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» Bidding war hots up for LionOre
» LionOre to verify Norilsk bid
» Nickel prices sustainable in short term
» Xstrata bid to leave Nkomati intact
» Bank funding not critical for LionOre
» LionOre capex rockets


Norilsk trumps Xstrata's LionOre bid
Allan Seccombe
Posted: Wed, 23 May 2007

[miningmx.com] -- NORILSK Nickel has trumped Xstrata’s revised C$25/share offer in the takeover battle for nickel producer LionOre by raising its bid to C$27.50 or C$6.8bn.

The unsolicited all-cash offer is C$6 more than Norilsk’s first bid early in May, which followed Xstrata’s opening salvo of $18.50 at the end of March.

“Norilsk Nickel's decision to increase its offer reflects the quality and strategic value of LionOre to our company, which will give us greater scale in key commodities, enhanced geographic diversification and an exciting pipeline of growth projects," Norilsk Nickel's General Director Denis Morozov said in a statement.

Norilsk’s offer is 10% higher than that of its rival, which increased its offer by 35% to C$25/share, a move some market watcher saw as a “knock out bid.”
offer reflects the quality and strategic value
Shareholders will pocket an additional C$620m under the Norilsk bid and they have until 18 June to decide on the offer from the world’s largest nickel company.

Xstrata, which has a working relationship with LionOre and has a support agreement, implemented a C$305m break fee in it last offer in mid-May, incurring the wrath of the Russians.

“Our bid has been discounted to take into account the additional costs arising from the excessive C$305 million break fee payable to Xstrata,” Morozov said.

“This break fee has compromised a fair bidding process, and value, which should have been delivered to LionOre shareholders, instead may go to Xstrata,” Morozov said.

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Norilsk has operations in Russia, Australia, Finland and North America.

LionOre plans to produce 90,000 tonnes of nickel a year by 2012 from Tati, its 50% owned Nkomati Nickel in South Africa and Honeymoon Well in Australia.

TSX and Botswana-listed LionOre has developed the proprietary Activox technology, which uses an ultra-fine concentrate in an autoclave where water, oxygen, pressure and heat ensure a recovery rate higher than 90%, allowing LionOre to effectively mine and treat low-grade ore bodies.

LionOre has four such bodies, three of which are amongst the world’s five largest nickel deposits. LionOre has mines in Botswana, South Africa and Australia.

LionOre’s projected cash cost per recovered pound of nickel at the Activox plant is $1.69, far below the industry average of $3 to $3.80, the company has said.