Northern Peru Copper becomes another Chinese purchase

Northern Peru Copper Corp has signed a definitive agreement with China Minmetals Nonferrous Metals and Jiangxi Copper Co, under which those companies have agreed to make an offer to acquire all of Northern Peru’s outstanding shares for C$13.75 per share in cash. Northern Peru’s Board of Directors has unanimously determined that the offer is fair to its shareholders and is in the best interests of the company and its shareholders.   

Ross Beaty, Chairman, said, “During 2007, Northern Peru has worked with its advisors to seek a major mining company to acquire and develop the Galeno copper/gold/molybdenum project into a large producing mine that will provide substantial benefits to the Peruvian economy. During that time 27 companies signed confidentiality agreements to review the technical information on Galeno.  Of those companies, 18 visited Galeno and completed comprehensive technical due diligence. Minmetals and Jiangxi presented us with the best offer to acquire NOC and we are happy to accept their offer.  Both are large companies with extensive experience in the copper sector, and are fully capable of developing Galeno into one of the world’s premier copper mining operations.  I support their offer to acquire our company and encourage all shareholders to do so as well.”  

Minmetals and Jiangxi are committed to the efficient development of the Galeno Project. “The joint venture expects to continue with the first class work that has been conducted to date by the dedicated staff of Northern Peru Copper’s Peruvian subsidiary Lumina SAC,” said Huang Guoping, Vice President of Minmetals. Zha Kebing, Deputy Chief Engineer & Senior Engineer of Jiangxi added that “both companies are excited about this opportunity and hope to construct a world class mine.”  

The Galeno project is located in the Yanacocha mining district of northern Peru, some 16 km east of the mining operations at Yanacocha, the largest gold mine in South America. In January 2007, an independent, NI 43-101 compliant prefeasibility study was completed on Galeno. Using a long term copper price of $1.35/lb and an 8% discount rate, the PFS showed that the
project will generate an after tax net present value of $560 million and an IRR of 18.2%. Over the 20-year mine life, the project will produce approximately 144,000 t/y of copper in concentrate, averaging over 200,000 t/y in the first five years of the mine’s life.  The company is currently undertaking the feasibility study on the project which is expected to be completed in mid 2008.  At the same time, the company is continuing a three drill rig exploration program at the adjacent Hilorico gold/polymetallic zone.   The PFS indicates the Galeno mine will generate approximately 657 permanent jobs during its operating life and 3,600 jobs during the 2.5 year construction period. 

The PFS indicates that the mine will generate, over its 20 year life, $1.4 billion in taxes, government royalties and employee profit sharing payments, as well as substantial economic benefits and stimulus to its local communities, its region and elsewhere throughout Peru.  

Minmetals is one of the major subsidiaries of China Minmetals Corp (China Minmetals). China Minmetals, a state-owned
corporation, is a diversified metals and mining company based in Beijing. China Minmetals is engaged in the production and trading of metals and minerals, including copper, aluminium, tungsten, tin, antimony, lead, zinc, iron and steel-related commodities. China Minmetals also engages in activities related to real estate development, finance, shipping and tendering. In 2006, China Minmetals had operations in 44 countries and revenue of approximately $18.9 billion.   Jiangxi, a public corporation existing under the laws of China, is an integrated producer of copper in China, with operations in mining, milling, smelting and processing.  Jiangxi also maintains exposure to sulphur, gold, silver, platinum, palladium, selenium, tellurium, rhenium and molybdenum.  Jiangxi is listed on the London, Hong Kong and Shanghai stock exchanges.