Less than two months after trumpeting their proposed merger as a match that would create a $1-billion global mining company, two Canadian copper producers have called off the deal.
Aur Resources Inc. and Inmet Mining Corp. yesterday said they have mutually agreed to terminate their merger agreement, struck on May 4.
In a brief statement, the companies said they determined it was in their "respective best interests" to cancel the deal and that they were parting on amicable terms.
The companies said their decision was not the result of any technical or financial findings identified during due diligence.
The combined company would have had a stock market value of nearly $1.3-billion and had stakes in seven major mines around the world.
No termination fees are payable by either party.
When it was announced, the Aur-Inmet merger was widely viewed as a strategic move that would make both companies more competitive in a market where consolidation and bigger players are becoming the norm.
The deal was also announced as copper supplies were running short and prices were on the rise, a situation that has since intensified.
In a research note yesterday, Canaccord Capital Corp. analyst Greg Barnes said copper inventories are continuing a steady slide downward that began in early 2003. By next week, he wrote, the world's three major copper exchanges could collectively have less than 100,000 tonnes in inventory -- "quite remarkable considering that in January, 2003, total global exchange inventories stood at more than 1.3 million tonnes."
Earlier this month, there were reports that Brazilian iron ore giant Companhia Vale do Rio Doce was preparing to make a bid for some or all of Noranda Inc., the world's ninth-biggest copper producer.
Wendy Stueck