Argentina Mining M&A Poised for Revival

Publishing & Media

Share Tweet

Argentina Mining M&A Poised for Revival

Lumina Copper Takes Center Stage

Vancouver, BC / May 27, 2014 / Resource Reports: Two years ago Lithium One struck a $112 million deal with Australia's Galaxy Resources (GXY-ASX) on its Sal de Vida lithium-potash project in Northern Argentina. The merger was a boon for shareholders at the time and held out the hope for future M&A activity in Argentina.

Argentina's Planning Minister, Julio de Vido announced last week that the mining sector is expected to attract $3.85 billion dollars in 2014.  In the last ten years the sector has brought in over $11 billion dollars, generating 3.2% of Argentina's GDP.

Since May 23, 2014 Lumina Copper (LCC-TSX.V) has taken center stage in the Argentina mining space, rallying 26% to $7.58 per share, despite there being no significant movement in the spot price of copper or any material news announced by Lumina.

Could this mean that it's 'Game On' in Argentina?

One thing is clear: The Lumina's Taca Taca project is for sale and it's one of the largest copper deposits in the world owned by a junior.

Argentina has a rich mineral history and is home to some of the largest mineral deposits in all of South America including precious metals, lithium, uranium and potash - yet the country remains 75% unexplored.

There are 14 mines currently in production, with four more under construction and 15 additional advanced stage projects in the works. Most of the majors, including Goldcorp and Barrick, own projects and continue to invest in projects in Argentina.  The geology is that good.

The Argentine government is taking a proactive approach to attract international investment in the resource sector, forming the Federal Organization of Mining States (OFEMI).

Ten of Argentina's provinces have signed onto OFEMI, with the objective to coordinate criteria to apply regulations and establish conflict resolution strategies aiming bring long-term stability to issues like taxes, land property and hiring local labor in the country.

Paul Matysek, President of Goldrock Mines Corp. (GRM-TSX.V) was the dealmaker behind the last success in Argentina, Lithium One.

"International investors are pouring money into Argentinean oil and gas right now," says Matysek in a recent interview with The Northern Miner, "Yet people are too nervous to invest in mining in Argentina, even though the same regulations apply to both.  It just doesn't make sense."

In addition to his success with Lithium One Matysek was behind Potash One, where he oversaw a $434 Million takeover by Germany's K+S Ag. And before that he was the founder of Energy Metals, a uranium company that Uranium One acquired a controlling stake in only three short years for $1.8 Billion.

Mr. Matysek believes in the resource sector in Argentina.  That matters because he has track record of enriching shareholders who followed him into unloved countries or sectors.

Goldrock owns the Lindero gold deposit in Salta province, northwestern Argentina. GRM has been granted the primary overriding mining permit by the Salta provincial government to develop an open pit, heap leach gold mine.

The Salta provincial authorities recently approved the building and electrical permits that Goldrock requires to commence construction at Lindero.

REMSA has been contracted to transport 38,000 cubic meters of natural gas per day to the Lindero gold mine, using four trailer trucks.

"With the signing of this critical energy contract, Goldrock continues to advance the Lindero project and the de-risking of the construction schedule," stated Matysek.

6,010 companies involved in Argentina's mining industry, generate 72,000 direct and 564,900 indirect jobs, boasting the highest industry salaries in the country. In the last decade, mining sector exports have increased 300% from $ 2.1 billion to $6.5 billion.

If Lumina's Taca Taca asset is sold it may lead to a significant re-pricing of advanced resource projects in Argentina or make them a much stronger candidate for mergers and acquisitions.

Lumina closed at $7.46 per share ($328M market cap) while Goldrock Mines closed at $0.455 ($35M market cap).


SOURCE: Resource Reports