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PanAust Held Talks With Groups After Guangdong Rising Approach

By David Stringer
July 14, 2014 9:06 PM EDT

PanAust Ltd. (PNA), an Australian copper miner that’s the target of an about A$1.1 billion ($1 billion) takeover approach from a Chinese investment company, says it’s held talks with other parties over potential rival bids.

State-owned Guangdong Rising Assets Management Co. offered A$2.30 cash a share in a conditional proposal for the Brisbane-based producer. PanAust in May said it had rejected the bid from its biggest shareholder as being too low, though agreed to allow access to financial information.

“The company has held discussions with a number of parties and has established a data room” to allow Guangdong Rising and other parties to carry out due diligence, the company said today in a statement. “If a party wishes to submit a proposal it will be considered on its merits.”

Acquiring PanAust would give the buyer control of mines in Laos as well as the Frieda River project in Papua New Guinea, described by the target as one of the world’s largest undeveloped copper and gold deposits. PanAust has traded below Guangdong Rising’s offer price, signaling investors don’t expect it to succeed.

The stock traded at A$2.13, 0.9 percent lower, at 10:33 a.m. Sydney time. Guangdong Rising owns 23 percent of PanAust.

PanAust agreed last year to buy Glencore Plc (GLEN)’s stake in Frieda River, estimating the development costs at as much as $1.8 billion. Frieda River may produce 100,000 metric tons of copper and 160,000 ounces of gold annually and have a mine life of 18 years, according to company filings.

Copper production at PanAust’s Phu Kham mine in the three months to June 30 was 16,500 metric tons compared with 15,483 metric tons a year earlier, the company said today in a statement. The result compares with the median estimate of 16,200 tons from three analysts surveyed by Bloomberg.

Copper may slide into deficit from about 2017, with 4.5 million metric tons of new production capability needed to meet demand by 2022, according to Wood Mackenzie Ltd.

To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Keith Gosman, Iain Wilson

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