Chili backers like its prospects
Michael Quinn, 15 December 2011
LAST month South American copper hopeful Metminco was, as is often the case, forced to discount its shares to raise $A40 million from institutions. However, no such discounting was required this week by fellow South American copper hopeful, Hot Chili, with more than $A22 million worth of shares placed at slight premium. Why the difference?
While or sorts of justifications and rationale can be used as explanation, the short and simple answer would be the market better likes the prospects for Hot Chili.
In September Hot Chili announced a resource at its mainstay Productora project in Chile of 85 million tonnes grading 0.6% copper, 0.1gpt gold and 146ppm molybdenum, with resource upgrades due next year and scoping work due to be completed by the third quarter of 2012.
Metminco owns the Los Calatos project in Peru containing 926Mt of copper-moly resource, including an indicated 111Mt at 0.39% copper and 380ppm moly, as well as the Mollacas copper leach project in Chile containing 17Mt at about 0.54% copper and the Vallecillo gold-zinc project with about 10Mt of resources.
Los Calatos is described by its owner as world class though Peru currently has its issues. Still, Metminco would clearly seem the more advanced of the two in terms of development.
Hot Chili’s raising was backed by four of its top-five shareholders, with Taurus Funds Management the most enthusiastic of the quartet in raising its stake in the company from 4.1% to 13.4%.
Taurus director Dr Michael Anderson unsurprisingly bristled when queried as to whether Hot Chili’s broker for the placement, Bell Potter, had somehow engineered a scenario whereby investors keen on the junior felt they might miss out if they didn’t pay a premium.
“Taurus does not invest unless it believes the projects are good,” Anderson told HighGrade. “We base our investment decisions on technical and commercial due diligence; not what anyone else might be doing.
“I agree that it is nevertheless a great achievement in the current market, which much like a couple of years ago, appears to be paying far too much attention to sentiment as opposed to fundamentals.
“I am very much looking forward to getting involved with Hot Chili. They have assembled a good team and in our view the resource will in time be capable of supporting a major copper development.
“Watch this space!”
Anderson, who is to join the board of Hot Chili, would know a potentially viable copper project when he sees one given his last gig as managing director of Exco Resources, involved proving up the bona fides of a copper deposit in Queensland so as to sell it to Xstrata – for $A175 million.
Another Hot Chili backer, nickel miner and gold project developer Panoramic Resources, was more succinct when asked for its thoughts.
“Hot Chili ... lots of interest and a great story,” Panoramic managing director Peter Harold said.
He also pointed to the options issued with the new shares on a one-for-three basis.
Also in the December 15 - 21, 2011 edition
- AFRICA
- Eritrea risk narrows Zara field
- ASIA DESK
- Not all good as gold in China
- AUSTMINE
- MST buys Nixon Communications
- BREAKING NEWS
- Abenab progress for Avonlea
- Alara advances
- Alcoa declares divi
- Alcyone search boost
- Better news for St Barb
- Black Fire complies
- Bu Dun Hua copper
- Chief sees higher rating for Endeavour
- Cockatoo extension
- Impala sacks drillers
- Industrea win
- Kingston shines
- Maiden Rosie resource
- More Bass trouble
- More concerns on uranium supply
- Nany option exercised
- Newcrest output up
- Palito reassessment
- Pegasus finds copper
- PGM output up
- Radar on track
- Redhill expands holding
- Rio in control
- River attraction for Silver Lake
- Southern Cross ready to move forward
- Stonehenge sets sights high
- Straits gain
- Strategic permit
- Tanoyan update for Reliance
- Trafford's exploration boost
- Two Rivers death
- Ventnor copper hits
- WA uranium policy
- West Rand mines to merge
- Windfall at lake
- Winmar attracts investor
- Yellowhead on track
- CENTRAL ASIA
- Can miners really side-step a war?
- COAL
- Mardon's new year wish
- CONSULTING
- Consultants see room to grow in 2012
- Lory leads SKM mining into new growth phase
- CONTRACTING
- Contracting briefs: Redpath, Thiess, Decmil
- FINANCE
- A golden path to Dubbo development
- Copper deficit a fixture for the future
- Kagara opts for safety first
- Money’s almost too tight to mention
- Terramin view expected to become clearer
- FORUM
- How the JORC and Valmin codes work
- More must buy into JORC discussion
- FROM THE CAPITAL
- Capital management will be key 2012 theme
- GOLD
- Loyal to the cause
- Upside seen despite Teranga downslide
- HEAVY METAL
- Atlas Copco expands mining range
- ISSUES
- State-run miners: best of a bad bunch
- MINING
- Independence gloom unwarranted
- MINING INTELLIGENCE
- 'tis the season (still) to be wary
- MINING IT
- Auto-money changes everything
- Innovation is the new black
- IT notebook: ARANZ Geo, Immersive Technologies
- IT notebook: Devex receives certification
- IT optimists
- Mining IT: 2011 rebooted
- Mining IT: product releases to fill 2012 calendar
- XPAC to lead dynamic software revival
- PEOPLE
- People on the move: Gindalbie Metals, Abcourt Mines, Carbon Energy
- VIEW FROM THE WEST END
- Bitten on the bum by a Black Swan
