Tampakan merger transforms DHI into a major mining play

From AB Capital's The Opening Bell: Three Moves

Event

DHI is being transformed into a mining-focused holding company through its proposed merger with Indophil and Sonar, which own 100% of Sagittarius Mines/Tampakan. DHI also holds rights to 20.4% of Atlas and is pursuing SM's 34% stake.

View

If both assets are ultimately consolidated, DHI could have exposure to ~390,000 tpa of copper production at Tampakan's average planned rate plus Atlas's current output, which is ~28x Atlas's 2025 copper production. This gives DHI a potential production profile far larger than existing PH miners like APX, OGP and PX.

Catalyst

Sept. 14 shareholder vote on the Tampakan merger and P30 billion capital increase, followed by the exchange ratio/fairness valuation, Philippine Stock Exchange (PSE) clearance and potential acquisition of SM's ~34% Atlas stake.

Action

Speculative positive: DHI's ~P33.7 billion pre-suspension market cap looks small relative to the potential scale of Tampakan + Atlas, but valuation, dilution and funding remain the key unknowns before assigning meaningful value to the assets.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.