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SMH Business Day September 2, 2008

Stuck at Albidon

Zambian nickel miner Albidon looks set to remain independent for now.

That's because Lion Selection has failed to sell a 20.5 per cent stake in Albidon worth $72 million which had been expected to prove a catalyst for a full takeover bid.
Lion now plans to return $1 a share to stakeholders rather than the previously mooted $1.30 to $1.50 after the attempted sale of its stake in the Cracow goldmine also failed.

Logical acquirers for the Albidon stake could have included companies like Xstrata Nickel, OZ Minerals, Anglo American and Norilsk. But a life-of-mine offtake agreement with China's Jinchuan is likely to have made it an unattractive proposition for integrated nickel producers like Xstrata and Norilsk which have their own smelters and refineries to feed.

OZ has been vocal about its desire to increase its nickel production, but a Citigroup analyst, Clarke Wilkins, expects it will focus on targets closer to home, such as West Australian nickel miners Panoramic (formerly Sally Malay) and Western Areas.

Wilkins has noted that OZ still needs to regain the investment community's trust after mistiming its acquisition of Allegiance Mining earlier this year. It had bid for Allegiance just before the equities market became unstable and the nickel price continued its plunge.