Rumors of MVP entry perk up Atlas share prices

MANILA, Philippines - Shares of Atlas Consolidated Mining & Development Corp. have sharply risen over the past few days as investors scrambled to get into the mining firm on rumors of a possible entry of a new investor group led by telecommunications magnate Manuel V. Pangilinan.

The market was flooded by speculations that foreign investment fund Crescent Asian Special Opportunities Portfolio (CASOP) is selling its 45-percent stake in Atlas unit Carmen Copper Corp. (CCC) to the Pangilinan-led group.

Atlas climbed to as much as P20.15 per share yesterday before closing at P20, or 5.37 percent higher than Wednesday’s close. It remains the most active stock in the market this week with a total of 27.57 million shares valued at P584.55 million changing hands yesterday.

The stock has gained by almost 20 percent since the start of the week.

Based on its financial statements as of end-December 2010, Atlas owned 54.46 percent of CCC, which has been successfully rehabilitated to become the country’s largest copper exporter.

Mining giant Philex Mining Corp., which is controlled by Hong Kong-based First Pacific Co. Ltd. in which Pangilinan is managing director and chief executive officer, was also up yesterday, rising 6.5 percent to settle at P21.30 apiece.

First Pacific, through Philex, is aiming to become the dominant gold and copper producer in the region within the decade. To achieve this goal, the group is aggressively on the lookout for existing gold mines to boost its cash flow.

Just last month, Philex sealed a deal to acquire up to a 60 percent stake in Manila Mining Corp.’s Kalayaan project in Placer, Surigao del Norte for a minimum of $25 million.

Philex also earlier acquired five percent of Lepanto Consolidated Mining Corp. from First Metro Investments Corp. and Bank of the Philippine Islands for P1.43 billion.

Analysts said CCC, located on the island of Cebu, would be a good acquisition target given its rosy prospects. In the first quarter this year, CCC posted a net income of P1.37 billion or nearly 5.3 times what it reported in the same period in 2010 as revenues jumped 51 percent to P3.37 billion.

CCC’s copper sales are forecast to exceed 60,000 tons in concentrate in 2014.

Analysts said the impressive figures were a result of higher volumes and prices on the sale of copper.

“Even if prices were to fall, Atlas would be fine since it has hedged 30,000 tons at $8,148, meaning, that is the lowest price that Atlas will be able to sell its copper. Cost management has also helped push margins higher. Even at its current price, Atlas is still trading at below 10x 2011 P/E, which is much lower that the market’s,” said Prince Anthony Yeung of AB Capital Securities.