Avanco Resources Limited is an emerging mid-tier copper producer situated in Brazil

CASE STUDY

Following a comprehensive benchmarking of global development-stage copper projects undertaken in 2013, the Appian team successfully identified Avanco Resources as a unique investment opportunity. At the time, the company’s flagship asset, Antas North, was one of the highest grade undeveloped copper projects in the world, with significant potential for scale and growth supported by regional satellite exploration targets, and the nearby Pedra Branca deposit. Additionally, Avanco’s management team had successfully accumulated the second largest land package within the highly prospective Carajas region of northern Brazil. Near term production at Antas North with expansion potential combined with significant exploration upside and a strong management team, led to the formation of Appian’s investment thesis.

Following the maiden investment in June of 2014, Appian, along with Avanco’s other major shareholders, supported the company from greenfield development to production within less than 24 months. Given the uniqueness of Avanco’s deep project pipeline and the scarcity of assets similar to Antas North, Appian was confident that the company would be a high priority target following an uptick in M&A activity in the mining sector amid a market recovery. Appian’s thesis proved correct with OZ Minerals announcing a friendly takeover offer for Avanco on 27 March 2018. The offer consideration was structured as a combination of cash and shares and valued Avanco at A$418 millionrepresenting a 121% premium to Avanco’s share price on the day prior to announcement. The transaction closed in July 2018 and Appian was subsequently able to successfully time an attractive exit from its position in Oz Minerals.

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