Barrick Gold Corp. (TSX:ABX, NYSE:GOLD) is mulling an offer for beleaguered Canadian copper miner First Quantum Minerals (TSX:FM) after its shares were sent reeling from the closure of its flagship mine in Panama, according to a Bloomberg report.
While Barrick has not commented, analysts at Jefferies said a Barrick bid could make strategic sense.
First Quantum’s shares have more than halved in value since protests over its contract to operate the Cobre Panamá copper mine forced it to curtail operations.
In November, Panama’s Supreme Court deemed the contract unconstitutional.
According to the Bloomberg report, Barrick has now approached some of First Quantum’s biggest investors to gauge support for a potential takeover as it expands into copper.
“We believe interest from Barrick and possibly from other miners limits downside risk to FM shares,” the Jefferies analysts wrote in a client note.
“We also believe there is good long-term value in FM, but the risk/reward tradeoff for a 12-month horizon is not compelling enough to justify a 'Buy' rating.”
The analysts have maintained their ‘Hold’ rating on First Quantum while lifting their price target to C$15 from C$12.
First Quantum’s shares jumped 11% to C$13.29 on Wednesday following the Bloomberg report.