JUBILEE Mines shares rocketed yesterday afternoon amid speculation a corporate buyer was willing to pay $10.50 a share to build up a stake in the West Australian nickel miner.
Since Friday Jubilee shares have risen from $9.25 to close 54c higher at a record $9.83 yesterday on relatively high trading volumes.
The increase seemed curious as the stock went ex-dividend on Monday and the nickel price took a 3.8 per cent dive on the London Metal Exchange on Monday night.
But brokers and fund managers said rumours were circulating that an unnamed company was looking to pick up Jubilee shares.
If a rival lodged a bid at $10.50 a share, Jubilee would be valued at $1.35 billion. But any company making an offer would need the support of Jubilee's executive chairman, Kerry Harmanis, who owns 17 per cent of the company.
Jubilee's other substantial shareholder is the Canadian nickel company Inco, which has a 5 per cent stake. But given Inco is likely to succumb to a $C19.4 bid from Brazil's Companhia Vale do Rio Doce, it would probably not bid for Jubilee.
At the Diggers and Dealers mining conference in Kalgoorlie last month, Mr Harmanis said he realised Jubilee could be an attractive takeover target.
"If someone comes in with money on the table I will talk to them," he said. "Everybody has a price. It's going to take a fair bit of money to dislodge me."
When questioned about Jubilee's large share price gains yesterday, Mr Harmanis said he was aware of the takeover rumours.
"I have no knowledge of why the share price has gone up," he said. Jubilee gave the same response to a query from the stock exchange after trading closed last night.
Yesterday the company approved the acquisition of a $4.3 million ore sorter to be installed near the nickel concentrator at its Cosmos mine. It is understood the board was not working on any sort of friendly merger deal.
Last month Goldman Sachs JBWere analysts said Jubilee could be a prime takeover target because of the high-grade, low-cost, low-risk nature of the Cosmos operation and recent exploration success. Three of the world's biggest nickel producers - Falconbridge, Inco and WMC Resources - have been takeover targets in the past year.
Teck Cominco failed in its recent attempt to buy Inco and is believed to be looking at other acquisitions. There has also been talk of Anglo American building a nickel business. But for either, Jubilee would be a relatively small purchase.
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