Slim Adds Mines

Minera Frisco has agreed to pay $750m to acquire mining assets in Mexico from AuRico Gold, it says. The deal includes the operating Ocampo gold and silver mine, the Venus and Los Jarros projects and a 50% stake in the Orion project. The transaction is somewhat difficult to value, analysts say, due to the involvement of pre-operational assets and the infrequency of similar transactions in Mexico. Though the price tag represents less than 10% of Frisco’s market cap, the new assets’ contributions to revenues could be much larger, Julio Zetina, an equities analyst at Vector Casa de Bolsa, tells LatinFinance. “Slim knows how to buy. They are good asset hunters,” he adds. Frisco mentions financing for the sale coming from Bank of America Merrill Lynch, its advisor on the deal, and the company does not respond to a request for additional comment. With less than $200m in cash on hand, Zetina says, Frisco will unlikely use much of its own resources. A debt financing might make more sense for the company, he adds, despite equity markets being very welcoming for Mexican issuers in recent weeks. Canada-based AuRico plans to use proceeds to pay down debt, make other investments and pay dividends. The transaction is expected to close in December. Credit Suisse BMO, CIBC and Fasken Martineau DuMoulin advised AuRico. Frisco was spun off from Carlos Slim’s Grupo Carso holding company last year, with Slim owning nearly 80%.