Full News ReleaseAur Resources on acquisition trail
Mon Mar 26, 12:19 PM
SANTIAGO (Reuters) - Canada's Aur Resources , a mid-tier copper producer, is on the lookout to acquire a copper miner or property in the $1 billion range, Chief Executive Jim Gill told Reuters on Monday.
In the Chilean capital, Santiago, on the eve of the sixth annual World Copper Conference (CRU), Gill said his company has $500 million in the bank that could go toward a possible acquisition.
He said Aur, with mines in Chile and Canada, would produce about 120,000 tonnes of copper this year and close to double that after an expansion is completed at its Andacollo copper mine in late 2009.
"We could easily do a $1 billion deal without any problem whatsoever," Gill said in an interview.
Aur shares were up 61 Canadian cents at C$23.31 on the Toronto Stock Exchange in late-morning trading.
As copper prices hold at surprisingly high levels, above $3 per pound compared with production costs of less than a third of that, miners are searching for new sources of output.
Gill, who sees average copper prices staying above $3/lb in 2007, said the company would be interested in buying either a company or an individual property or mine, as long as it was a good value.
He cautioned, however, that with copper prices so high and production financing more easily available, many potential acquisitions are priced beyond their value.
"There are things out there that meet our criteria but are too expensive," he said. "There are probably 20 like that."
Gill said a mine or property would have to promise at least a 10-year mine life and a minimum 15 percent return on capital to be considered an acquisition target.
"If those two things aren't there, its not worth the risk," he said.
Aur is also exploring for new assets, and is looking at properties in Chile, Peru, Ecuador and Mexico in Latin America and is also on the lookout in south central Africa.
It is also pursuing organic growth in Chile and hopes to receive approval in coming weeks from environmental authorities to start the $336 million expansion of its Andacollo mine, in north-central Chile.
Andacollo already produces about 20,000 tonnes of copper cathode from a supergene deposit. The expansion involves mining the underlying hypogene deposit.
Gill said the expansion would boost production there to about 80,000 tonnes of copper per year and 66,000 ounces of gold for the first ten years, and slightly less than that for the decade after that.
Gill said orders are in for mining machinery and trucks.
"Our target is to start earth work there in the third quarter this year," he said.