Teck Cominco to absorb Aur in $4.1-billion bid

Vancouver – Looking to boost its copper production and reserves, Teck Cominco (TCK.B-T, TCK-N) has tabled a friendly $41 per share bid for fellow Canadian base metals miner Aur Resources (AUR-T, AURRF-O).

Teck Comincos offer of $41.00 in cash or 0.8749 of a Class B share for each Aur Resources common share comes in at a 29% premium to Aurs 20-day volume weighted average closing price and represents a valuation of about $4.1 billion.

The move comes amidst a strong industry trend of mergers and acquisitions that have seen several major Canadian mining companies disappear from existence.

The acquisition will immediately add more than 200 million lbs. (90,000 tonnes) of annual copper production to Teck Cominco, boosting its yearly output by 43%. The Vancouver-based miner will also see its copper reserves and resources swell by about 15 billion contained lbs. (6.8 million tonnes), or about 136%, in taking on Aurs mineral project portfolio.

Teck Cominco also anticipates its annual copper production will grow 72% by 2010 to reach the 342 million lbs. (155,000 tonnes) level as a result of the Aur takeover.

Aurs board of directors has thrown its full support behind the offer where Teck Cominco will pay out a maximum of $3.1 billion in cash and issue up to about 22 million Class B shares. Teck Cominco will have a right to match any better offer that comes along and will receive a $140-million termination payment should the takeover not consummate due to a superior offer.

Teck Cominco president and CEO Don Lindsay reviewed the fit of Aur into the companys growth plans, explaining the acquisition will immediately increase our cash flow and add substantially to our long term growth in copper production.

We are pleased to re-establish our operating presence in Chile, continued Lindsay, calling it one of the very best countries in the world in which to operate in mining.

During a conference call, Lindsay also described the Aur team as very complimentary to Teck Cominco. He continued in bestowing compliments to its founders, specifically Aurs president and CEO James Gill, which “took the company from seed capital of just $250,000 when it was formed in 1981 to a value of $4 billion today.”

Subject to regulatory filings and approvals, Teck Comincos offer is subject to acceptance by at least 66.67% of Aur shareholders.

Aurs project portfolio consists of:

• 76.5% of the Quebrada Blanca open pit copper mine in northern Chile. The SX-EW processing operation is forecast to produce 177.5 million lbs. (80,510 tonnes) of cathode copper in 2007 at total operating costs of 86 per lb.
• 90% of the Andacollo open pit copper mine in central Chile. Also a SX-EW processing operation, it is forecast to produce 42.7 million lbs. (19,351 tonnes) of cathode copper in 2007 at total operating costs of 83 per lb.
• Duck Pond underground copper-zinc mine in central Newfoundland. Commenced operation in early-2007 and forecast to produce 28.4 million lbs. (12,882 tonnes) copper, 52.8 million lbs. (23,950 tonnes) zinc, 377,600 oz. silver and 2,700 oz. gold in concentrates for 2007. Copper cash costs of 15 per lb. net of other metal credits.
• Andacollo hypogene deposit, underlying current mining operations, scheduled for development. Proven and probable reserves of 434 million tonnes at 0.39% copper and 0.13 gram gold per tonne. Forecast to produce about 156 million lb. (71,000 tonnes) copper and 59,000 oz. gold annually over modeled mine-life of 21 years.
• Advanced-stage exploration projects in southern Argentina, Ecuador and Chile.

Interestingly, Aur initially purchased its 76.5% interest in Quebrada Blanca from Teck Cominco predecessor companies in late-2000 for US$180.6 million. Under the agreement Teck Cominco was also to receive contingent payments, up to a maximum of US$40 million, should yearly average copper prices equal or exceed US$1.10 per lb.

Following the takeover announcement, shares of Aur Resources soared 31% in July 3rd trading to close up $9.86 at $41.56 apiece. Teck Cominco Class B shares notched up 60 to close at $45.80.