OZ Minerals Ltd. (OZL), Australia’s third-largest copper producer, rose the most in seven weeks in Sydney trading after a newspaper reported that Glencore Xstrata Plc (GLEN) is weighing a takeover offer.
Melbourne-based OZ Minerals advanced 4.5 percent to A$4.61 at 10:58 a.m. local time, the most since Aug. 12, giving it a market value of A$1.4 billion ($1.3 billion). Earlier it had gained as much as 6.7 percent. Australia’s benchmark S&P/ASX 200 Index declined 0.9 percent.
The U.K.’s Mail on Sunday newspaper reported yesterday that Glencore is considering an offer after buying a 10 percent stake in OZ Minerals. The newspaper didn’t name its sources.
“The company advises it has not received a substantial shareholder notice from Glencore nor has OZ Minerals been approached by Glencore in regard to any proposal,”OZ Minerals said today in a filing to the Australia Securities Exchange. The statement followed a query from the ASX on media speculation over Glencore acquiring shares in OZ Minerals.
Glencore doesn’t “comment on market rumor or speculation,” spokesman Baar, Switzerland-based Charles Watenphul said today in an e-mailed statement.
Glencore Chief Executive Officer Ivan Glasenberg said in May the company may study “opportunistic” deals. OZ Minerals, which has fallen 31 percent this year, reported a first-half loss and took a A$232 million writedown in July at its Prominent Hill mine in South Australia, its only producing asset.
The Australian producer is at “a turning point” as it completes a program to remove waste from its mine, an operation that has curbed copper production, Chief Executive Officer Terry Burgess told Bloomberg Television’s “Asia Edge” in an interview last month.
“In that sense it looks like a typical Glencore strategy, to buy something as it’s just about to turn the corner,” Michael Evans, a Sydney-based analyst at CIMB Group Holdings Bhd. (CIMB) said today by phone.
OZ Minerals is seeking to complete a pre-feasibility study at its Carrapateena copper project in the first half of 2014 and said in May the operation would need pre-production capital expenditure of A$3 billion. Initial studies suggest the site could have potential output of as much as 110,000 metric tons of copper and 130,000 ounces of gold per year, the company said in a presentation earlier this month.
“It’s an asset, once it’s up and running, that turns you from a copper mining company with seven year’s mine life, to one with 30 years, so from that perspective it’s an attractive option,” CIMB’s Evans said.
OZ Minerals missed out on Rio Tinto Group’s Northparkes copper mine, a person with knowledge of the matter said July 16, after China Molybdenum Co. agreed to pay $820 million for Rio’s 80 percent stake in the Australian asset. OZ Minerals had been among companies that made final bids, the person said.
Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director of Glencore Xstrata.
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