Aeris doubles down on M&A growth strategy

Aeris Resources has reiterated ambitious company plans for acquisitions despite a bid to acquire Glencore’s CSA copper mine in New South Wales falling through earlier this year.

The company offered $US575 million ($878 million at the time) in cash and shares to acquire Glencore’s Cobar-based mine in March, but the proposed offer was shortlived.

Aeris executive chairman Andre Labuschagne said the company was undeterred by the result of the Glencore bid and would continue to “aggressively pursue” acquisition opportunities, while advancing its flagship Tritton operations in NSW.

The Tritton operations primarily comprise of the Tritton and Murrawombie underground copper mines, with plans in place for an eventual open pit expansion of the latter.

“Tritton is a great foundation to grow from, but we’ve always said we want to grow beyond Tritton and bring another operating mine in,” Labuschagne said.

“Unfortunately, we were unsuccessful with CSA, but it shows we are serious about how we want to grow this company.”

Aeris has a two-fold strategy for growth incorporating the expansion of Tritton and the acquisition of a second mine.

The company exceeded its production targets at Tritton in the 2019 financial year with 26,852 tonnes of copper (against guidance of 24,500 tonnes) at a cost of $2.78 per pound. 

Aeris has also reduced its debts by more than $US100 million since 2013, around $US20 million of which was supplied by Hong Kong-based shareholder PAG (30.9 per cent) in the last financial year.

“We have always said that our aim is to become a mid-tier, multi-mine company,” Labuschagne said. “The board believes Aeris’ balance sheet is sufficiently robust to pursue growth through suitable M&A opportunities.”

Aeris explained that the expansion of Tritton was also a priority for the company due to existing brownfields and greenfields opportunities that could expand the mine’s life beyond four years.

The majority of these opportunities are located on or adjacent to a corridor called the Budgery Sandstone. The company’s efforts have so far been restrained to its southern half, but it believes the northern half holds the potential for new discoveries as well.

“There is a huge upside,” Labuschagne said. “The potential is maybe we find another Tritton or Murrawombie-sized deposit.”

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