independence ripe for takeover

Independence may be ripe for a takeover
SMH August 17, 2007 - 5:54PM

The plunging price of nickel is causing headaches for producers of the stainless steel additive but it might just be the catalyst for AngloGold Ashanti Ltd's takeover of Independence Group Nl.

AngloGold, South Africa's largest gold miner, has made no secret that it had looked at taking over nickel miner Independence but noted the commodity's strong price was acting as a deterrent to the move.

The two parties are linked through their involvement in the emerging Tropicana gold project, 400 kilometres northeast of Kalgoorlie, in which AngloGold has a majority interest.

AngloGold's regional head of Australia, Graham Ehm, said last week the company "had a look" at taking over Independence but the strong nickel price had made the West Australian miner expensive.

"It's true that we have had a look and they (Independence) fully expect us to have a look," he said on the sidelines of the Diggers and Dealers forum.

The nickel price hit a high of $US51,800 per tonne in May, but has slowly dropped from that peak to close at $US25,100 a tonne overnight, with Independence's share price tracking the nickel price in a downward direction.

The volatility in the Australian share market, which is being driven by the fallout from the sub-prime mortgage crisis in the United States, has also wiped some of the value from Independence.

Independence hit a high of $8.90 in June, before retreating to close at $4.63 on Friday.

Taking out Independence would deliver AngloGold control of the highly prospective Tropicana project, but questions remain on the future of the nickel miner's flagship asset, the Long mine near Kambalda.

Mr Ehm indicated the mine would probably be put up for sale, saying" "We are gold miners, it (Long) doesn't fit our portfolio".

There would likely be a host of candidates interested in adding Long to its portfolio, including fellow Kambalda nickel miner Mincor Resources Nl.


I wouldn't sell IGO even at $8.90.