INTERVIEW-Six mining firms eyeing Colossus Minerals: CEO
11/04/09 - 07:43 AM ET - Reuters
* CEO says signs confidentiality agreements with 6 cos
* Includes at least one South African platinum producer
* Says would not entertain JV
* Sees Serra Pelada project in production by late 2011
By Chakradhar Adusumilli
BANGALORE, Nov 4 (Reuters) - Colossus Minerals Inc has signed confidentiality agreements with six global mining companies that may be interested in buying the company, its chief executive said.
Colossus, which is developing its flagship gold-platinum-palladium Serra Pelada project in Brazil, is often cited as a potential takeover target by industry analysts amid rising M&A activity in the sector and higher prices for precious metals.
"We haven't got into any specific discussions of being taken over as of yet," Chairman and CEO Ari Sussman told Reuters. "The agreements allow them access to review our data and our project."
Sussman declined to name the six mining companies but said at least one South African platinum producer was involved in the agreements.
At the moment, Sussman said, he was unsure what premium a deal might fetch if it materialized, but he expects any potential deal to value the company at double its current market price, at least.
"So C$10 would be a good number," the CEO said.
The stock, which has surged six-fold in the past year, closed Tuesday at C$5.38, valuing the company at about C$389 million.
"I'm not a seller of my stock yet," Sussman said. "I think we are going a lot higher."
In October, the company adopted a shareholder rights plan that makes hostile takeovers difficult.
NO JV PLANS
Colossus would not be interested in a joint venture for the Serra Pelada project, which is expected to begin production in late 2011, the CEO said.
"To be clear, we wouldn't entertain a joint venture with a larger company -- they would have to buy us -- or we are going to (develop the project) ourselves," Sussman said.
The CEO said the company was well funded with C$90 million cash on hand, and he expects capital expenditure for the project to be below C$100 million.
The company, which has started metallurgical testing at the Serra Pelada project, holds a 75 percent interest in the project, while Brazilian cooperative company COOMIGASP holds the rest.
The partnership was formed in July 2007. Vale SA , which held the underlying title to Serra Pelada until 2007, explored the area from 1980 to 1998, completing more than 200 drill holes in the Serra Pelada mineralized system.
"I believe we can add a lot more value first to the project by advancing it towards production before we really want to entertain discussions on being taken out, if someone is available," Sussman said.
Colossus might be willing to push the takeover talks towards late first quarter or early second quarter next year as the Serra Pelada project would be de-risked further, Sussman added. (Editing by Deepak Kannan)
