Noranda, Codelco launch Rio Algom takeover

The copper wars that shook up the U.S. and Mexican mining scene earlier this year moved north during the Aug. 16-22 report period, as heavyweights Noranda and Codelco (Corporacion National Del Cobre de Chile) announced a $1.5-billion hostile takeover of Canadian producer Rio Algom.

Noranda is offering Rio Algom shareholders $24.50 cash per share. If the bid is successful, the company will then sell half of Rio Algom to Codelco, the Chilean state-owned mining corporation. However, Rio Algom shares quickly soared above the bid price, from $18.50 to $26.25, as investors anticipated either a sweetened offer or the entrance of another bidder. Noranda shares, meanwhile, rose 15 to $14.95.

While copper, zinc and lead prices were unchanged over the week, other base metal producers showed signs of life: Teck‘s B shares climbed 65 to $9.95; Cominco gained 95 to $20.30; and Breakwater Resources edged up 2 to $2.32. Boliden was unchanged at $1.32.

Nickel was the only base metal to flex its muscles, with spot prices rising US27 to US$3.91 per lb. on the London Metal Exchange. Nickel inventories, meanwhile, dropped to critical levels of below 14,000 tonnes. Despite this, the nickel majors were mixed: Inco fell 30 to $23.90; Falconbridge was up 40 at $17.25, as the strike in Sudbury dragged into its fourth week; and Sherritt International was off 4 to $4.55.

Gold prices took a turn for the worse, sagging US$3.05 on little volume to hit a London morning fix of US$272.45 per oz. on Aug 23.

With the market displaying little interest in physical gold, most of Canada’s gold majors declined: Barrick Gold fell $1.20 to $24.20; Placer Dome shed 15 to hit $12.80; Kinross Gold fell back to penny stock status, off 4 to 96; TVX Gold kept sliding, falling 57 to $2.28; and Cambior fell another 3 to 52. Only Franco-Nevada Mining bucked the trend, climbing 45 to $16.

Junior Manhattan Minerals rebounded slightly from a long decline, rising 16 to $2.66 as the company reported that prefeasibility work is continuing on the TG-1 gold and sulphide deposits at the Peruvian project known as Tambo Grande. Manhattan spent US$11 million on work at Tambo Grande over the first half of 2000 and expects to complete a final feasibility study in the first half of 2001.

Aber Diamond, formerly Aber Resources, rose 70 to $11.70 as the junior announced that it, along with partner Rio Tinto, had received a federal class “A” water licence for the Diavik diamond project in the Northwest Territories. Acquiring the licence paves the way for the the partners to make a formal production decision at Diavik.