Australian acquisition to help Quadra Mining boost copper production: CEO

Australian acquisition to help Quadra Mining boost copper production: CEO

An acquisition of an Australian mining company will help Quadra Mining Ltd. (TSX:QUA) diversify its base, increase its copper production by 50 per cent and lower its average cost per pound, the company’s chief executive said Thursday.

“In time we believe that the market will recognize the reduced risk profile,” Quadra president and CEO Paul Blythe told a conference call with analysts.

Equatorial’s major asset is its 39 per cent ownership interest in CCM El Tesoro, a Chilean company that owns and operates the El Tesoro project. The mine is 28 kilometres east of the town of Sierra Gorda and Quadra’s own exploration project.

“This is one of the prolific copper producing regions in the world including some of the world’s largest copper mines,” Blythe said.

Insurance company AMP Life Ltd. holds more than 97 per cent of Equatorial’s outstanding shares. Equatorial had put itself up for sale under an auction process in April after AMP failed in an attempt to buy the shares it did not already hold in an offer of $7 AUS per share.

Under the deal announced late Thursday, AMP will receive an average of $9 AUS per share for its stake, while the minority shareholders will be paid $9.26 AUS per share.

The total acquisition price is $449 million AUS ($337 million US).

Equatorial shares gained $2.25 to close at $9.25 AUS on the Australian Stock Exchange on Thursday after the deal was announced. Quadra Mining’s shares were up 42 cents or about four per cent at $11.31 Cdn in trading on the Toronto Stock Exchange.

The offer for the Australian copper producer comes as base metal prices have posted record highs in recent months. However, Blythe said despite the high prices, little or no new copper production has been announced recently.

“We note an increasing consensus among base metal analysts toward a sustained higher price,” he said.

The El Tesoro project is an open pit mine and heap leach operation producing copper cathodes. Mining under the current plan is expected to continue until 2012 after which stockpiles will be treated until 2017.

In 2005, cathode production was 98,121 tonnes. Cathode production this year is estimated to be 91,618 tonnes.

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