Aur spurned again

Aur Resources‘ (AUR-T) 2-week-old bid to acquire a 76.5% interest in the Quebrada Blanca open-pit copper mine in Chile came to an abrupt end as one of the mine’s remaining shareholders, Chilean-based Inversiones Mineras, announced its intention to exercise its right of first offer.

Inversiones Mineras, also known as Pudahuel, will pay sellers Cominco (CLT-T) (with a 47.25% interest) and Teck (TEK-T) (29.25%) up to US$262 million under the same terms as those negotiated by Aur (T.N.M., March 13-19/00). Currently, Pudahuel owns a 13.5% stake in Quebrada Blanca, with state-owned Empresa Nacional de Minera (Enami) holding a 10% carried interest.

The US$262-million price tag includes: the purchase price, set at US$155 million; US$67 million in project debt, which Pudahuel would buy from a unit of Teck; and an obligation to make payments of up to US$10 million annually for four years should the price of copper stay above US$2,425 per tonne. There are also annual payments to Enami of US$2.1 million, and Pudahuel would assume a greater share of the project’s US$82-million bank debt.

Pudahuel must come up with US$192 million cash on closing and US$30 million in cash or shares by December 2002.

Cominco and Teck have agreed that, if Pudahuel is unable to complete the purchase, Aur will be offered the exclusive right to buy their combined 76.5% interest under the terms of the original deal.

Cominco says its US$176-million share of the sale will be used primarily to reduce debt.

The sale will cause Teck’s cash reserves to double to US$280 million as the major continues to eliminate its non-core minority interests in order to concentrate on larger projects, such as the advanced-stage Antamina copper-zinc project in Peru.

In 2000, Quebrada Blanca is expected to produce 75,000 tonnes of cathode copper from solvent extraction-electrowinning. Current cash costs are about US$1,125 per tonne, and reserves are pegged at 150 million tonnes grading 0.91% copper.