"Patiently creating tier 1 production assets"
We believe the acquisition of Katanga Mining highlights a third broad value driver for the
group. The simple three-step approach of Acquire (piece by piece), Integrate and then Expand
was well executed in the case of Katanga. The company’s counter-cyclical cash flow
business enabled it to take advantage of the financial crisis in 2008/09 to eventually acquire a
controlling stake. However, had the financial crisis not intervened, the company would still
have had some equity stake, an interest bearing loan and an off-take agreement.
.
Glencore’s entry point into Katanga came via a 13.9% stake in Nikanor in the beginning of
2007 and a US$150m convertible loan to Katanga for the Kamoto Mine. When Katanga and
Nikanor merged at the end of 2007, Glencore held an 8.6% stake in the larger entity. The
KOV open pit (Nikanor) and the Kamoto Mine (with its processing infrastructure) gave
immediate synergies. Through a series of loans, both convertible and bridging, Glencore was
able to acquire 67.9% when the loan facility was converted in 2009. A further rights issue at
the end of 2009 allowed Glencore to acquire 77.9%, which has since been reduced to
74.4%. Katanga Mining has now embarked on an Accelerated Development Plan with the
aim of achieving 308Mtpa of copper and 30ktpa of cobalt by 2015E. There are clearly
execution risks with the ramp-up plan, but we estimate that Glencore’s acquisition price of
US$762m has netted a return of 400%, based on our US$3,049m valuation of the asset, or
78% IRR.
Quelle:
Glencore Initiation - dated June 6, 2011 - 131 pages pdf
www.scribd.com/doc/57254342/Db-Glencore-Initiation
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