bci 4yrs ago had nothing, aon can do it too

Breaking News
Chinas Regent set for $300m BC Iron bid
January 20, 2011, 12:00AM

BC Iron is the latest Australian miner to be targeted by a Chinese suitor, with Regent Pacific Group expected to launch a bid today.

Both companies halted trading in their shares yesterday, with BC Iron saying it was preparing an announcement on a corporate transaction, while HongKong-listed Regent said it was preparing to announce a very substantialacquisition.

Ocean Equities analyst Sam Spring said the expected deal would be a large transaction for Regent, with its marketcapitalisation of about $200million, compared with BC Ironscapitalisation of almost$300m.

It makes sense for Regent Pacific, as they have invested $20m cash into BC Iron and have been long-term supporters in their project, hesaid.

With not many new projects coming onstream in the near term and the iron ore price where it is, it does make sense for Regent Pacific, because they have said they are looking to grow their resources and were looking in the iron orespace.

BC Iron operates the Nullagine project in the Pilbara, a joint venture with Fortescue MetalsGroup.

The junior wasearlier forced to sell half of the operation to Andrew Forrests Fortescue to gain access to infrastructure to ship the ore to Chinesecustomers.

BC Iron, which listed in December 2006, started production in November and is due to ship its first iron ore and receive its first mining revenue thismonth.

The ore is trucked to Fortescues Christmas Creek ore processingfacility, from where it is hauled on Fortescues railway to the HerbElliott terminal in PortHedland.

Managing director Mike Young has done an amazing job, Mr Springsaid.

In four years they have gone from just listing to entering production to now being taken out, which is fantastic, Mr Springsaid.

Regent would have completed extensive duediligence on BC Iron, including its joint venture with Fortescue, hesaid.

There probably wouldnt be a huge change in how the joint ventureworks.

Regent would be comfortable with the relationship that is in place between BC Iron and Fortescue, if there is to be atakeover.

Regent Pacific is BC Irons second-largest shareholder, with a 19.8 per cent stake, behind Ukrainianbillionaire Gennadiy BogolyubovsConsolidated Minerals, which holds 21.1 percent.

Analysts do not expect ConsMin to begin abiddingwar.

Mr Spring said the deal would surprise some in the market, as BC Iron had secured infrastructure for its mine through the joint venture withFortescue.

They have such aconsolidated shareholder base that it did not automatically appeal as a merger and acquisition target, hesaid.

Regent Pacific, which has focused on copper, zinc and coal projects in mainland China, has beenselling a range of assets to boost its cash to about $US123.6m at the end ofDecember.

The market is expecting a cash offer for BC Iron in light of HongKong-listed Wah Nams attempts to move on iron ore juniors Brockman Resources andFerrAus.

Wah Nam, a limousine company, has offered its scrip for the two companies, but both have rejected thebid.

Mr Spring said there would continue to be corporate activity in the Pilbararegion.

To know how significant that will be, you just need to look at a junior company (BC Iron) that went from having nothing four years ago to getting into production and then doing a trade sale, hesaid.

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