PanAust Ltd. (PNA), the Australian operator of copper, gold and silver mines in Laos, said it may be an acquisition target after losing a third of its market value this year as metal prices slumped.
“We don’t look over our shoulder the whole time, but I think at these sort of prices we are ridiculously cheap,” Gary Stafford, managing director of the Brisbane-based company, said in an interview in Sydney.
Gold, silver and copper all fell into a bear market last month as China’s economic growth slowed to 7.7 percent in the first quarter from 7.9 percent in the previous three months. Chinese mining companies may use an extended global slump in commodity prices to boost acquisitions of foreign assets, according to the investment banking unit of Bank of China Ltd.
Private equity and Chinese investors “probably are monitoring us,” Stafford said yesterday. Chinese investment group Guangdong Rising Assets Management Co. owns a 19.65 percent stake in PanAust, according data compiled by Bloomberg.
PanAust, which has dropped 35 percent this year, rose 0.2 percent to A$2.185 in Sydney trading at 1:10 p.m. local time, giving it a market value of A$1.35 billion ($1.4 billion).
The company, which is weighing two potential expansion projects, will defend itself if any approach was made, Stafford said. It will decide within 12 months on funding either a third mine in Laos, or a new development in Chile, where PanAust already has a joint venture with Codelco, the country’s state- owned copper producer, he said.
PanAust estimates the Laos project would cost about $300 million to build. It said it would need to spend as much as $1 billion in Chile to develop both its joint venture with Codelco and the Carmen copper-gold deposit.
“If we make a decision in the middle of next year, we’ve another two years to build our cash in the business,” said Stafford, adding that PanAust will still be able to make dividend payments as it builds cash.
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