Fortescue Ltd (ASX: FMG) shares are on the move on Tuesday morning.
At the time of writing, the iron ore giant's shares are up 1.5% to $21.85.
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Why are Fortescue shares rising?
Today's push higher could have been driven by the release of a promising announcement relating to its copper ambitions this morning before the market open.
According to the release, the shareholders of Alta Copper (TSX: ATCU) have approved Fortescue's proposed acquisition of all issued and outstanding shares that are not already owned by Fortescue.
The mining giant notes that the shareholder vote clears a key step toward Fortescue securing full ownership of Alta Copper's portfolio of exploration assets. This includes the Canariaco Copper Project in northern Peru.
Fortescue currently holds approximately 64% of Alta Copper's issued share capital, and the acquisition will be implemented by way of a Canadian Plan of Arrangement.
Management highlights that the approval satisfies the shareholder voting requirements and represents a key milestone toward completion of the transaction.
What are the terms?
Fortescue has agreed to pay Alta Copper shareholders a cash consideration of C$1.40 per share (A$1.48 per share). This represents a premium of 50% to Alta Copper's 30-day volume weighted average price prior to the proposal being announced.
It implies a total equity value for Alta Copper of C$139 million (A$147 million).
While this is pocket change for a company like Fortescue, which generates billions in free cash flow, it could still be a big deal.
Why is it acquiring Alta Copper?
Fortescue highlights that Alta Copper is currently the 100% owner of the Canariaco Copper Project.
This project comprises multiple deposits and prospects across a large, highly prospective landholding within an emerging porphyry copper corridor. It believes it has the potential to support a long-life copper operation.
On completion of the transaction, Fortescue will secure 100% ownership, which will add to its copper portfolio in Peru and enable the company to leverage its existing technical capability and in-country experience.
Commenting on the deal, Fortescue's Growth and Energy CEO, Gus Pichot, said:
Copper is a core pillar of Fortescue's long-term growth strategy and the transaction is aligned with our disciplined approach to capital allocation and reputation of responsibly developing high-quality assets.
The Canariaco Project is a compelling copper opportunity, and full ownership will provide Fortescue with greater control over project development, capital allocation and long-term value creation. Subject to completion of the Transaction, Fortescue's initial focus will be on integration planning, technical review, community engagement and progressing the studies required to inform future development decisions.
