The company will acquire Brazilian copper miner Avanco Resources ((AVB)) in a cash and scrip deal that values the company at $418m. UBS is surprised by the deal, not because of the premium but rather the timing and the country.
The broker believes OZ Minerals has a full slate with Carrapateena in development and a growing pipeline of local targets. UBS suggests managing assets in Brazil will present unique risks, although the company’s experience in copper offsets this somewhat.
The broker maintains a Neutral rating and $9.80 target.
Target price is $9.80.Current Price is $9.00. Difference: $0.80 – (brackets indicate current price is over target). If OZL meets the UBS target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).