Article(I'm sorry for the previously unsuccessful attempts to post this article.)
Copper mining companies merge
Consolidation increases strength and security for small operators
Peter Koven, Canwest News Service
Published: Tuesday, September 09, 2008
TORONTO -- In the metals industry, almost everyone agrees there are too many small, single-mine companies many investors will not touch. Two of those companies are now trying to do something about it.
Sherwood Copper Corp. and Capstone Mining Corp. announced plans to merge Monday, creating a $500-million company with plans to get a lot bigger.
The two miners both have a single operating mine in a politically friendly jurisdiction and a market cap of close to $250 million. That is too small to attract many institutional investors, and it puts them at risk if their one property has problems.
Putting them together reduces that risk, and lowers their cost of capital while attracting more investors. The new company will have the scale to consolidate the sector by buying up more of the unloved one-mine companies.
"This is the kind of transaction investors were waiting for in the junior base metal sector for a long time. Because there needs to be consolidation," said Sherwood CEO Stephen Quin.
"It's very clear that single-mine companies trade at a discount relative to multiple-mine companies. I think all single-mine companies would agree they should be part of multi-mine companies, it's just a question of how ..."
© The Vancouver Sun 2008