00:00Tech Resources, one of the last big Canadian miners of critical minerals, is being acquired by British mining giant Anglo-American.
00:08There are several hurdles to jump before it's official, including a review by Ottawa.
00:13Let's go to Jonathan Price, President and Chief Executive Officer of Tech Resources.
00:17Thanks for joining us today.
00:19Hi, Mirella. Pleasure to be here.
00:21Why now? What led you to agree to this deal? And is it the challenges you're facing with the copper mine in Chile?
00:27Look, we've been working on simplifying our portfolio for a number of years.
00:33We've we've exited a number of businesses to ensure that we are almost entirely focused on copper because we see this as a key strategic metal for the future and great fundamentals ahead of us here.
00:45The opportunity here with with Anglo-American to create Anglo Tech is is a profound one in that it will create a scaled and high quality platform comprise comprising six world class copper assets with incredible synergies associated with the combination of the two companies.
01:03We have secured through our work with Anglo-American commitment for them to move the global headquarters here to Vancouver, Canada, which we think is a great thing for the country.
01:15And of course, that head office will be populated by the majority of the senior executives for this transaction.
01:21So we think this is great for shareholders. The focus on copper, on scale, on quality is something clearly that the market wants right now.
01:30We think this is great for Canada because of the commitments that we're making to establish the global headquarters here and many other undertakings we're making for ongoing investment in Canada.
01:40And we think this is something that the shareholders, the government and Canada more broadly should be very pleased with.
01:46OK, so let's break it down a little bit more. The mine in Chile, we know that you have pivoted to try and focus on.
01:52There have been problems with that. Cost overruns, time delays.
01:56Did you feel like your hand was a little forced by the fact that you do need some focus and perhaps some help on that project?
02:03Look, we have a path forward for the mine Cabral de Blanca in Chile.
02:07We have to work through some of the tailings related development that's required to enable us to take that to full production.
02:14But we're fully confident that we'll overcome those challenges.
02:17And we believe that this will continue to be viewed as a world class asset and that the intrinsic value of that asset is not in any way diminished.
02:27So we very much look forward to working through that.
02:30The reason for doing this transaction now is that these opportunities don't come along very often.
02:35These opportunities to put together a combination with a relatively comparable peer with great assets and a like-minded outlook to what it takes to be a mining company that delivers value to shareholders with a basis of responsible operations.
02:53These combinations don't come along very often.
02:56And when you see them, you have to seize them.
02:58And that's exactly what we're doing here in this combination with Anglo-American.
03:02And we couldn't be more excited to be creating Anglo-tech.
03:05A year ago, the stock was above $53.
03:08Now it's about $39.
03:09And that's with the boost of this announcement.
03:11Some may say you're selling too cheaply.
03:13How do you respond to that?
03:15Look, we think there's incredible upside to be generated through the combination that we're putting together here.
03:21We have structured this as a true merger of equals.
03:23And that is really reflected in the terms, in terms of how the board and senior management team is comprised.
03:29There are enormous synergies that can be unlocked in two areas.
03:33One, corporate synergies.
03:35We've said $800 million per annum through procurement, through marketing, through consolidation of these two companies.
03:42And then another $1.4 billion of annual EBITDA uplift through the combination of the Cobrava Blanca mine in Chile and the adjacent Coyoasi mine, in which Anglo-American has a significant interest.
03:55There is material upside to be had here.
03:57And that's before looking at the company that we will be creating here.
04:02We'll be creating the fifth largest copper producer in the world, but one that comprises entirely of very high quality, large, long-life assets in very, very good jurisdictions throughout the Americas.
04:15I expect this to be a must-own mining company for investors.
04:19I just want to let people know we were also looking at the line chart.
04:22I was quoting the U.S. numbers.
04:24We were looking at the TSX a moment ago.
04:26So this is an all-stock deal, no premium for tech shareholders.
04:29Why not?
04:31This is a true merger of equals.
04:33This is two companies bringing together very complementary portfolios, bringing together world-class assets, and sharing in the upside.
04:41And that's the key point in this.
04:43There is significant upside here that tech resources shareholders will have access to through this transaction.
04:49And we're very excited by that potential.
04:51China Investment Corps is one of your big shareholders.
04:54Have you spoken to them?
04:55Are they on board with the deal?
04:58Look, we are currently out on the road speaking to investors all over the world and gathering their feedback.
05:04There is real recognition here for the industrial logic of this and the quality of the business we're creating.
05:11Now, of course, those conversations are very preliminary at this point in time.
05:15But one thing I can point you to is the appreciation in the stock price of 17% in tech resources since this deal was announced.
05:22And I think that's an immediate recognition that there is value to be had here.
05:26Was there any effort, any look at putting together a Canadian deal with other Canadian players?
05:33Look, we've looked globally to understand what is the best opportunity for shareholders and all stakeholders here.
05:41And we've concluded that the best partner we could find is Anglo-American and the assets that they bring together.
05:47We are very, very committed to Canada.
05:49You see that through the undertakings that we've put forward as part of the release.
05:53You see that through the commitment to have the global headquarters of this business in Vancouver, Canada,
06:00the commitment to have the majority of senior management in Vancouver, Canada,
06:04and the significant investments that we're prepared to make.
06:07And we've spoken to $4.5 billion Canadian dollars over five years that we will make in the Canadian critical minerals sector.
06:15I think this is a phenomenal opportunity for Canada.
06:18And we're very proud to have been able to pull these commitments together and present them to the Canadian government.
06:25Will you entertain other offers if they come forward?
06:29Look, we are very focused on moving this transaction forward, taking it to a vote of our shareholders later this year,
06:36and then pursuing the regulatory approvals that we require to get this to close.
06:41We, of course, in putting forward this transaction, absolutely believe this is in the best interest of our shareholders.
06:47And we intend to move forward as such.
06:49Is there a timeline on how long that HQ has to stay in Vancouver?
06:53I'm wondering what has been done here to get that regulatory approval that you say you need from Ottawa?
07:01So, of course, the regulatory approval process is in front of us.
07:05The commitment that we are making to Canada and the presence of the global headquarters of Anglo Tech in Canada is an enduring commitment.
07:13Is an enduring commitment, but there isn't a timeline scheduled or a time when that HQ can move out of Canada?
07:21No, what I mean by enduring is it's a perpetual commitment.
07:24The headquarters of this company, Anglo Tech, will remain in Canada in perpetuity.
07:29Got it.
07:30What will your role be?
07:31My role will be deputy CEO in this new organization.
07:36So, Tech Resources chair will be the chair of Anglo Tech.
07:41The Anglo-American CEO will be the CEO of Anglo Tech, and I will be the deputy CEO.
07:47So, working alongside the CEO with a particular focus on the integration of these businesses.
07:52Integration is so critical to ensure that the value that we're talking to our investors about can be delivered,
07:58and, of course, can be delivered quickly.
08:01Integration is complex.
08:02I have prior experience of doing this, and I think I can add a lot of value to the company by making that my focus in the early years of Anglo Tech.
08:11Jonathan, what's your last pitch to investors who might still be on the fence about this?
08:17Look, what I would say is we are creating a company here that is truly special in terms of the scale,
08:22in terms of the quality of assets, and in terms of the value that we will deliver to shareholders over the short, medium, and long term.
08:30Jonathan Price is President and Chief Executive Officer of Tech Resources.
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