It’s not a big deal; only around $350m, but the Oz Minerals bid for Avanco Resources is another sign that quality assets can command a premium in a copper market hungry for new supply.

Oz Minerals’ cash and shares offer on Tuesday was made at a 121% premium to the ruling share price of its fellow Perth-based firm. With the board and just over 30% of the company’s shareholders in favour of the deal Avanco’s stock duly doubled on the ASX. Punters seem to believe the price is probably fair – Oz Minerals also gained despite its generous off-market offer, upping its market valuation to over $2 billion.

Avanco’s top shelf shareholder registry buttresses the idea that smart money has been scouring for copper assets long before the metal's recovery from six-year lows struck early 2016.

Number one investor Appian Capital which has already accepted, invested in Avanco back in 2014 and together with BlackRock and Greenstone, private equity firms hold just under 50% of the company. Glencore owns 8% which sets up the tantalizing (perhaps slim) prospect of a counter offer from the world’s number three copper producer.

Avanco owns the two-year old high-grade Antas mine in Brazil which currently produces 12–14kt of copper per year, but Oz Minerals is really after its land holdings and late stage projects in the Carajás province of the South American nation.

At around 1,800km2 it’s the second largest land holding in a region known for iron oxide copper-gold deposits of which Vale’s 200ktpa Salobo is the prime example. In January this year Avanco acquired an option for 100% of the Rio de Janeiro giant’s Pantera copper project near Antas.

Oz Minerals' Prominent Hill mine in South Australia which produces over 100,000 tonnes per year shares the same geology (so does BHP’s Olympic Dam copper-gold mine in the region).

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