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AUSTRALIA PNA.AX 1,84 AU$ 30,50%
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Investors size up Australian copper mines amid weakness

Publié le 02 octobre 2015

SYDNEY, Oct 2 (Reuters) - Australian copper miners sitting on undeveloped deposits are catching the eyes of investors looking beyond the downward trajectory in metals markets, with private investment giant KKR & Co LP the latest to take a position.

"Private investors are assessing the longer term value while the market sits at the bottom," said Fat Prophets mining analyst David Lennox

Copper prices have deteriorated in response to declining economic growth in China, the world's top consumer.

London Metal Exchange copper ended the third quarter down 10.5 percent, the weakest quarterly performance in more than two years.

Shares in Australian copper companies have declined in step, despite copper in Australian dollars remaining relatively flat at around A$3.30 a pound

"It's a bit skewed, suggesting the company's are being undervalued by the market," said Lennox.

Researchers at Capital Economics expect Australia to outperform other commodities-heavy countries such as Canada, Brazil and Norway.

"Australia's labour market will probably remain stronger than those elsewhere, its fiscal situation is not as bad and its services sector is well placed to take advantage of the weakening in the Australian dollar," it said.

KKR acquired a 10 percent stake in Oz Minerals on Thursday at an 8.7 percent premium to the last close, its first investment in Australian mining.

Oz Minerals mines about 120,000 tonnes of copper a year, but could go much higher if a second deposit, named Carapateena, is constructed.

"We thought it was a good time to accumulate exposure to Oz Minerals' shares given the environment," KKR said in a statement.

That deal follows one last month where private investors, ERM and Lighthouse Minerals, partnered to buy a mothballed copper mine owned by India's Hindalco in eastern Australia, with an eye to restart production at a higher rate.

On a larger scale, Chinese state-owned investor Guangdong Rising Assets Management (GRAM) in May was one of the first to act, completing a takeover of PanAust Ltd after PanAust finalised a $125 million deal to buy a copper project in Papua New Guinea.

Analysts expect GRAM to spend nearly $2 billion developing the project.

"The key message is that valuations are starting to look interesting," said Peter O'Connor, a mining analyst for Shaw Stockbroking.

"Companies that offer specific opportunities, be it through valuations, optionality or management activism are being explored. Where shareholders are sometimes slow to see the growth path, somebody from afar can better pick up on that," O'Connor said.

(Editing by Ed Davies)

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