In today’s briefing:
- Peak Rare Earths (PEK AU): A Done Deal at an Attractive Spread
- Zijin Gold International – Creating a Global Pure-Play Gold Champion
- Zijin Gold IPO Preview
- Copper Convergence — Anglo–Teck’s Path to Scale and Value
- Business Breakdown: Paushak Ltd – Phosgene Chemistry Powering Long-Term Growth
- Anglo-Teck Merger: Scaling Up to Fortify Copper Empire
- Vedanta’s Risky Diversification into JP Associates;Instead of Debt Reduction
- Americas/EMEA base oils demand outlook: Week of 8 September
- Exploits Discovery: Sells Newfoundland Claims for $8.8M
- GIGA: Advancing Turnagain with Fall Geophysics; Financing Closed
Peak Rare Earths (PEK AU): A Done Deal at an Attractive Spread
- On 5 September, Shenge increased its minimum scheme consideration for Peak Rare Earths (PEK AU) to A$0.443, a 23% premium to the previous minimum cash consideration.
- The IE considers the offer fair and reasonable. The key conditions are approval from the Fair Competition Commission of Tanzania and shareholder approval (vote scheduled for 16 September).
- This is a done deal, as Tanzania approval and the vote are low-risk. At the last close and for a 30 September payment, the gross/annualised spread is 5.5%/147%.
Zijin Gold International – Creating a Global Pure-Play Gold Champion
- Zijin Mining is spinning off its seven overseas gold mines into Zijin Gold International, creating a dedicated, pure-play gold producer and positioning it for a Hong Kong IPO.
- The IPO proceeds will primarily fund mine upgrades and overseas M&A, with a portion earmarked to reinforce the balance sheet and corporate flexibility.
- With media reports suggesting a $3B+ IPO size and potential launch in September, coupled with gold rallying above $3,600/oz, investor appetite around the listing is notably heightened.
Zijin Gold IPO Preview
- Zijin Gold is getting ready to complete its IPO in Hong Kong this year. A successful IPO of Zijin Gold could fetch as high as US$3 billion in IPO proceeds.
- Zijin Gold had sales of US$3.0 billion (up 32.2% YoY) in 2024. Net margin increased from 14.2% in 2023 to 20.8% in 2024.
- There has been a sharp increase in the gap between gold AISC (all-in-sustaining cost) and gold price in the past year, leading to higher profit margins of gold producers globally.
Copper Convergence — Anglo–Teck’s Path to Scale and Value
- Anglo and Teck agreed an at-market merger of equals, creating a copper-tilted major. Pro forma ownership about 62%/38%; HQ Vancouver, primary LSE listing. Anglo plans a sizeable pre-close special dividend.
- Scenario-Based synergy valuation indicates multi-billion upside, with recurring cost savings earlier and long-dated Chile adjacency optionality subject to partner alignment and permitting. This frames interloper incentives, break-price support, and re-rating.
- Approvals hinge on Canada’s net-benefit test and multi-jurisdictional antitrust; shareholder hurdles look manageable. I favor a hedged long-TECK/short-AAL pair capturing a double-digit spread, with dividend liabilities on the AAL short.
Business Breakdown: Paushak Ltd – Phosgene Chemistry Powering Long-Term Growth
- Paushak is undergoing a INR 240 crore capex program to expand its downstream capacities and move into semi-specialized products, impacting near-term profitability.
- The company’s strong market position in phosgene derivatives and custom manufacturing for global players underpins its long-term growth potential despite current financial pressures.
- While elevated valuations reflect short-term capex strain, Paushak’s long-term growth trajectory and strategic expansion reinforce its strong market outlook, maintaining a bullish stance for the future.
Anglo-Teck Merger: Scaling Up to Fortify Copper Empire
- Anglo American and Teck Resources merge in a $53 billion deal, creating the world’s fifth-largest copper producer with defensive scale.
- The merger promises $800 million in annual cost synergies by the end of 4th year, but execution across multiple jurisdictions will remain a challenge.
- Regulatory approval in Canada and key stakeholder positions, including Keevil and Elliott, will be pivotal to deal success.
Vedanta’s Risky Diversification into JP Associates;Instead of Debt Reduction
- Vedanta (VEDL) recently emerged as the highest bidder in a fiercely competitive auction to acquire Jaiprakash Associates (JAL), a key player in the Indian infrastructure sector.
- With an offer of INR 17,000 crore, Vedanta secured the company’s assets under the National Company Law Tribunal (NCLT) resolution process.
- While the deal presents an opportunity for Vedanta to expand its footprint in diverse sectors, several factors raise concerns about the financial sustainability and strategic risks associated with this acquisition.
Americas/EMEA base oils demand outlook: Week of 8 September
- US base oils demand could ease in face of downward price-pressure and healthy availability of supply.
- Buyers that built stocks as buffer against supply-disruptions during Atlantic hurricane season could start to tap those volumes before seeking additional supplies.
- Demand could face more downward pressure if buyers are wary about exposure to further drop in prices.
Exploits Discovery: Sells Newfoundland Claims for $8.8M
- Exploits has agreed to sell its Newfoundland mineral claims to New Found Gold for up to $8.8M, including $7.0M in shares and a 1% NSR royalty.
- The royalty applies to Bullseye, Gezeebow, and Keats West, which we previously noted as important for advancing NFG’s Queensway Project.
- The Company is well-funded for exploration at its Ontario and Quebec Projects, hosting 680Koz in historical gold resources.
GIGA: Advancing Turnagain with Fall Geophysics; Financing Closed
- Giga will begin a geophysics program at its Turnagain project targeting copper, platinum, and palladium potential near the existing resource.
- The Company recently closed its non-brokered private placement, raising C$690K across two tranches of flow-through and non-flow-through units.
- Initial results from the program are expected in early October, marking the first operational step under new CEO Scott Lendrum.
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