The latest couple to contemplate a merger is Vancouver-based TECK COMINCO and Torontos AUR RESOURCES. In a deal worth $4.1 billion, Teck Cominco is offering $30.75 in cash and 0.2187 of a Class B share for each Aur common share.
The move is being billed as a friendly takeover having the unanimous backing of the Aur directors. And why not? The two companies have been friendly for many years. Executives have enjoyed reciprocal seats on each others boards. They were partners in the Aur Louvicourt copper-zinc mine from startup in 1999 to closure in 2005.
More interesting to Teck Cominco is the portfolio of base metal producers owned by Aur. Chief among these are the Quebrada Blanca copper mine (90%) in Chile, the Andacollo copper mine (100%), also in Chile, and the Duck Pond copper-zinc mine (100%) in Newfoundland.
If the deal closes as proposed, Teck Cominco will get an immediate 200-million-lb-plus boost, or 43%, to its total copper production this year. Annual copper production will grow by 342 million lb, or 73%, by 2010 (compared to 2007 numbers before the acquisition). And perhaps the most important number of all is a 15-billion-lb, or 136%, boost to copper reserves and resources.
In compiling figures for our annual list of the Top 40 Canadian Mining Companies (which will appear in the August issue of CMJ), I have found Teck Comincos 2006 revenues top all other metal miners. Adding the 2006 revenue from Aur makes Teck Cominco a contender for the top spot overall, a spot that is currently occupied by an oil sands producer. When Teck Cominco joins the ranks of oil sands producers (see item below), it may be the unquestioned leader of Canadian mining companies.
Congratulation to Norm Keevil and Don Lindsay at Teck Cominco and to James Gill at Aur. From here it looks to me like a winning combination.
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