Peru Copper Shares Skyrocket As Market Prices In Takeover

| About: Peru Copper (CUP)
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Peru Copper Corp. (CUP) shares were up more than 10% in Friday afternoon trading in New York after the company revealed it has entered into an exclusive agreement with a third party. The market is likely expecting a takeover of the copper explorer, but more news should emerge by the time its exclusivity period ends on May 28.

“Two recent acquisitions of undeveloped copper projects suggest major base metal producers are being more aggressive in order to secure assets,” Canaccord Adams analyst Wendell Zerb said in a note to clients.

He pointed to AngloAmerican’s (AAUK) successful auction win for the Michiqually copper project in Peru as well as Teck Cominco Ltd.’s (TCK) investment in a 50% stake in the Galore Creek project in British Columbia with NovaGold Resources Inc. (NYSEMKT:NG).

Mr. Zerb said the purchase prices for both of these deals are considered above average when compared to previous transactions by majors developing copper assets.

He thinks there is a 75% chance of a Peru Copper deal succeeding and has a “buy” rating and C$7.85 price target on the stock.