OZ Minerals turned down a $25-per-share takeover attempt from BHP this week, suggesting the bid didn’t sufficiently recognise its attributes.
The copper miner was trading at $18.92 when the advance was made on August 5 before jumping nearly 40 per cent to scale $25 following the proposal.
Despite the offer rejection, analysts believe OZ Minerals is still very much in play and that a superior offer could soon be made by BHP or another mining company.
Financial services company Jefferies has indicated OZ Minerals could attract up to $36 per share depending on what price tag the bidder puts on copper.
The copper price slumped to a 20-month low on July 11 with copper for delivery in September teetering above $US3.40 per pound on the Comex market.
Futures have improved since then and were trading at $US3.65 per pound on the Comex market at the time of writing (1:25pm AEST, August 11).
The Australian Government’s Resources and Energy Quarterly – prepared by the Office of the Chief Economist – forecasts copper prices to average $US4.3 per pound in 2022 before pulling back to $US4.08 per pound by 2024 as surpluses grow.
Tyler Broda, an analyst at RBC Capital Markets, told Reuters that given copper is perceived as a key commodity in the renewable energy transition, bidders should expect to pay overs.
“The underlying belief in this longer-term outlook for copper will make it very hard to transact without paying a substantial premium,” he said.
“This appears to remain the case even with falling near-term commodity prices and a very uncertain macro environment impacting both the West and China,” he added.
BHP is champing at the bit to secure access to more ‘future-facing’ raw materials.
The major miner made a play for Canada-focused nickel miner Noront Resources in mid-2021 as part of takeover tussle that lasted months, before backing out in December.
Andrew Forrest-backed Wyloo Metals emerged the victor in the Noront crusade, completing the acquisition in April this year.