Glencore to bump up stake in Peruvian zinc miner Volcan

Glencore has agreed a deal to bump up its holding in Peruvian zinc miner Volcan.

The company, which already has a 7.68% stake in Volcan, said late on Tuesday that it has agreed to buy 26.7% of the voting shares at $1.215 each.

Under Peruvian law, Glencore must also offer to buy all other class A shares through holding under a public tender, but the company will cap the maximum they will buy at 48.2%.

Glencore will own between 44.84% and 66.3% of the total class A shares, giving the miner and commodities trader an interest of between 19% and 28.1% in the company. It said the aggregate consideration payable pursuant to the terms of the offer will be between $531m and $956m, depending on the level of acceptances.

The consideration will be payable in cash on the closing of the offer and will be funded from existing cash resources.

"Volcan's operations are located in the richest polymetallic production area in Peru, producing some of the highest quality zinc concentrates. The transaction will provide an increase and extension of Glencore's zinc production profile and the opportunity for synergies with Glencore's existing Peruvian zinc operations," the company said.

Investec said: "While the transaction may have a strategic rationale, for example, to prevent a competitor gaining a foothold, Glencore appears to be paying multiples above its own, so will now need to demonstrate financial rationale as well."

At 1300 BST, the shares were up 0.3% to 354.60p.