nice, page-5

From Bloomber.com.au

Last paragraph mentions Brockman rersources as one for potential aquirers


Gloucester Coal Shares Surge on UBS Recommendation (Update1)

By Jesse Riseborough

May 22 (Bloomberg) -- Gloucester Coal Ltd. rose to its highest in more than 11 years in Sydney trading after UBS AG said it's the ``best value'' coal stock in Australia as takeovers increase.

Gloucester has the most ``upside potential'' based on valuations used in ArcelorMittal's A$631 million ($608 million) purchase this week of a 14.9 percent stake in rival producer Macarthur Coal Ltd., UBS analysts led by Sydney-based Glyn Lawcock said in a report. The bank said Felix Resources Ltd. is its other ``key pick'' in the sector.

Acquisitions of coal and iron-ore assets in Australia, the world's largest exporter of the steelmaking materials, will rise as makers of the alloy try to reduce costs, UBS said. Lakshmi Mittal's ArcelorMittal, the world's biggest steelmaker, is in talks with Macarthur that may lead to a A$4.2 billion takeover.

``We expect there to be further consolidation within the sector as steel producers globally recognize the increasing importance of securing supplies of iron ore, coal and manganese,'' Lawcock said in the report dated yesterday.

Gloucester rose A$1.20, or 11 percent, to A$12.00 at the 4:10 p.m. Sydney time close on the Australian stock exchange, the highest since November 1996. Felix rose 2.8 percent to A$18.70.

Output Breakdown

Gloucester's output is comprised of about 60 percent thermal coal, used in power stations, and 40 percent coking coal, used to make steel, UBS said. Steel producers may be more interested in buying coking-coal producers to secure supply, the report said.

Noble Group Ltd. owns a 19.7 percent stake in Gloucester and could block any takeover, UBS also said.

Potential acquirers of Australian iron-ore companies will seek those with access to infrastructure such as port and rail, UBS said. Favored stocks include Fortescue Metals Group Ltd., Mt. Gibson Iron Ltd., Murchison Metals Ltd., Atlas Iron Ltd., BC Iron Ltd. and Brockman Resources Ltd., the report said.

To contact the reporter on this story: Jesse Riseborough in Melbourne at [email protected]
Last Updated: May 22, 2008 04:27 EDT