Los Andes Copper Ltd. is considering options to finance development of a mine in Chile, including a potential sale of the asset or the company, according to people familiar with the matter. It’s shares jumped.
The Vancouver-based explorer is working with advisors to study strategic options as it prepares for the next stage of the Vizcachitas project, said the people, who asked not to be identified because the information is private. Los Andes Copper isn’t currently running a formal sale process, but may start gauging interest from potential buyers, the people said. The company declined to comment.
Vizcachitas is expected to become a 180,000-metric-ton-per-year mine, roughly the size of Andina owned by Chile’s state miner Codelco, the world’s largest copper producer. Development costs for a project of that size are likely out of reach for Los Andes Copper, which has a market value of $380 million. Its stock was up 3.8% at 9:44 a.m in Toronto, extending a year-to-date gain to 34%.
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Supplies of copper, the metal used in everything from electric vehicles to wind turbines, are expected to tighten significantly as the transition away from fossil fuels drives a surge in demand. That outlook has led large producers to step up their interest in beefing up reserves both through acquisitions and exploration. Newmont Corp. recently secured a A$28.8 billion ($19.2 billion) deal to buy Australian rival Newcrest Mining Ltd. in a move that will help boost its resources of copper.
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Chile accounts for a quarter of the world’s mined copper and has the most reserves. Companies are weighing investment decisions in the nation as regulatory risk subsides. An initial constitutional process that threatened radical changes has given way to a more conservative format, and the government agreed to limit tax hikes.
Los Andes Copper was recently authorized to restart drilling at Vizcachitas after fulfilling conditions laid out by an environmental court.
--With assistance from Thomas Biesheuvel.
(Adds share price in first and third paragraph)
Author: Dinesh Nair, James Attwood and Vinicy Chan
