Global commodities trader Trafigura has sold about a 25% stake of the preferred shares of Peruvian zinc and silver miner Volcan Compania Minera for around $400m equivalent, say bankers in Peru not involved in the deal. The shares were sold in several blocks via the local exchange and the buyers are local institutional investors, says one of the bankers. He adds that Trafigura acquired the stake in 2006 and sold it because Volcan is not part of its core business. Another banker says that BBVA Continental and Scotia handled the transactions.
Category: Peru
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China Minmetals Invests in Peru
China Minmetals will invest an estimated $2.5bn in Peru’s Galeno copper mine in the Cajamarca region, according to the country’s vice minister of mines, Fernando Gala. The company’s potential investment in Peru could reach as high as $11bn, which would represent 25% of Peru’s project financing needs, he says. “This project should serve as an example to other investors from Hunan that they can come to Peru,” Gala says.
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First Quantum Enters LatAm Mining
Canada-based copper miner First Quantum Minerals is making its first entrance into LatAm via the acquisition of peer Antares Minerals for CAD460m, the company says. Antares owns copper and gold assets in Peru and Argentina. As part of the deal, each Antares share will be exchanged for 0.07619 of each First Quantum share or a cash payment of CAD6.35 per Antares share. Also, Antares’ 50% stake in the Rio Grande project in Argentina will be spun off into a new company, Regulus Resources. The new company will be 90.1% owned by existing Antares shareholders and 9.9% by First Quantum. If the deal does not go through, Antares will have to pay the buyer a break-up fee of CAD13.5m. “LatAm is an important copper jurisdiction, so it is certainly has been on our radar,” according to a spokeswoman, adding that First Quantum will be looking for more acquisition opportunities. First Quantum operates in Australia, Africa and Finland. BMO Capital Markets is First Quantum’s advisor while Antares worked with Dundee Securities.
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Hochschild Cuts Canada Exposure
Hochschild says in a press release it is reducing its stake in Canadian gold miner Lake Shore Gold to 6% from 35%. The stake is being sold for CAD392m or CAD3.60 per share on a bought deal basis to Canada-based banks RBC Dominion, BMO Nesbitt Burns and CIBC World Markets. Proceeds from the sale will be used to bring the Azuca and Inmaculada projects to production. Wednesday, Hochschild said it would acquire a 30% stake in the Inmaculada gold and silver project in southern Peru from Arizona-based JV partner International Minerals, bringing the total stake to 60%. The deal involves an initial cash consideration of $15m, an agreement to fund the project’s first $100m of capex and a $20m private placement with International Minerals.
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Peru Sets Up Infrastructure Fund
Peru’s finance ministry announced the creation of a $460m infrastructure fund. Local pension funds have committed $220m, Brookfield Asset Management has committed $100m, multilateral CAF $40m and Cofide $100m. The fund will invest in companies in the energy, gas, transportation, water and health sectors among others in Peru. A ministry spokeswoman says the fund will invest in shares and convertible debt. She adds that the fund will begin investing in 2011 and expects to conclude the investment period in 4 years. The fund will hold investments for about 12 years on average, she says. The fund is being managed by Brookfield and AC Capitales, a local private equity shop.
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Hochschild Boosts Inmaculada Stake to 60%
Peruvian mining company Hochschild is acquiring a 30% stake in the Inmaculada gold and silver project in the southern part of the country, bringing its total stake to 60%. The deal involves an initial cash consideration of $15m, an agreement to fund the project’s first $100m of capex and a $20m private placement with Arizona-based joint venture partner International Minerals, which is selling the 30% to Hochschild. The buyer says in a statement that based on spot prices of $1,300/oz and $22.1/oz for gold and silver respectively, the project could return a cumulative total pre-tax cash flow of approximately $1.0bn, equivalent to $699m at a 5% discount rate and $483m at a 10% discount rate, with an internal rate of return for the project of approximately 58%. The transaction is due to close by the end of the year.
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Bidders Prequalify for Peru Oil Blocks
Offers from 8 companies have prequalified to compete for 14 oil and natural gas blocks in Peru, says state oil contracting agency Perupetro. The investment needed to develop the blocks is estimated at $700m over the next 7 years, Perupetro says. The bidders are Argentina’s Tecpetrol, Colombia’s Ecopetrol, a consortium of Repsol, Ecopetrol and YPF, a consortium of YPF and Petrouruguay, UK-based Pitkin Petroleum and Sinochem unit Emerald Energy.
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Lima Bolsa Set to Catch Fish IPO
Peruvian fishery Pesquera Exalmar is preparing to IPO in Lima, targeting an October 28 float. If successful, the deal would be the first Peru IPO since Interbank holdco Intergroup sold shares in 2007. Exalmar plans to sell 57.5m primary units and 54.4m secondary locally, as well as 119.9m primary shares internationally. The issuer does not indicate a value or price range, though says the sale should raise more than $100m when referring to proceeds in the prospectus. Proceeds are marked for repaying debt from recent acquisitions, buying boats, and expanding the footprint in Peru’s southern coast. The fishmeal and fish oil producer would be the second of Peru’s fisheries to go public, after Copeinca. Exalmar had gross income of $37.48m in 2009 and $47.43m in 2008, according to its prospectus. Santander, Citi and Interbank are managing the sale.
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Peru Surprises With No Change
Contrary to market expectations, Peru’s central bank left its monetary policy rate unchanged at 3.00%, citing a small drop in inflation. Morgan Stanley forecast it would tighten by 25bp to 3.25%, a lower hike than the 50bp increase seen in August and September, due to low inflation, which is around 2.0%. Barclays also expected a 25bp hike, with the rate ending at 3.5% by the end of the year. Bank of America Merrill Lynch expected the bank to continue the trend with a 50bp hike.
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Peru Rate Hike Expected
Peru’s central bank is expected to tighten its monetary policy rate today. Morgan Stanley forecasts it will hike 25bp to 3.25%, less than the 50bp increase seen in August and September, due to low inflation. Barclays also expects a 225bp hike, with the rate ending at 3.5% by the end of the year. Bank of America Merrill Lynch meanwhile predicts a 50bp hike. It expects Peru to end the year at 4.25%.