There is life in the copper mining industry that may have knock-on ramifications for South America-focused Metminco (ASX:MNC, LON:MNC), according to broker Canaccord.
In a note issued Wednesday its analysts assessed the benchmark set by First Quantum Minerals’ (LON:FQM) US$433mln acquisition of Lumina Copper.
Lumina owns the Taca Taca Project in Argentina, which is similar in geology and grade to Metminco’s Los Calaotos deposit in Peru - though former is more than twice the size of the latter.
More interesting are the deal metrics and specifically the 2.1 cents a pound per ounce paid by FQM for Taca Taca.
On this basis, Metminco is worth 7p a share, according to Canaccord. The stock is currently changing hands for 1.16p.
“Importantly, the First Quantum transaction shows that larger copper producers are willing to pick up assets despite the broader macro uncertainty that is pervading the equity market,” said analyst Peter Mallin-Jones.
“This suggests that finding a partner for the Los Calatos project is by no means impossible, and we take this transaction positively.”
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