JUNIOR MINING

Barclays' Cupric Canyon to buy Botswana-focused copper junior

Cupric Canyon targets Hana Mining with a C$67 million offer for the Hana shares it doesn't already own.

HALIFAX, NS (MINEWEB)  - 

It knows the project well. Now it wants to own it. Cupric Canyon Capital, a private equity firm backed by Barclay's Bank, has offered Hana Mining a C$67 million takeover offer for the 81.4 percent or so shares in Hana it doesn't already own. The offer is a strong premium to Hana's recent shareprice - 88 percent to the 20-day volume weighted shareprice according to Hana - though notably short of the shareprice heights Hana has traded at during most of the past few years (over C$5 in late 2010 and over C$1 in late 2010) and the C$1.35 Cupric paid for Hana shares back in a January 2012 private placement.

For its C$67 million Cupric is chiefly getting the Ghanzi copper project, Hana's flagship project in Botswana. In a May scoping study, Hana reported capital costs of $399 million for a copper project that could churn out 66 million pounds copper and 878,000 ounces silver a year on average over a 12-year mine life from a 10,000-tonne-per-day operation at cash costs of $1.96 per pound copper. Clearly Cupric likes what it sees therein as Hana said Cupric intended "to advance the Ghanzi project through the design, construction and operational phases of its development."

The offer from Cupric at C$0.82 per Hana share got endorsements from Hana's board and, critically, Hana's other major shareholder, Pala Investments, which Hana has said owns 19.5 percent of its outstanding shares. Pala agreed to lock up its shares to the Cupric deal. Further Hana said Scotia Capital advised it the offer was fair. The takeover bid values Hana at C$82 million, or about a third the net present value Hana assigned to the Ghanzi project after tax and at an eight percent discount back in May.

While many countries in Africa are tarred with reputations as being high-risk for mining and exploration, Botswana is not one of them. It stands out as the continent's safest jurisdictions for mine investments, and in the world for that matter. Not that long ago in a poll of mining companies the Fraser Institute ranked Botswana 16th on its policy potential index. To put that in perspective Botswana came ahead of copper-juggernaut Chile (17th) and a slew of other better known mining jurisdictions. Meanwhile it's also worth noting Botswana topped the Fraser Institute's list in terms of both mining policies and mineral potential, ahead of Greenland, the Yukon, Saskatchewan, Chile and Alaska, respectively ranked from second to fifth.

Botswana's relative risk-free status and mineral prospectivity won't have escaped Cupric as it builds its copper portfolio with an eye, as stated on its website, to a public offering or getting bought-out down the road.