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Real-Time news about Lionore Npv (London Stock Exchange): 0 recent articles
|hazzy: Xstrata have announced that they will not match Norilsk offer. Share price will therefore fall about 50p on Monday. Well done to all those who got out on Friday. Am pleased in a way that Xstrata didn't win the day. They tried to commit daylight robbery with their initial offer. If they had bid C$25 a share in the first place they would probably have won IMHO. Might teach them a lesson for the future.
|tartan_penguin2: Canadian Mining Journal, 3/28/2007
CANADIAN MINING PERSPECTIVES: Xstrata hunts LionOre
By Marilyn Scales
Toronto's XSTRATA NICKEL is on the hunt for another Canadian acquisition since Xstrata won the battle for Falconbridge just eight months ago. It has offered $18.50 for each share of LIONORE MINING INTERNATIONAL of Toronto and London, U.K. The deal is worth $4.6 billion.
Both LionOre and Xstrata are patting themselves on the back. Amazingly, the merger is described as "friendly". That adjective is far different from the ones used to describe the hard-won battle for control of Falconbridge last year. Before that was settled, proposals from several suitors were met with repeated resistance and counter-offers.
LionOre, for the most part, has gone quietly about the business of producing nickel in Western Australia, South Africa and Botswana. The company estimates that its share of nickel contained in concentrates will be almost 40,000 t during 2007. That figure is about half of Xstrata's nickel capacity and roughly 15% of CVRD INCO's output. LionOre also operates a 140,000-oz/y gold mine in Western Australia.
What LionOre has that Xstrata wants, besides a substantial production boost, is the patented Activox® technology, a hydrometallurgical method of treating sulphide ores. The key to Activox is ultra-fine grinding followed by leaching at only 110ºC and one atmosphere of pressure.
At the March 26 press conference announcing the deal, Xstrata Nickel CEO Ian Pearce waffled when asked to put a dollar value on the Activox process. He lapsed into corp-speak, citing "optionality", "flexibility" and "leveraging" certain orebodies. He refused outright to reveal a dollar figure.
LionOre is ready to build the first commercial Activox refinery at its Tati nickel project in Botswana. The company has raised $250 million to build the facility, and the remaining $100 million will come from cash on hand and from Tati operating income.
Observers believe that acquiring LionOre and its Activox process will be a money-maker for Xstrata. Xstrata has expertise in ultra-fine grinding technology, and it acquired the Nikkelverk refinery in Norway as part of the Falconbridge deal. That plant is due for a phased expansion to 250,000 t/y of refined nickel from the current nameplate capacity of 86,000 t/y. Could this be the site of the second Activox plant?
Xstrata's $18.50 offer represents a 16.5% premium on the price of LionOre shares over the 30-day TSX trading price prior to the announcement. However, $18.50 is only 5.8% higher than the closing LionOre price on March 23, 2007.
Questions were raised at the press conference regarding the $18.50 value placed on LionOre shares since it represents such a small premium over the previous Friday's closing price. Indeed the share price early on the morning of March 27 was over $19.25 per share. Someone, factoring in a sustained record high nickel price, must think Xstrata's offer is low.
What started out as a friendly business combination is beginning to show signs of attracting higher offers from third parties. Stay tuned for further developments.|
|lasata: March 27, 2007
Xstrata May Prove To Have Been A Bit Mean With Its Bid For LionOre.
The friendly bid of US$4 billion by Xstrata for LionOre Mining International represents a big bet by Mick Davis that the sky high nickel price is not about to collapse. Judging by the comment from our metals expert Rob Davies yesterday he looks to be on pretty safe ground. As Rob pointed out the newsflow from the supply side remains constructive for the nickel price, even if individually it is painful for the operator concerned such as European Nickel which has had its mine construction delayed. Not that it would be the biggest producer in the world, but it is part of a continuing saga. The reported reason for the fall in nickel prices last week of an increase in stocks is almost risible. At less than 5,000 tonnes LME inventories are irrelevant to all intents and purposes.
