CAML jumps on $119 mln deal to buy copper developer New World Resources

Investing.com -- Shares of Central Asia Metals Plc (LON:CAML) jumped by 3% on Wednesday following the company’s announcement of a definitive agreement to buy Australian-listed New World Resources Limited in a deal valued at A$185 million ($119m). 

The transaction, viewed positively by analysts and investors, is expected to increase CAML’s long-term copper production profile and growth outlook.

RBC Capital Markets analysts described the acquisition as strategically compelling, highlighting the attractive valuation. 

The $120 million price tag represents just 0.24x the net present value (NPV) of the Antler copper project, New World’s flagship asset, based on a 2024 pre-feasibility study estimating an NPV of $498 million. This compares favorably to CAML’s current 0.90x P/NAV valuation at spot prices.

CAML aims to more than double its copper equivalent output through the acquisition. RBC forecasts current annual production at 25 ktpa, with the Antler project expected to lift output to 55 ktpa once operational. 

This addresses what analysts have described as a lack of near-term growth catalysts in CAML’s existing portfolio.

Located in North America, the Antler project contains 543 kt of measured and indicated copper and is projected to produce 30 ktpa of copper equivalent over a 12-year mine life. 

This includes annual output of 16.4 kt of copper, 34.5 kt of zinc, 3.6 kt of lead, 533 koz of silver, and 6 koz of gold.

With C1 costs forecast at just $0.12/lb and AISC of $0.51/lb, the project is expected to rank in the lowest quartile of the global copper cost curve.

The $298 million in expected development capital will be funded separately from the acquisition. 

CAML plans to finance the deal using its $68 million in existing cash and a newly secured $120 million credit facility with a 3-month SOFR + 4.15% interest rate.

New World’s board has unanimously recommended the acquisition, with a shareholder vote slated for Q3 2025. 

While the transaction marks a major step forward for CAML, RBC analysts caution that key milestones remain.

These include permitting, financing the capex, and completing a Definitive Feasibility Study (DFS), which CAML will lead post-acquisition.