Adding to the excellent Anracorr and Scorcer...

Adding to the excellent Anracorr and Scorcer .....
http://english.capital.gr/News.asp?id=1374304

Exxaro In Advanced Talks To Buy African Iron - Sources

-- Exxaro in advanced talks to buy African Iron, sources say

-- Deal could value Congo-focused African Iron at over A$300 million

- Acquisition could be announced as early as this week


By David Winning

Of DOW JONES NEWSWIRES


SYDNEY -(Dow Jones)- Exxaro Resources Ltd. (EXXAY) is in advanced talks to buy African Iron Ltd. (AKI.AU) in a deal that could value the Republic of Congo-focused iron ore miner at more than A$300 million, two people familiar with the matter said Monday.

The acquisition, which may be announced as early as this week, would boost Exxaro's exposure to fast-growing demand for steelmaking materials and offset growth restraints in South Africa where it is a major producer of coal and mineral sands.

Shares in African Iron, which is based in Western Australia and owns the Mayoko iron ore project in the Republic of Congo, jumped more than 9% Monday to 40 Australian cents in heavy trading volumes.

For Exxaro's takeover offer to be successful it will likely need the support of either Cape Lambert Resources (CFE.AU), which owns 25.2% of African Iron, or Equatorial Resources Ltd. (EQX.AU), the company's second-largest shareholder with a 19.9% stake.

Deal flows for Australia-based resources companies are intensifying as miners look to reinvest profits reaped during a sustained period of high prices for commodities like iron ore and coking coal, and steelmakers move to guarantee supply lines for raw materials by investing directly in mines. Last year, resources deals accounted for 44% of the US$65.7 billion-worth of inbound M&A to Australia, data from Dealogic show.

Rapid industrialization in Asia is driving M&A activity, with Rio Tinto PLC (RIO) predicting the mining industry needs to increase supplies by 100 million metric tons of iron ore annually for the next eight years to meet demand. Chinese steel output isn't forecast to peak until about 2030, and other growth economies such as India will likely be on an upward demand trajectory at this point.

Exxaro--the second-largest South African coal producer and the third-largest global producer of mineral sands--tried last year to secure a larger foothold in iron ore through a A$123 million bid for Australia's Territory Resources Ltd.

However, the Johannesburg-listed company abandoned its pursuit of Territory after the offer was trumped by a A$133 million bid by Singapore-based commodities trader Noble Group (N21.SG).

Exxaro's main iron ore asset currently is a 20% stake in Sishen Iron Ore Co. in South Africa, majority-owned by Anglo American PLC (AAL.LN), according to its website.

Acquiring African Iron fulfils a key goal of the Exxaro board to own an iron ore project. African Iron has a 92% stake in the Mayoko project and plans to build a mine with an initial output of 5 million tons of ore.

Expanding overseas also helps Exxaro to offset constraints on growth within South Africa that include infrastructure bottlenecks, regulatory uncertainty, bureaucratic delays and high labor costs.

Although mining accounts for around 9% of South Africa's economy and is its biggest foreign exchange earner, the domestic industry has shrunk over the past 16 years to 2009, compared to an average growth rate of 5% globally, Exxaro Chairman Len Konar told shareholders at the company's annual meeting last year.

Exxaro is being advised by Investec Ltd. (INL.JO) and law firm Gilbert & Tobin, while African Iron is receiving legal advice from Freehills, the people familiar with the transaction said.