Increase by nearly 8%! JIANGXI COPPER makes a third offer to acquire SolGold, targeting top copper-gold mines in South America

Jiangxi Copper has once again raised its acquisition offer for the UK-listed company SolGold to 28 pence per share this Friday, with a total value of approximately £842 million ($1.13 billion). This marks the third bid by the Chinese copper giant in three weeks for SolGold, which owns Ecuador's top copper-gold mining project.

The latest offer is a 7.7% increase from Jiangxi Copper's previous rejected bid of 26 pence last month. After rejecting Jiangxi Copper's two prior non-binding acquisition proposals, the SolGold board stated that if Jiangxi Copper submits a formal acquisition offer under these terms, it will recommend shareholders accept it.

Despite the increased acquisition offer, SolGold's share price fell sharply on Friday, hitting a day low of 25.1 pence in early trading, down about 11% during the day. The decline later narrowed to below 9%, still remaining under 26 pence, which is below Jiangxi Copper's offer, reflecting investors' cautious attitude towards large-scale mining acquisition deals. The acquisition still requires approval from Chinese regulatory authorities for overseas investments, and Jiangxi Copper has initiated the relevant procedures.

Jiangxi Copper's acquisition efforts come amid a global scramble for copper assets, with miners anticipating that investments in artificial intelligence and electric vehicles will drive up copper demand, leading them to invest billions of dollars in acquisitions.

Three Bids Gradually Increase SolGold's Attitude Changes

Jiangxi Copper, which holds a 12.2% stake in SolGold, is the largest shareholder. After its initial non-binding acquisition proposal was rejected on November 23, it made another bid of 26 pence per share on November 28, which was also rejected by the board. The latest offer of 28 pence is Jiangxi Copper's third attempt.

According to media reports on Friday, the SolGold board expressed a "tendency to recommend" Jiangxi Copper's improved offer, provided that Jiangxi Copper submits a formal offer under these terms. This change in attitude indicates substantial progress in the acquisition negotiations.

According to the UK City Code on Takeovers and Mergers, Jiangxi Copper must publish a formal offer announcement by 1 a.m. on December 27 or issue a clear statement regarding the abandonment of the acquisition.

Targeting South America's Top Copper-Gold Mining Project

This acquisition would give Jiangxi Copper control over SolGold's flagship Cascabel project, located in the Imbabura province of Ecuador, which hosts one of South America's largest undeveloped copper-gold deposits.

The main Alpala deposit of the Cascabel project has proven, controlled, and inferred resources, including 12.2 million tons of copper, 30.5 million ounces of gold, and 10,230 million ounces of silver. The project is expected to complete its pre-feasibility study in 2024, with plans to start early engineering in 2026 and achieve first production in 2028.

According to the pre-feasibility report, the mine is expected to have an operational life of 28 years, with an average annual copper production of 123,000 tons, gold production of 277,000 ounces, and silver production of 794,000 ounces. During peak production, the annual copper output is expected to exceed 216,000 tons

Major Shareholder Support Secured, Copper Production Expected to Increase After Acquisition

Jiangxi Copper has secured support from other major shareholders of SolGold, including BHP, Newmont, and Maxit Capital, who collectively hold 40.7% of the shares. BHP and Newmont had previously expressed interest in SolGold but lost interest due to funding disputes and changes in the scope of the Cascabel project.

The acquisition still requires approval from Chinese regulatory authorities for overseas investments, and Jiangxi Copper has initiated the relevant procedures.

Jiangxi Copper's business footprint spans China, Hong Kong, as well as regions such as Peru, Kazakhstan, and Zambia. If the acquisition is successful, with the development and operation of the Cascabel project, it is expected to bring significant resource increments to Jiangxi Copper. The company's long-term copper production may see a doubling in growth, which will significantly alleviate the issue of insufficient profitability from its cathode copper products and enhance its position in the industry.

Relevant data shows that over the past five years, the gross profit margin of Jiangxi Copper's main product, cathode copper, has fluctuated between 3% and 4%, with some years even falling below 3%. In 2024, Jiangxi Copper's self-produced copper concentrate is expected to be 199,700 tons, and in the same year, the company's cathode copper smelting capacity will reach 2.3 million tons