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Aquarius trades up on takeover talk Posted: Tue, 17 Jan 2006 [miningmx.com] -- AQUARIUS Platinum challenged its 52-week high on speculation it might be the subject of renewed corporate action by Impala Platinum, a firm that owns 8% in the mid-cap firm and has cash of up to R8bn. The speculation was supported by the resignation of Cathie Markus, an executive-director of Impala, from the board of Aquarius. Aquarius traded up 7.27% at the time of writing to R58/share nearing a 52-week high of R60/share achieved on December 12. The platinum index, in contrast, was down as South African counters traded weaker on a 1.1% lower dollar platinum price. Impala is thought to have held talks with Aquarius Platinum in September in which Impala unsuccessfully offered to buy the company’s assets. Markus, however, said her resignation from Aquarius was unconnected with potential corporate action between the two companies. Commenting on whether Impala was looking to buy more platinum reserves, she said: "We are always considering whether to invest, divest or hold our investments.” Impala was not appointing a replacement in her stead on the Aquarius board, she said. Impala owns 8% of Aquarius Platinum, and a 20% stake in the South African based assets held through Aquarius Platinum SA. Stuart Murray, Aquarius CEO, said corporate governance was top of mind in Markus resignation. “Sitting on boards of two competing companies has always been an issue for us,” Murray said in an interview. “But I must say that Cathie has been exemplary in recusing herself when necessary.” “I am not currently involved in corporate action,” said Murray. “That’s not to say other people aren’t.” There’s growing speculation among analysts that Aquarius Platinum was Impala Platinum’s next target particularly as Impala's Zimbabwe strategy had been put on the backburner amid political problems. “They haven’t replaced Markus and Impala has a large stake in Aquarius,” said Steve Shepherd, an analyst for JP Morgan. “But Aquarius is a well managed company. You’d have to ask whether by buying it, Impala would be adding to management.” It’s thought that Murray, who has a less than harmonious relationship with Impala, would be unlikely to stay on at an enlarged company. Gert Ackerman, who joined Aquarius from Impala, was fairly close to retirement age, analysts said. “It's a biteable chunk for a company with a cash flush balance sheet like Implats. But you would be buying a company with heavily diluted mine-to-market ounces, as a fair proportion of Aquarius' production is, in fact, committed to be processed by Implats' main competitor" said another analyst in Johannesburg. This is because Aquarius Platinum neither smelts or sells the metal but delivers matte to Anglo Platinum and Impala Platinum to refine. Another drawback to corporate action between Impala and Aquarius is that Aquarius is so heavily priced. There were suggestions of a deal in September last year when Aquarius was trading at R45/share at the start of the month. “We now feel that Aquarius Platinum shares are valued in the market on higher platinum group price forecasts than we are currently prepared to assume,” said John Meyer, an analyst for Numis Securities. “It might look a bit desperate,” said Shepherd of Impala’s speculated approaches to Aquarius. Another complication is that Aquarius recently concluded a pool and share agreement on its Marikana asset in the Bushveld Complex with Impala’s rival, Anglo Platinum. Anglo has preemptive rights over smelting matte produced from Marikana. Last year, Lonmin submitted proposals to buy Southern Platinum for about $273m, a transaction that received some criticism because Lonmin was not buying assets comparable to its current suite.Free news alerts: click here to subscribe
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