sally malay eyes wmc's lanfranchi

the following is from miningnews.net.
It doesn't appear to be the subject of an ASX announcement...
would this explain SMYs move up in price today??
(i hold)

Sally Malay eyes WMC's Lanfranchi

Stephen Bell


Wednesday, December 03, 2003
JUNIOR nickel group Sally Malay Mining is favoured to pick up WMC's last significant Kambalda mining asset – the underground Lanfranchi project.

Analysts believe the former underground mine could fetch up to A$20 million – a handy sign-off for WMC as it completes a three-year pullback from underground mining at Kambalda.

WMC's exit from the famous mining town began in November 2000 when it offloaded the Miitel, Mariners and Redross mines for A$38 million to a Mincor Resources-led joint venture.

After half-a-dozen other sales to companies such as Titan Resources and Independence Gold, WMC will close off the cycle with Lanfranchi.

The former underground mine was the last in line partly because it was also the last to close – in April last year.

A WMC spokesman said Lanfranchi operates under a State Agreement Act with the WA government.

Junior group Sally Malay says it is looking at the asset via WMC's private tender and may lodge a bid before the December 10 deadline.

"We've done our due diligence and are in the process of working through that with a view to making a bid," managing director Peter Harold told Dow Jones Newswires.

Rob Brierley, an analyst at Paterson Ord Minnett, said Lanfranchi may be worth around A$15-20 million, given the current enthusiasm for nickel assets.

But he believes that a new owner such as Sally Malay will need to boost WMC's previous ore production by 40% to maximise the value of the asset.

WMC had been mining around 200,000 tonnes of ore per year for output of around 5000 to 7000 tonnes nickel metal.

An upgrade could push that rate closer to 10,000tpa, Brierley believes.

Sally Malay's Harold said the old mine boasts a decline and a resource, though he was unable to quantify the latter because of confidentiality restrictions.

Harold expects some "aggressive" competition for Lanfranchi because of nickel's soaring value on the world market.

But he seems unlikely to face a bidding war from Jubilee Mines, WA's leading mid-cap sulphide producer from its Cosmos operation.

Jubilee executive chairman Kerry Harmanis is on an investment roadshow in Asia and unavailable for comment on Lanfranchi.

But Harmanis told Australia's Mining Monthly last month that exploration around Cosmos remained his best chance of growing Jubilee.

"What is the point of us spending around $200 million on one of these nickel sector companies?" he said. "In our way of thinking, organic growth remains the best way to go."

But for emerging junior Sally Malay, a successful tilt at Lanfranchi would virtually double its future nickel production as its namesake mine in WA's Kimberley region prepares for a July start-up.

That development is forecast to produce 8000 tonnes per year of nickel plus smaller amounts of copper and cobalt.

Sally Malay is spending around $60 million on building the mine, but last month raised $10 million in new equity to fund "strategic acquisitions".

The 67 cents-per-share placement was taken up 75% by overseas institutions and 25% local investors, Harold said.

Sally Malay shares were unchanged this morning at 69 cents.