The board of Perth-based Universal Resources has indicated it will reject CopperCo’s formal takeover offer – which hit Universal shareholders mailboxes this week – despite analysts giving the deal their blessing.
Universal last week said it expected to reject the fellow Queensland copper explorer’s all scrip, six for one tilt as inadequate and told shareholders not to act until a formal target’s statement was reviewed.
The market has roughly out priced CopperCo’s bid by two cents since it was announced in mid-December, despite coming in at a 16.4 per cent premium at the time.
Analysts, however, like the idea, which could create an Australian copper company with potential production of between 50,000 tonnes to 100,000 tonnes a year.
Hartley’s resource analyst Jonathon Battershill said, in a research note, that many synergies existed between CopperCo and the Universal Mt Isa assets.
However Mr Battershill said Universal’s management had taken too long to develop its cornerstone asset – the large low grade copper/gold Roseby project, which contains 745,000 tonnes of contained copper equivalent.
He said CopperCo’s management, which included well known mining player Keith Liddell and former Straits Resources CEO Brian Rear, had a track record of successfully developing copper and base metals mines.
Mr Battershill said the merger would make a “refreshing change” in Australia’s copper sector, where there were few mid-tier producers.
Investment newsletter Stock-analysis author Peter Strachan also backed CopperCo’s bid, saying the strategy made sense because of its current projects.
“Ten thousand tonnes [of copper] per year is too small ... you need at least 50,000 to become an interesting investment for the market,” he said.
CopperCo currently controls a sizeable land package in the Mt Isa region and is investigating producing 15,000tpa of copper cathode from its cornerstone Mt Isa project, Lady Annie.
