should be worth $9

snippet from news article

---------------------------------------------------

BHP's $7.85 bid for WMC was significantly above the low bids from Xstrata and will be sufficient to gain strong institutional support. But in the unlikely event that BHP does not secure 50 per cent by Friday evening the bid will be withdrawn and WMC shares will fall sharply. Of course, any big fall will doubtlessly cause Rio Tinto to redo its sums.

If BHP gets 50 per cent of the stock it will declare its bid unconditional and remaining WMC shareholders will need to decide whether to stay with a WMC minority position for the longer term. Those who decide not to accept, again face the near certainty that their shares will fall in the short term.

Longer term, any independent WMC shareholders are staking their fortunes on uranium. I think it likely that uranium will be one of the world's most valuable minerals because China and India are swinging to nuclear and the US is likely to follow.

The independent report valued WMC at $8.24 using a low uranium price of $US22 a pound. A more realistic price would be above $US30 a pound which would make WMC worth above $9. Some individual WMC shareholders have big capital gains tax liabilities and may prefer to ignore the share price fall and ride the uranium boom.

WMC tried to get BHP to offer a share exchange alternative but the big Australian refused. Because of the likely WMC share price fall, BHP will probably win 100 per cent control. But BHP is an ethical company and if there is a significant minority stake in WMC they will not be raped.

The current stories coming out of Olympic Dam say that the former Billiton elements in BHP have won the internal battle and will remove top Olympic Dam expertise and try to control Australian uranium production from the copper operation in Chile. If these stories are half right then BHP shareholders will be grateful for a WMC minority stake which would prevent BHP from taking such a big management risk, given it has no experience in uranium production.