Zaldivar deal falls through

An agreement under which Aur Resources (AUR-T) would have bought a half-interest in the Zaldivar copper mine in northern Chile from Outokumpu has proved too rich for Aur’s blood.

Aur was to have paid US$265 million for Outokumpu’s half of the project’s operating company, Minera Zaldivar, and for debt Minera Zaldivar owes Outokumpu. The company called off the agreement when it became clear that bank loans would have been issued only on restrictive terms, and that covering the rest of the purchase price by issuing new shares would cause significant dilution of the company’s equity.

Both Outokumpu and its partner, Placer Dome (PDG-T), have put their 50% interests in Zaldivar on the block. Outokumpu is trying to position itself at the “downstream” smelting and refining end of the metal industry, and Placer Dome is trying to divest its base metal assets.

Aur, on the other hand, is on the acquisition trail in the copper business, and still has a bid in on the Cerro Colorado deposit in western Panama. In exchange for a US$2-million loan to property holder Tiomin Resources (TIO-T), Aur has the option to buy Tiomin’s interest for US$4 million on exercise, plus US$10 million within 90 days of the start of commercial production at Cerro Colorado.