Teck Cominco Makes Friendly Bid for Aur
In 2006, Quebrada Blanca produced 181.6 million lb of copper and Andacollo produced 41.4 million lb of copper. Duck Pond came into production in January 2007 and is expected to produce 29.7 million lb of copper, 56.1 million lb of zinc, 396,900 oz of silver, and 2,900 oz of gold this year.
The Andacollo mine currently produces electrowon copper cathode from oxide ores, with oxide reserves sufficient to sustain production until late 2009. Production of concentrates from the sulphide ores of the hypogene deposit is scheduled to phase in as mining of oxide ores phases out.
The mine plan for the hypogene deposit calls for open-pit mining of 424 million mt of ore over 21 years. Minelife production of metal in concentrates is expected to average 71,000 mt/y of copper and 59,000 oz/y of gold. Higher grades during the first 10 years of production are expected to allow production to average 81,000 mt/y of copper and 66,000 oz/y of gold.
Teck Cominco’s producing copper assets include a 97.5% interest in the Highland Valley Copper mine in southcentral British Columbia and a 22.5% interest in the Antamina copper mine in north-central Peru. Highland Valley produced 171,000 mt and Antamina produced 384,200 mt of copper in 2006.
Teck Cominco and Aur entered into a support agreement that provides a nonsolicitation covenant on the part of Aur, subject to provisions that entitle Aur to consider and accept a superior proposal; a right in favor of Teck Cominco to match any superior proposal; and a termination payment to Teck Cominco of C$140 million if the acquisition is not completed as a result of a superior proposal.
The Teck Cominco/Aur agreement was generally well received by financial community analysts, who judged the deal as offering full value for Aur, with minimal likelihood of a competing bid.