director buying today..... vote of confidence, page-19

adzman - a read of this where a few mid tier get a mention may help.

I bought a few VRE at 22c on fri & this is my official after mkt ann. Resistance at 25c will be blown away in the next cyclone.



Xstrata snares blue chip Australian mid-tier nickel producer – who’s next?

Major miner Xstrata is moving into the Australian nickel mining sector with an agreement to take over Jubilee Mines for US$2.9 billion.
Author: Ross Louthean
Posted: Monday , 29 Oct 2007

PERTH -

Julian Hanna, managing director of Western Areas NL, may have known something when he told the Australian Nickel Conference last week that a major challenge for the new wave Western Australian nickel producers would be to retain independence. Today, Xstrata plc announced the takeover of Jubilee Mines NL with a 35% premium on that company's Friday closing price on the Australian Stock Exchange

Xstrata plc (LSE: XTA.L; ZSE: XTA.S) and Jubilee Mines (ASX: JBM) announced a Bidding Agreement for an all-cash offer by Ithaki Australia Pty Ltd, a wholly owned subsidiary of Xstrata plc, to take over Jubilee by way of a recommended off-market takeover offer.

The Offer is for $A23 ($US21.22) per share, valuing Jubilee at about $A3.1 billion ($US2.9 B) and it has already won the recommendation of Jubilee's board, including executive chairman Kerry Harmanis whose family holds about 15% of the company.

For Xstrata it is a plum target because Jubilee has been the nickel miner producing spectacular profits from mining high grade sulphide ore in WA's north eastern goldfields and paying dividends few ASX-listed miners could match.

In 2006/07 Jubilee had earnings per share of $A1.34 ($US1.23) and paid dividends totaling $0.67/share ($US0.61/share), and at June 30 had cash of $A293.1 M ($US270.5 M).

It's a big foot in the door for Xstrata which earlier this year was thwarted in its attempt to take over Canadian-listed LionOre International (which holds WA nickel operations and refining facilities and a gold mine) by Russia's Norilsk Nickel.

Questions from journalists at today's teleconference included questions about what other Australian nickel targets Xstrata may have, and who else was bidding for Jubilee. They didn't get answers on those issues either from Harmanis or from Xstrata Nickel's Ian Pearce, though it was indicated Xstrata was not the first in the Jubilee bidding exercise.

On whether Xstrata thought the nickel price would remain strong and not fall below the $US10/lb barrier, Pearce just said Xstrata had a lot of faith in this metal.

So, who could be the next target? Western Areas, which mines nickel sulphides in the Forrestania belt, may be in the gunsights, along with emerging Tasmanian producer Allegiance Mining. The nickel laterite producer Minara Resources, which holds the big Murrin Murrin nickel-cobalt resources and refining facilities may also be a takeover target.

However, with mergers and acquisitions re-appearing on the Australian scene, it may well be that other bright performers have a safety shell. The miners in the Kambalda belt - Mincor Resources Ltd, Independence Group NL and Sally Malay Mining Ltd are making hay by just producing ore and trucking it to BHP Billiton's Kambalda concentrator, where effectively it sold at the door. It then goes into BHP Billiton's smelting and refining facilities in WA.

Sally Malay owns 75% of the Lanfranchi operations at Kambalda (with Brilliant Mining of Canada holding the balance) but it also has the Sally Malay nickel-copper mine in WA's Kimberleys.

Some of the points made at today's press conference were:

* Xstrata is not interested in producing an IPO on the ASX.
* Kerry Harmanis will remain involved in the transition stage of the takeover but has no interest in a chief executive role in any new or existing company.
* Jubilee recently signed a concentrate offtake agreement with BHP Billiton and Harmanis said that would have to be honoured.

"Jubilee is clearly the premier independent nickel company in Australia and benefits from a highly experienced team of people." Ian Pearce said.

"In making this offer, we have taken full account of Jubilee's existing operations and its various exploration and development projects."

He said Xstrata Nickel will establish a regional base for its activities and future growth in WA, and this obviously includes using Jubilee's headquarters in West Perth, which is Australia's mining hub for mid-tier miners and junior explorers.

There is a break fee in this deal of $A31.1 M ($U28.7 M) should Jubilee not complete it.

Jubilee mines nickel at the Cosmos mine and has the Cosmos nickel mine and related deposits, the emerging Sinclair project to the south and the Cunyu deposit. Joint ventures in the region include Emu Lakes with Image Resources which is planning an IPO on its 30% equity and other properties; and Collurabbie with Falcon Minerals.

In the eastern goldfields it has a partnership with Pioneer Nickel.