Metminco makes Chile move

Copper play Metminco (MNC) has taken an option to buy the La Piedra project in Chile for $30.05 million (£18.8 million). Chaired by Chilean Antonio Ortuzar, the company, whose flagship asset is the Los Calatos copper and molybdenum prospect in neighbouring Peru, has agreed to pay La Piedra's present owner Alfonso Bianchini Frost $350,000 on signing the option agreement.

In a deal structured to it give it time to evaluate La Piedra's potential before committing the bulk of the money, AIM-quoted Metminco, steered by managing director William Howe, will thereafter pay $350,000 annually up to June 2013, followed by $1 million on or before June 2014. If the company decides to go ahead, it must then pay $28 million in cash, or half in cash and half in shares, to take over the La Piedra tenements.

Metminco, with offices in Australia and Chile, points out La Piedra is only 35 km from two major copper mines, Anglo American's Los Bronces and Chilean group Codelco's Andina, which produced respectively 221,400 and 209,727 tonnes of copper last year. Metminco already owns another Chilean copper project, Mollacas, holding an indicated and inferred resource of 17 million tonnes of ore holding between 0.52 and 0.567 per cent copper.

Los Calatos in Peru is much bigger, boasting indicated resources of 111 million tonnes of ore with 0.39 per cent copper and inferred resources of 815 million tonnes of ore with 0.37 per cent copper, with molybdenum, too. Metminco spokesmen say Los Calatos will take longer to bring into production than Mollacas, which should serve as an appetiser for the Peruvian main course.

Floated in April 2010 at 9p, and recommended by Growth Company Investor last August at 12.5p, Metminco shares now trade at 20.25p, valuing the company at £296 million. They should go further, provided copper retains its appeal.

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