WE'VE seen the Chinese using ASX-listed copper juniors as a vehicle for investment in Africa's great copperbelt (MMG/Anvil), or at least attempting to do so (Discovery).
Today we get an example of the Canadians doing the same in Latin America's great copperbelt, with Perth-based junior Southern Hemisphere (SUH) expected to announce a deal on its Llahuin copper/gold project in central Chile with Canada's Lundin Mining.
A shorthand explanation for the activity is that while local investors can't see the disconnect between copper prices and equity values, overseas inventors/miners can.
That certainly looks to be the case with Southern Hemisphere. It went into a trading halt yesterday, saying it was working on a farm-in agreement on a project and a share placement to a new cornerstone investor. Word from Canada is that the company has struck a deal under which Lundin could spend as much as $US35 million to earn a 75 per cent interest in Llahuin.
Lundin is also expected to take a $US5m ($4.86m) placement of shares covering 11.5 per cent of Southern Hemisphere at C25c (24.8c) a share.
The placement price is close to twice Southern Hemisphere's last sale price of 13.5c, again highlighting that this market is being overly mean on its valuations of the copper juniors.
Apart from Lundin being being involved in DRC copper production, it is also known here for being the subject of a takeover bid last year by another ASX-listed African copper producer, Equinox.
Canada's Barrick Gold changed all that by taking over Equinox for $C7.3bn, leaving Lundin to carry on solo. Apart from the Southern Hemisphere deal, Lundin has also taken up a chunk of the $35.5m placement by Hot Chili (HCH), owner of the Productora copper project in Chile.
Llahuin currently ranks as a 436,000 tonne copper deposit, along with 460,000 ounces of gold. But with more drilling, it could be something much bigger.
That's why the deal with Lundin, with its deeper pockets, has been struck. Other farm-in deals with majors on Southern Hemisphere's other projects in Chile are expected.
SUH Price at posting:
16.5¢ Sentiment: LT Buy Disclosure: Held
