Copper Dream Team NORTHERN MINER
Copper "dream team" runs up against Russian billionaire
When Cupric Canyon Capital started up two years ago, Northern Miner newspaper dubbed the private equity firm the "copper dream team." Its key players were executives from Phelps Dodge, the U.S. copper company that was taken over by Freeport McMoRan in 2007 (forming the world's largest copper company).
Scottsdale, Arizona-based Cupric Canyon has deep pockets, too: it's backed by Barclays Natural Resource Investments, an arm of London-based banking conglomerate Barclays PLC. Cupric Canyon's mandate is to identify copper assets at various stages and add value by leveraging their management expertise, including by helping juniors de-risk projects.
Earlier this year, Cupric Canyon took a 10% position in Hana Mining (HMG), a Vancouver-based junior miner advancing a copper-silver project in Botswana. But the "dream team" is not the only Power Player that has taken an interest in the firm.
Enter Vladimir Iorich. Our
October 6 2011 Power Player, Iorich is a Russian billionaire who has spent almost $64 million in the past year and $235 milion in the past two years acquiring stakes in junior mining companies.
And the activist investor, who has shown a willingness to play hardball in companies he's bought into, may yet turn out to be a nightmare for Cupric Canyon Capital and its "strategic" investment in Hana Mining.
On Feb. 6, Cupric Canyon filed an opening balance of 9,948,500 shares of Hana Mining (including a private placement of 6.25 million shares at $1.35), giving them a 10% stake in the company. "This agreement is the culmination of many months of building a relationship between the Company and Cupric," Hana CEO Marek Kreczmer stated at the time in a company news release. "I look forward to working with the management of Cupric towards the development of the Ghanzi Project."
On May 14, Hana released what it called a "positive" preliminary economic assessment for Ghanzi showing a total capex of $399 million, a pre-tax net present value of $363.3 million (8% discount), a 13-year mine life and average annual production of 66 million pounds of copper and 878,000 ounces of silver. The PEA was based on copper at $3.40 per pound and silver at $30 an ounce, both of which are above current prices.
The timing -- just as copper was plunging due to global economic headwinds -- couldn't have been much worse. Investors hammered Hana Mining shares, driving the stock down from $1.29 to 42 cents
on May 14, the day the PEA was released.
Two days later, Iorich filed an early warning report and opening balance of 16,413,800 shares through his Pala Investment Holdings Ltd., revealing him the company's largest shareholder.
On May 22, Iorich bought another 3 million shares, indirectly through Pala, at 49 cents in the open market, giving him a 19.5% stake.
One day later, Cupric answered. The private equity group purchased another 150,000 shares at 46.6 cents, and they've been buyers ever since. Most recently, Cupric purchased 1.79 million shares at 70 cents
on June 4, taking its holdings to 16,024,510, a 16.1% stake.
Hana Mining isn't the only company that Iorich has made a play for. Earlier this year, his Pala Investments holding company bought 50.7% of Asian Mineral Resources Limited (ASN), which is advancing a nickel-copper project in Vietnam that was shelved by the 2008 financial crisis.
Iorich's major holdings in mining companies including Nevada Copper (NCU), Mercator Minerals (ML) and Alacer Gold (ASR) have been hammered by the selloff in the junior mining space over the past year. He's already had better luck with his investment in Hana Mining: the stock has bounced and Iorich is sitting on a paper profit of $810,000 on his
May 22 trade alone.
Hana Mining is the only public company for which Cupric Canyon Capital has filed an early warning report.
Vladimir Iorich's Insider HoldingsShares Held % of Quoted Market Value
Asian Mineral Resources (ASN) 50.7
Melior Resources (MLR) 44.0
Nevada Copper (NCU) 34.2
Winstar Resources (WIX) 21.7
Hana Mining (HMG) 19.5