The amazing thing is that the Questor column in the Daily Telegraph managed to write an article about the deal without once mentioning the supply /demand situation in nickel. To be fair it did say that crumbling house prices in the States may affect its economy, but managed to avoid mentioning the ever rising internal demand in China for stainless steel.
Anyway the logic behind this deal well outweighs the chances of a major setback to the nickel price and Simon Toyne, a mining analyst at Numis Securities, reckons that
the payback period could be less than 4 years at current nickel prices. He expects LionOre's nickel production to increase by around 50 per cent over the next two years to 49,000 tonnes and that takes no account of the Honeymoon Well project in Australia which could add a further 40,000 tonnes for many a year to come as it has a contained nickel resource of 1.3 million tonnes.
At the moment Xstrata's nickel refining capacity is some way head of production. LionOre will provide a better balance and this should be good for profit margins even though the returns on nickel processing are way below those from mining. Currently LionOre's production from Botswana and South Africa , which represents around half of group nickel production, is smelted in Botswana and refined in Xstrata's Nikkelverk refinery in Norway. Once Xstrata has LionOre under its belt it will be able to use its Activox nickel recovery technology, which is a modified high pressure acid leach system, to produce an intermediate product which does not need smelting and can be sent direct to the refinery, thus lowering costs.
Then there is the Horn smelter in Canada owned by Xstrata which is also operating well below capacity. Maybe the nickel concentrate produced in Australia by LionOre , which is currently treated by third parties , could be switched to Canada and thus increase the capacity utilisation of the smelter and provide a further boost to profits. Nearly five years ago Colin Steyn the chief executive of LionOre, who is not a man given to idle boasts, said that Activox® technology would be key to the growth of LionOre over the longer term. Presumably this message got to Mick Davis and helped him with his timing as last summer LionOre announced that it was going to invest US$620 million in an Activox ® and Dense Media Separation plant at Tati following the results of a bankable feasibility study. As a result production was expected to rise and cash costs to fall.
The benefits of the deal certainly goes in both directions. As Simon points out, Activox could prove very useful at the Kabanga project which Xstrata is developing in Tanzania and Xstrata could play a crucial role in funding the Honeymoon Well project in Australia which seems to have been sidelined by the focus on Activox.. Colin Steyn pointed out to Minews last year after he bought the plant at Bulong to unlock value in nickel sulphides that Western Australia is full of 'dirty nickel concentrates' which no smelter will touch. Talks have been going on about some sort of relationship with BHP Billiton as it has some of these and the great advantage to LionOre is that they can be tested by shipping samples to the demonstration plant in Botswana.
This may be described as a friendly deal and Mick Davis may have got a recommendation from LionOre's directors and persuaded 19 per cent of shareholders to accept irrevocable lock-up arrangements, but C$18.50 per share only represents a 5.8 per cent premium to the price last Friday. It also values LionOre on a fairly modest price earnings ration which pays little attention to the fact that growth over the coming years may come more from LionOre than Xstrata. The current share price of LionOre shares in Toronto is now over the C$19 mark so it looks as if the betting is now on Mick Davis having to raise his price if he is going to get acceptances out of the majority of shareholders|
|tartan_penguin2: courtesy jojosydney on hotcopper....
Xstrata's takeover bid comes up short
Monday, March 26, 2007
The premium attached to Xstrata PLC's $4.6-billion takeover bid for nickel miner LionOre Mining International Ltd. is too slim and several institutional shareholders said they won't tender their shares to the all-cash takeover bid in hopes of wresting more money out of the friendly buyer.
Xstrata, which has swelled in size over the past few years with an aggressive acquisition strategy led by chief executive officer Mick Davis, is offering $18.50 a share for Toronto-based LionOre, a 5.8-per-cent premium to Friday's closing share price of $17.49 on the Toronto Stock Exchange.
The takeover's premium, when weighed against share levels before the offer, appears paltry compared to other recent deals in the sector, including the Anglo-Swiss miner's winning of bid of $62.50 a share for Falconbridge Ltd. last summer, an $18-billion transaction. Fund managers said Xstrata will have to do better if it wants to win the support of two-thirds of LionOre shareholders needed for the deal to be approved.
