Chasing copper and nickel
Need to know
- BHP bids $25/share for all of Oz Minerals
- OZL Board has already rejected the offer
- BHP has accumulated <5% of OZL shares
Investment implications
BHP Group has offered $25.00 per share to acquire OZL. The OZL Board has quickly rejected the offer arguing it falls short of the ‘compelling value’ claimed by BHP.
OZL CEO Andrew Cole said: “We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations.” Those locations happen to be mostly adjacent to BHP operations such as Olympic Dam in South Australia (Carrapateena and Prominent Hill – OZL) and Nickel West in WA (West Musgrave – OZL). OZL argues BHP’s offer does not recognise the significant synergies that would be available due to the location factor.
OZL also argues its share price has regularly traded above $25/share in 5 of the last 12 months of this year and is opportunistic given the falling copper and nickel prices.
OZL has 19 global exploration projects underway in Australia, Brazil, Sweden and Peru. The most important is the Carrapateena Block Cave project in SA with mine reserves of 210mt Cu at 1.1% Cu and
0.44g/t of gold. It would lift OZL’s CU equivalent production from under 60mtpa to over 140mtpa.
The approximately $8.9 billion enterprise value offered by BHP would comfortably fit within its balance sheet capacity.
This commentary reflects our initial view. For detailed reports for companies under Sandstone Insights coverage, see our latest research notes for our investment view and specific risks associated with investing in these companies.
Stock overview
Share price
Company overview
BHP Group is a global commodities producer including iron ore, metallurgical coal, copper, gold, silver, uranium oxide, lead, zinc, cobalt, molybdenum, manganese, thermal coal, petroleum products and potash.
Price performance
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