SHARES in First Quantum Minerals moved as high as 5% on December 9 amid renewed speculation the Toronto-listed company could be the subject of a takeover.
China’s Jiangxi Copper Company agreed to pay $1.1bn for a stake in First Quantum, becoming it largest shareholder. This was achieved by buying Cupric Holdings from Pangaea Investment Management which holds about 18% of First Quantum.
However, the exact nature of Jiangxi Copper Company’s plans are unknown. There’s also speculation that Rio Tinto, the Anglo-Australian firm, had moved into the bidding for First Quantum, according to a Reuters report.
First Quantum in September disclosed it was in talks with Jiangxi for a potential sale of a minority interest in its Zambian copper assets. However, Jiangxi is prevented from buying more than 20% in First Quantum under a standstill agreement reached in October.
First Quantum is also seeking partners for new copper projects, including a possible joint venture with Rio Tinto, CEO Philip Pascall said last month.
“Clearly there’s an M&A angle to this, but I wouldn’t attribute it entirely to that,” Jefferies LLC analyst Christopher LaFemina told Reuters. “I’m not sure what their (Jiangxi) bigger picture plan is, but I don’t think you need to buy equity in the company to negotiate a minority buyout for one of the assets,” he added.
Citing a Bank of Nova Scotia research note, Reuters said that First Quantum could be split up with Jiangxi taking its Africa assets and its Cobre Panama copper mine going to Rio.
