From Mining News:
Trading games as potential new Sphere player emerges
Nick Evans
Wednesday, 29 September 2010
MARKET speculation is growing that Xstrata will have to lift its bid for Sphere Minerals, after a Singaporean metals trader emerged as a significant stakeholder in Sphere yesterday.
Sin-Tang and a group of associates declared an 8.63% stake in Sphere yesterday with two-thirds of the holding bought on-market in the past two weeks, at an average price of $2.56, above Xstrata's $2.50 offer price.
That?s 1.57% more than Xstrata has managed, despite the offer having been open since the beginning of the month.
Sphere shares have not traded below the $2.50 offer price since September 1, and shares in the company rose 4c to $2.57 yesterday when Sin-Tang emerged on the company register.
The buying group included Sin-Tang, its local investment vehicle Aus-Ore and its three major shareholders ? Du Zhenzeng, who founded Chinese steel group Tangshan Ganglu Iron & Steel, Zhou LianMing, who founded the Hebei Xinquan Coking Co, and Xie Yuzheng and his personal company Mighty River International, who were last sighted throwing a spanner into the works of Mineral Resources? takeover of Mesa Minerals earlier this year.
The substantial notice disclosure notice was made to the ASX by Clayton Utz lawyers, who have previously acted for the Singaporean group in its merger and acquisition activity, and MNN understands Argonaut Securities are also advising the group.
Sin-Tang specialises in upstream bulk commodity sales in the carbon steel sector, and has been active in the Australian market over the past 12 months.
The company paid a 15% premium to prevailing market prices to take a 5% stake in Exco in August, with the two saying at the time they will work together to develop a second-stage deal that may see Sin-Tang take a direct stake in Exco?s Cloncurry copper project in Queensland.
The Singaporean group also paid a premium for a stake in Royal Resources last year, in another long-term deal that will see Sin-Tang progressively increase its stake in the company?s Razorback magnetite project through staged payments.
While Sphere wouldn?t comment on the Sin-Tang share purchase today, MNN understands the two companies are well known to each other.
A spokesman for Sphere refused to comment on whether Sin-Tang was one of the other interested parties talking to Sphere about the future of its west African iron ore projects before the Xstrata offer.
The spokesman said Sphere has had no contact with Sin-Tang, and was prevented from canvassing other takeover opportunities by the terms of the deal with Xstrata Coal.
Sphere?s target statement included a clause revealing the company will become liable to pay a $4.4 million break fee to Xstrata if the directors breach their exclusivity obligations under the takeover agreement.
Xstrata has given no sign it is preparing to lift its offer, despite the painfully slow acquisition process and the fact that Sin-Tang now holds a greater stake in the company.
The mining major extended the offer period by two weeks on Monday and yesterday declared the offer free from another major defeating condition, saying yesterday Mauritania?s mining ministry has confirmed Sphere's mining licence in Mauritania is valid.
Xstrata representatives did not respond to MNN?s invitation to comment on this story.
Sphere shares closed the day at $2.57
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