"The company is being stolen," said Bill Belovay, who manages the BMO Resource Fund, which owns 1.1 million shares, or about 0.5 per cent of LionOre's outstanding shares.
"I think it's unfair. It's unfair to shareholders," he said, adding that LionOre management "just lies down and doesn't even fight."
However, unlike last summer's frenzy of takeover bids for both Falconbridge and Inco Ltd., the prospective purchase of LionOre, which has nickel mining operations in Western Australia, Botswana and South Africa, comes amid a record surge in nickel prices.
The metal has soared 62 per cent so far this year on expectations of continued strong demand from China.
Colin Steyn, LionOre's president and chief executive officer, said current price levels are unsustainable over the long term and could damage the manufacturing industries that need nickel to make stainless steel and other alloys.
"We see the nickel price at unprecedented levels and probably at a level, if it continued to increase, that could actually have value destruction in the industry it supports," he said in a press conference.
Xstrata, which codenamed its bid "Androcles" after the Roman slave who pulled the thorn out of a lion's paw, has won so-called lock-up agreements with nearly a fifth of LionOre's shareholders who have agreed to tender their shares to the bid. LionOre directors and management, holding 3 per cent, have agreed to submit their shares along with roughly 16 per cent of shareholders that Mr. Steyn described as "people who have been investors in this company since the beginning and have not relinquished their shares."
Among them is Bob Disbrow, a stockbroker at Haywood Securities Inc. in Toronto, who would only say he has a "significant" stake in LionOre.
LionOre is prohibited from soliciting other bids and if it accepts a superior proposal from another suitor, Xstrata is entitled to a $130-million break fee. It also has the right to match a higher bid.
"We've looked at the company. We believe we have made a fair and reasonable offer to shareholders and we have the right to match and that's where to be," said Ian Pearce, CEO of Xstrata Nickel.
For much of the recent rise in metal prices, LionOre had struggled with production problems at two of its key mines and had continually disappointed shareholders. However, the miner, which produced 34,000 tonnes of nickel in 2006, began to turn things around in the third quarter of last year.
After losing $76-million (U.S.) in 2005, it swung to a profit of $428-million last year. Before the Xstrata offer, its shares had gained 270 per cent over the past year.
The company hired investment banker JPMorgan Cazenove to explore its alternatives last year. Mr. Steyn said four interested parties signed non-disclosure agreements that gave them access to a data room with the company's confidential information.
"At this stage they haven't led to an offer," Mr. Steyn said.
According to sources, Russian giant Norilsk Nickel Group was among the interested parties. Vancouver's Teck Cominco Ltd. is also believed to have had a look, but is thought to be no longer interested in LionOre, whose shares gained $1.80 (Canadian) to $19.29 in heavy trading of more than 35 million shares on the TSX Monday.
Even without a competing offer, Benoit Brillon, of NatCan Investment Management Inc., which owns roughly 3.5 million LionOre shares or about 1.6 per cent of the miner, said Xstrata will have to pony up more cash if it wants to succeed. "Is it high enough? I don't think so," said Mr. Brillon, who added that although Xstrata "seems to have a lock-up on a significant amount on shares, I don't think they're going to get it at this level."
Charles Oliver, the lead manager of the AGF Canadian Resources Fund said he was sad that LionOre, the largest pure-play nickel producer left on the Toronto Stock Exchange, was on the verge of disappearing. He said his company, which owns roughly 5.5 million LionOre shares, was not impressed with the offer.
"The premium is not really healthy. I'm not sure I want to part with it," he said.
Several analysts had a target price of $20 or more for LionOre, who although officially based in Toronto, has its top executives posted in London.
Macquarie Bank Ltd. and TD Securities Inc. are Xstrata's financial advisers on the deal.|
|daz: Share price is remarkably sanguine about the potential shipment delays. If Ivernia's lead output has been suspended, there must be a chance the same will happen to LOR. If the company don't have an alternative to using the Esperance port, it would hit them hard.|
Lionore Npv share price data is direct from the London Stock Exchange