CCU''s day will come......Hold your shares
$1.6-billion bid for Katanga the latest move in trend transforming mundane metal into hot commodity
ANDY HOFFMAN
From Tuesday's Globe and Mail
July 10, 2007 at 6:32 AM EDT
It doesn't have the exotic quality that recently pushed nickel, uranium and molybdenum to record highs, but plain old copper is suddenly the mining market's hottest commodity thanks to a sudden spate of takeovers inspired by an increasingly common belief that prices for the mundane metal will stay stronger for longer.
Last week, Canadian integrated mining giant Teck Cominco Ltd. offered $4.1-billion in cash and stock for copper pure-play Aur Resources Inc. to shore up its current production and fuel future growth, heralding what some industry experts are calling an "unprecedented" high valuation for a copper company.
Yesterday, Katanga Mining Ltd., a TSX-listed company developing a copper mine in the Democratic Republic of Congo, was hit with an unsolicited takeover bid valuing the company founded and headed by Canadian Arthur Ditto at more than $1.6-billion. The all-stock offer, planned by London's Central African Mining & Exploration Co., is expected to draw rival bids.
Now the market is revisiting price targets for the remaining copper companies. Desjardins Securities upgraded Africa-focused First Quantum Minerals Ltd., yesterday from a hold to a buy and increased the stock target by more than $33, from $86.50 to $120 a share.
"Anything copper-related is really starting to rock and roll," analyst John Hughes, said in an interview. Mr. Hughes said the upgrade reflects a belief that consolidation for copper producers will continue, and a willingness demonstrated by Teck in the Aur deal, that big miners will "pay up" for known reserves.
"Ultimately, we think First Quantum, and other small companies with known resources are the next target group," he said.