cvrd possible buyer

Riversdale Mining Says CVRD A Possible Buyer

(Adds company, analyst comment and background)

By Alex Wilson
Of DOW JONES NEWSWIRES

MELBOURNE (Dow Jones)--Riversdale Mining Ltd. (RIV.AU) said Tuesday its Mozambique coal
project makes it a potential takeover target with Brazilian mining giant CVRD (RIO) a
likely predator.
Riversdale's coal tenements are adjacent to CVRD's Mozambique coal
development and Riversdale Chief Executive Michael O'Keeffe said the Brazilian giant
may be keen to ensure it is the leader in the growing coal industry in the African
nation.
"I am sure they would like to dominate, but we just have to get on with our
business and prove this up and try to maximize value for shareholders," he told Dow
Jones Newswires in an interview.
"There is going to be a huge threat to see if we can hold on to this thing."
However, O'Keeffe said Riversdale has so far had no approaches from CVRD over its
coking and thermal coal project, which is targeting first production in late 2009 or
early 2010.
The Sydney-based company recently won the backing of Tata Steel (500470.BY) with the
Indian steel major paying A$100 million for a 35% stake in its key coal tenements.
And last week, it bought the Mozambique coal tenements of Aquila Resources Ltd.
(AQA.AU), taking its holding in the country to 290,000 hectares and giving it the largest
geographical footprint in the Moatize region.
Riversdale currently has a resource of 62 million metric tons of coal in Mozambique and
O'Keeffe said it will announce a "significant" increase in this at the end
of August.
Next door neighbor CVRD currently has a resource of 2.4 billion tons, and O'Keeffe
said there is "no doubt that we could be two or three times that," once further
exploration work has been carried out.
The first phase of the project is planned to produce 3 million tons of coking coal a
year and 4 million tons of thermal coal.
Of the thermal coal, 1 million tons will be exported, and Riversdale has a memorandum
of understanding to supply the remaining 3 million to a power plant to be built to help
meet Southern Africa's power shortfall.
Riversdale is currently in discussions with a rail and a port operator for the project,
and O'Keeffe said talks are "very advanced" with the rail operator.
Hartleys analyst Andrew Muir, who has a buy rating on the stock, said the market will
be watching to see if Riversdale can finalize the port and rail facilities, which are the
key to a bulk commodity business like coal.
"Those agreements are quite critical, and it is a work in progress in that
regard," he said.
The rail and port are to be run on a common user basis, which means Riversdale will
likely have to cooperate with CVRD.
O'Keeffe said skilled labor is one of the biggest challenges for the project but
that Riversdale believes it can train locals as well as fly in workers from its existing
operations in South Africa.
Riversdale shares closed down 2.5% at A$3.07.

-By Alex Wilson, Dow Jones Newswires; 61-3-9671-4313; [email protected]

(END) Dow Jones Newswires
August 14, 2007 03:57 ET (07:57 GMT)
Copyright (c) 2007 Dow Jones & Company, Inc.

Tuesday 14 August 2007 17:57:45:100 AEST