Australia | Sep 24 2007
By Chris Shaw
Increasingly the Chinese are looking not only to Australia as a trade partner for the supply of raw materials they need to feed the growth in their economy but to Australian companies, where the trend is for Chinese investors to take a stake in Australian resource projects via an interest in the company working on the project.
The upcoming float of China Yunnan Copper Australia Limited (CYU) is a perfect example, as the company is scheduled to list next month with Yunnan Copper Industry (Group), China’s third largest copper producer, as a major shareholder with a stake of around 26.7%.
Yunnan Copper Industry is one of ten government supporting enterprises and is considered a key enterprise by the Yunnan provincial government in China, the group currently with total assets of around rmb11.5 billion that are expected to grow to around rmb15 billion by 2010, meaning Yunnan Copper Australia certainly has found a heavyweight supporter.
The company is looking to raise a total of $4 million via the issue of 16 million 25c shares, which will create a total issued capital of 77.6 million shares and around 18 million 2010 options with a strike price of 40c. The initial public offering is fully underwritten by Martin Place Securities.
Following the IPO the company should have around $6.5 million in cash to spend on its projects, which will focus on copper, gold and uranium in the north of Queensland. The company 100% owns 11 permits in and around Mt Isa, Cloncurry and Ravenswood; its Cloncurry prospects located near the Ernest Henry mine and having already been shown to contain wide intercepts of low grade copper.
The company’s Ravenswood prospect is part of a farm-in agreement with Newmont Australia and Sipa Gold, where by spending up to $2m those companies can acquire a 70% interest. Drilling is expected to commence on this project within six months of the company listing on the Australian Stock Exchange.
One advantage for the company is its prospects appears under-explored, yet are located close to proven reserves of existing mines, meaning the exploration outlook appears favourable once operations get fully underway.
A further advantage is the partnership with Yunnan should allow the company to more easily sign offtake agreements for any output should exploration prove successful, while it should also provide scope for Yunnan to provide required financial support for any projects the company undertakes.
Investors interested in the company can view the prospectus at the group’s website, www.cycal.com.au