Below is a snippet of todays Daily Reckoning.......makes a nice...

Below is a snippet of todays Daily Reckoning.......makes a nice read while sally's price is a little depressed.

***How to Spot a Mining Takeover Before Other Investors Do

Here are three ingredients for a mining takeover story. Lots of small companies. Tonnes of rock that Chinese companies want. Low share prices.

So when you have lots of small companies with tonnes of rock that Chinese companies want selling at low share prices…that’s even better. And it describes Australian nickel pretty well.

Meet the average listed nickel company in Australia. It’s $800 million in size at most, and its share price has fallen 30% this year alone. Reader, nickel. Nickel, reader.

As for having tonnes of rock? According to the US Geological Survey, Australia has 36% of the world’s total nickel reserve.

It gets better. Traditionally, the world’s biggest producers are Canada and Russia. At first glance, that’s a fact that could deflate the investing aspirations of the average investor. But you’re better informed than that.

You see, in the same way that the US passed the glorious torch of oil production to the Middle East years ago, Russia and Canada will inevitably surrender the less-glorious nickel flame. Large, developed nickel companies like Vale, Russia’s Norilsk, or China’s Jinchuan will gravitate towards better reserves. First in line is Australia, with 24 million tonnes of the stuff.

We’re the Saudi Arabia of nickel? Bingo.

But that’s not enough on its own. America, for example, is the Saudi Arabia of debt. New Zealand is the Saudi Arabia of sheep. Our apartment this morning is the Saudi Arabia of filthy crockery. None of those things are good investments.

What would make them good investments? If suddenly sheep prices soared, or people established filthy crockery as our benchmark currency. A shock. Something unexpected. Some sort of spark in the industry.

Yesterday, BHP clacked together two pieces of flint near a pile of dry sticks. After shutting down its Kalgoorlie smelter for a rebuild, 28,000 tonnes of nickel disappeared from the market. That’s 2% of global supply. Prices are rising already. The nickel metal market scooped up a 7% gain yesterday.

We wrote last month about how takeovers in mining are supporting the share prices of good companies. If you’re cheap, you’re takeover fodder, as long as you’ve got a good asset. Base metal equities have taken a right pummeling. We reckon their time will come again."