take over by xstrata

Xstrata poised for $4b LionOre bid
Email Print Normal font Large font Jamie Freed
March 26, 2007 - 1:18PM

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AdvertisementXstrata is poised to launch a $4 billion-plus takeover bid for Australian-listed nickel miner LionOre Mining International as early as this evening.

LionOre, which is headquartered in Toronto but has several mining operations in Western Australia, has been rumoured to be a target for the Anglo-Swiss mining giant in recent weeks.

LionOre, which has a secondary listing in Australia scheduled to be removed later this year, entered a trading halt this morning. The company's managing director for Australia, Brian Hill, would not comment on the reasons for the trading halt.

"As soon as (an) announcement is available to be made, it will be made," he said.

But the Herald has learned Xstrata is preparing to launch an offer for the company, which has a market value of $3.85 billion before any bid premium, which typically adds 30 per cent or so to the price of a company.

Xstrata's purchase of LionOre would follow its $US17.2 billion acquisition of Canadian nickel miner Falconbridge last year. Xstrata has also been an active player in Australia in recent years, having successfully purchased Mt Isa Mines and made an unsuccessful tilt at WMC Resources.

Earlier this month, South African newspaper Business Day reported LionOre chief operating officer Peter Breese declined to comment on whether his company had received an approach from Xstrata. But Mr Breese added the speculation about an Xstrata bid for LionOre probably arose because LionOre was the only "pure play" nickel producer still listed on the Toronto Stock Exchange and the largest based on metal production.

Nickel prices rose above $US50,000 a tonne on the London Metal Exchange for the first time earlier this month, amid a shortage of supply and increased demand for stainless steel. LionOre expects to produce 44,300 tonnes of nickel at a cash cost of $US3.52 a pound this year.

LionOre shares last traded at $17.59.

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