Sept. 30 (Bloomberg) –Minmetals Resources Ltd. (1208), a unit of China's largest metals trader, agreed to buy Anvil Mining Ltd. (AVM) for HK$10 billion ($1.3 billion), gaining three copper mines in Africa.
Minmetals will pay C$8 ($7.71) a share for each of Anvil's, the Hong Kong-based company said today in a statement. The board of Anvil, listed in both Sydney and Toronto, has recommended the offer, it said. The offer is a 39 percent premium to Anvil's last traded price in Canada.
China, the world's largest consumer of metals from copper to zinc, has spent $17 billion this year buying mines to secure supply to feed its industrial growth. Minmetals had its C$6.04 billion offer for African copper miner Equinox Minerals Ltd. trumped by Barrick Gold Corp. in April.
"This acquisition is part of China's move to have access to raw materials," Peter Rudd, mining and resources manager at Armytage Private Ltd., said by phone from Melbourne. "They realize the importance and the significance of those materials to their future wellbeing."
Anvil shares rose 31 percent in Sydney to A$7.65 ($7.49) at 11:57 a.m. and Minmetals fell 2 percent in premarket Hong Kong trading. Minmetals has applied for approval from Australia's Foreign Investment Review Board for the offer.
Minmetals is taking advantage of the global market rout that has wiped 29 percent off the copper price since a February high. Copper fell 1.7 percent today.
Buying Anvil will give Minmetals three copper mines in the Democratic Republic of Congo which may produce 60,000 metric tons of copper cathode annually from next year. Minmetals last year produced 64,000 tons of cathode from its Laos operations and 34,000 tons of copper in concentrate from its Golden Grove mine in Australia. It also mines zinc in Australia.
"It is an excellent fit with the company's strategy to focus on upstream base metal businesses," Minmetals said.
Minmetals offer values Anvil at about 1.7 times the value of its total assets, based on data compiled by Bloomberg. That compares with the median of 4.08 times of 10 similar deals in the last five years.
There have been $11.2 billion copper mining takeovers so far this year, compared with a total of $12.4 billion last year, data compiled by Bloomberg shows. The biggest was Barrick's takeover of Equinox.
Minmetals is advised by BNP Paribas SA and Anvil is advised by BMO Capital Markets. Minmetals will use a loan from Album Enterprises, a unit of its largest shareholder, to fund the deal, it said.