MUMBAI/KOLKATA: PSU copper miner Hindustan Copper (HCL), which is set to launch a follow-on offer, is eyeing around Rs 3,000 crore by selling by-products from its mines at Malanjkhand in Madhya Pradesh and Khetri in Rajasthan. The company has floated tenders for selling about 200 million tonnes of high-quality granites (also called waste rock) at its MP mines and 95 million tonnes of copper tailing from its mines in MP and Rajasthan.
But the money that will accrue to the company by selling the by-products will come over the next few years since it is not possible to lift the granites and copper tailings at one go, sources said.
According to sources, while HCL is likely to get at least Rs 915 crore in 10 years from waste granite, another Rs 2,000 crore would come from copper tailings.
This has assumed significance as HCL is gearing up to mobilize an estimated Rs 4,000 crore to Rs 5,000 crore from an follow-on offering (FPO) next month, in which the government is divesting a 10% stake (9.25 crore shares) while the company is offering an equal number of shares to raise funds for its own use. As of now, the FPO is scheduled to open on December 6.
Incidentally, while the granite it is selling has anti-water absorption and anti-abrasion qualities and could be used as ballast on railway tracks, the copper tailings contain substantial amount of micro-nutrients and a lot of other minerals, the tender documents on HCL's website noted. The other minerals include nickel, cobalt and tin. Sources also said the ore concentration of HCL is more than 1%, which is better than the global average of 0.82%.
"Earlier, the global average was more. But gradually, it is coming down as best mines have already been explored," said a source. The company is also in the process of reviving some of the mines, which are currently non-operational.
On Wednesday, the HCL stock on the BSE ended at Rs 447, but market players believe the offer will be at a substantial discount to the current market price. And this discount could be as much as 35% to the market price. Even if the shares are offered at Rs 300, the FPO will raise about Rs 5,400 crore from investors. At present, the government holds almost 99.5% in the company, with just about 0.5% with the public.
But the money that will accrue to the company by selling the by-products will come over the next few years since it is not possible to lift the granites and copper tailings at one go, sources said.
According to sources, while HCL is likely to get at least Rs 915 crore in 10 years from waste granite, another Rs 2,000 crore would come from copper tailings.
This has assumed significance as HCL is gearing up to mobilize an estimated Rs 4,000 crore to Rs 5,000 crore from an follow-on offering (FPO) next month, in which the government is divesting a 10% stake (9.25 crore shares) while the company is offering an equal number of shares to raise funds for its own use. As of now, the FPO is scheduled to open on December 6.
Incidentally, while the granite it is selling has anti-water absorption and anti-abrasion qualities and could be used as ballast on railway tracks, the copper tailings contain substantial amount of micro-nutrients and a lot of other minerals, the tender documents on HCL's website noted. The other minerals include nickel, cobalt and tin. Sources also said the ore concentration of HCL is more than 1%, which is better than the global average of 0.82%.
"Earlier, the global average was more. But gradually, it is coming down as best mines have already been explored," said a source. The company is also in the process of reviving some of the mines, which are currently non-operational.
On Wednesday, the HCL stock on the BSE ended at Rs 447, but market players believe the offer will be at a substantial discount to the current market price. And this discount could be as much as 35% to the market price. Even if the shares are offered at Rs 300, the FPO will raise about Rs 5,400 crore from investors. At present, the government holds almost 99.5% in the company, with just about 0.5% with the public.
Aleem ahmad
PGDM
SEMESTER-1
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