http://www.theaustralian.news.com.au/story/0,25197,24326509-50052...

http://www.theaustralian.news.com.au/story/0,25197,24326509-5005200,00.html

Anglo American backs explorer Magma Metals

Sarah-Jane Tasker | September 11, 2008

JUNIOR Perth-based explorer Magma Metals has received an $8.08 million boost from global resources giant Anglo American.

The announcement saw Magma's stock rocket 25 per cent yesterday, closing at 52c in an Australian market where most resources stocks ended the day in the red.

Anglo American, the world's largest platinum producer, has agreed to acquire a 10 per cent stake in the nickel, copper and platinum group explorer, buying 13.47 million Magma shares at 60c.

Magma managing director Keith Watkins said the funds would be used to complete a 24,000m drilling program at its flagship Thunder Bay North platinum-palladium project in Ontario, Canada.

Mr Watkins said the explorer had been approached by several major companies wanting to enter into a joint venture for the Thunder Bay project, but the company wanted to maintain control. "We want to run it and Anglo offered an investment, with no real rights over the project," he said. "It provides funding in a difficult market. Anglo also has good credentials and its stake proves the potential the project has."

Southern Cross Equities analyst Rob Bishop said Anglo's interest vindicated the Canadian project. "It is a serious stake, 10 per cent, and it could suggest a blocking stake," he said.

"There is nothing better for a junior with a new greenfield discovery than to get the vote of confidence of a major. It tells investors in the market this is a serious project."

Anglo American will install a non-executive director on Magma's board and has the right to participate in any future share placements.

DJ Carmichael Research analyst Paul Adams said Anglo's interest told the market the world's largest platinum producer believed Thunder Bay would become a mine.

"Anglo also thought it important enough to add someone to Magma's board, which is an important point because they obviously want to keep close to the action," he said.

"The offer, which was close to a 50 per cent premium on Magma's trading price, was also a huge vote of confidence."