Altona considers Roseby sale or merger
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Australia’s Altona Mining may sell its Roseby copper project or seek to merge itself with another firm after global miner Xstrata decided not to buy into the copper project in the state of Queensland, Altona’s managing director said on Monday.
Xstrata chose not to exercise an option to buy a 51 per cent stake in the project after seeing the valuation put on it by an independent party, an Xstrata spokesman said. Altona and Xstrata did not disclose the price.
Credit Suisse is advising Altona on the sale process, which Altona’s Alistair Cowden expected would take about six months.
“We are starting a process essentially to look at a strategic transaction,” Cowden said. He said the options were to sell a stake in the project or the entire project or even consider merging with another company with a stronger balance sheet.
“Everything’s always for sale,” he said.
Analysts have speculated Chinese miner MMG, which is developing the neighbouring A$1.49 billion (HK$12.17 billion) Dugald River zinc-lead-silver mine, might be interested in the Roseby project.
Melbourne-based MMG, which has repeatedly flagged that it is on the lookout for base metals acquisitions, declined to comment.
“We’ve had numerous approaches, but been unable to pursue them because of the nature of the agreement with Xstrata that prevented us from dealing on the project,” Cowden said.
He did not say how many approaches it had received nor who they were from.
While Altona is in constant contact with MMG, as their projects are right next to each other, Cowden played down the chances of a deal with MMG.
“I’d suggest that they’ve pretty much got their hands full with the A$1.5 billion development at Dugald River. But you never know, it’s up to them,” he said.
Altona’s shares fell as much as 20 per cent after the announcement that Xstrata was not exercising its option on the Roseby project and last traded down 8.9 per cent at A$0.255, valuing the company at A$134 million.
“While we have not exercised this option, we remain strongly committed to mining investment in North West Queensland,” an Xstrata Copper spokesman said in an email.
Capital costs for the Roseby project were estimated last year at A$320 million for a project targeting annual production of 38,800 tonnes of copper and 17,200 ounces of gold.
With the cooling of Australia’s mining boom, Cowden said the company expected the capital cost could come down a bit.
“With mining contractors there might be a little bit more hunger in the market compared to when we priced nearly a year ago,” he said.
Analysts see the project as viable in light of a strong copper market, with copper trading around US$3.60 a pound.