Capstone to buy Far West

Finance

Publishing Date: 18 Apr 2011 12:02pm GMT
Author: Mining Journal

Canadian copper miner Capstone Mining Corp has made a friendly agreement to acquire Far West Mining Ltd in a deal that will result in a new strategic partnership with Korea Resources Corp (Kores).

Capstone will pay C$725 million in shares and cash for Far West, which owns the Santo Domingo copper-iron-gold project in Chile.

Under the proposal, Far West shareholders would receive 1.825 Capstone shares plus C$1 in cash. This values Far West’s shares at C$9.19 each based on the 30-day volume weighted average price of Capstone prior to April 15.

Following the completion of the deal, Kores would acquire a 30% interest in the Santo Domingo project from Capstone for about C$210 million.

Kores would also become Capstone’s largest shareholder by purchasing an 11% interest in the company for a further C$170 million.

Darren Pylot, Capstone president and chief executive officer, said: “The proposed acquisition of Far West is consistent with Capstone’s strategy of building a growth focused mid-tier copper producer in the Americas and represents excellent value opportunity for our shareholders.

“Santo Domingo is a robust development opportunity that will substantially increase Capstone’s leverage to copper and long-term growth profile.”