been prodding its state-owned and listed companies to acquire the natural resources - from oil to copper - the country needs to continue on its rapid growth path.

The Zijin-led group said it had received irrevocable undertakings to accept the offer from five Monterrico board members including chairman and chief executive Richard Ralph, whose holdings totalled 9.9 per cent, and it intended to retain Monterrico's listing on AIM.

'It's a good strategy for Zijin to capture overseas resources as well as a listing status in London', said BOC International analyst Belle Chan, adding that Zijin has enough capital resources to fund the takeover given its plan to raise funds from issuing A shares this year.

Separately, Monterrico, a loss-making company, yesterday said that it had completed a detailed feasibility study on its Rio Blanco project, in northern Peru which has an estimated 1.25 billion tonnes of metal, and would cost US$1.44 billion to develop with a four-year payback.

The project is schedule to come on stream in 2011, with an annual copper production of 224,000 tonnes and 1,800 tonnes of molybdenum in the first year, and will expand to a combined 50 million tonnes from year four.