The relevance of this......remember not so long ago when a few...

The relevance of this......remember not so long ago when a few of the gold boys got together thinking merger would prevent takeover…..all it did was bring the bigger sharks circling.

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'Elephants' on Ox trail: mine boss
Email Print Normal font Large font Barry FitzGerald
July 21, 2006

OXIANA boss Owen Hegarty has raised the prospect that the $4.5 billion Melbourne-based miner could become the subject of a takeover bid from one of the five industry heavyweights now slugging it out in the $50 billion North American mining merger frenzy.

The five "elephants", as Mr Hegarty described them, are Xstrata, Falconbridge, Teck Cominco, Inco and Phelps Dodge. Xstrata — last year's losing bidder to BHP Billiton for WMC Resources — has the upper hand to take Falconbridge, with Phelps ahead in the race for Inco and Teck on the sidelines with its rival Inco offer.

Mr Hegarty emphasised that Oxiana was "not in any conversations with anybody about being acquired". But he believes that continued consolidation of the global industry is unstoppable as the big companies use their burgeoning cash flows to lock in growth by buying other companies.

"One of the reasons that the elephants are fighting over there in North America at the moment — that five-way tussle that's going on over there — is because they are looking for other people's assets, for other people's resources, because they have limited organic growth opportunities," Mr Hegarty said.

"It is not going to stop at that because there is probably going to be two, three or four of them that are going to be disappointed about all of that … they will continue to look around for valuable assets. So we will no doubt be well and truly on the radar there, but there is nothing going on at the moment as they say, that we know of."

Oxiana has added to its potential appeal by securing a breakthrough deal with China's Minmetals to jointly pursue and develop various mineral properties in China and in other countries.

The joint venture will look at grassroot exploration projects through to the acquisition of existing operations.

Mr Hegarty was speaking on the release of the group's production and exploration report for the June quarter. "Overall it was a very rock-solid quarter from the Ox here in terms of production and major advances on the development and exploration side," he said.

The group's shares closed 17¢, or 5.47 per cent, higher at $3.28. But that gain reflected the broadly solid support for diversified miners rather than any particular joy with the Oxiana report. BHP Billiton also closed 5.8 per cent higher and Rio Tinto gained 4.50 per cent.

The production report confirmed that production at the group's Sepon gold project in Laos for (calendar) 2006 was expected to come in at 170,000 ounces. That is lower than originally forecast from the expanded plant because of lower grades. The more recently developed copper project at Sepon is on track to beat nameplate capacity of 60,000 tonnes of copper for the full year.

The reporter owns Oxiana shares.