Mr Darren Pylot CEO of Capstone Mining Corporation talks with Bloomberg's Mr Christopher Donville about the company's 5 year acquisition strategy, copper production goals and its Santo Domingo copper and iron project in Chile.
Capstone Mining Corporation owner of copper mines in Canada and Mexico is seeking to acquire a producer of the metal in the Americas to boost annual output by as much as 100 million pounds.
Mr Darren Pylot said that Capstone has about USD 500 million in cash, a debt free balance sheet and cash flow from its two operating mines. The company is looking for producing mines in the next 3 years that would add at least 40 million pounds of output or more. We’ve got three different levers to pull to be able to make an acquisition. We would be doing it without using any of our equity or shares.
Capstone, based in Vancouver is expanding in copper as demand from China and other developing economies helped to push the price of the metal to a record in February. The company plans to produce an average of 200 million pounds of copper a year during the next decade up from its 2011 forecast output of 80 million pounds.
Mr John Hughes an analyst at Desjardins Securities Inc said that companies with mines or development projects in the Americas that may fit Mr Pylot's acquisition criteria in the next 3 years include Baja Mining Corporation, Mercator Minerals Limited, Taseko Mines Limited, Copper Mountain Mining Corporation and Copper Fox Metals Inc.
Toronto based Hughes said that there really aren’t that many companies that fit. It shows just how challenged copper producers are to find and develop new sources of supply.
Mr Pylot said that Capstone also is looking for opportunities to acquire assets in partnership with Korea Resources Corporation. The state owned Korean company is Capstone’s largest shareholder with an 11% stake and is 30% partner in Capstone’s proposed USD 1.2 billion Santo Domingo copper project in Chile.
He said that with Santo Domingo and the Kutcho copper and zinc project in Canada moving toward development, Capstone isn’t interested in acquiring another unfinished mining project at this time.
A Mr Pylot said that any acquisitions that we would look at would be in the producing space The Company may be interested in buying development properties after 2014 when Capstone’s new mines in Canada and Chile are expected to start.
He said that Capstone produces copper at the Cozamin mine in Mexico’s Zacatecas state and the Minto mine in Canada’s Yukon Territory. Capstone produced 58.5 million pounds in the first 9 months meaning it must mine 21.5 million pounds to reach its full year target.
He added that we are confident as a management team that we will produce at least 21.5 million pounds of copper, which would be another million pounds more than we produced in the previous quarter.
(Sourced from Bloomberg.net)
