Ian Rozier, CEO, Eastplats
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» Eastplats shares fail to ignite
» Eastplats to lift platinum output
» Eastplats to unveil smelter in 2008
» Eastplats targets 700,00 oz output

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Eastplats erects takeover defences
Allan Seccombe
Posted: Wed, 07 May 2008

[miningmx.com] -- EASTERN Platinum has put in place a shareholder rights plan to protect investors in case of a takeover bid and some analysts raised the prospect that Xstrata could be taking a closer look at the company as part of its platinum ambitions.

Analysts were divided on what Eastplats’ announcement meant. Some said it was a routine event and nothing much should be read into it, while others saw it as a possible precursor to some kind of overture from a suitor.

“The Rights Plan is not being adopted in response to any proposal to acquire control of Eastplats,” the TSX and JSE-listed company said in a statement unveiling the scheme, which is designed to ensure investors are treated fairly in the event of a takeover bid rather than prevent such an occurence.
potential for a hostile bid
One analyst pointed out the company was not trading under cautionary. “I think that would indicate this is a pretty routine thing. Bog standard,” said the analyst who declined to be named.

Another analyst was less sure.

“There must be a reason they put something like that out. The fact they’ve put this in place must indicate they have a suspicion there is potential for a hostile bid,” the second analyst said, calling Eastplats assertion that the scheme was not in response to any proposal a “red herring.”

“There’s been speculation for ages that Xstrata is looking at Eastplats,” the analyst said.

Xstrata has ambitious platinum plans and Eastplats’ Crocodile mining complex, including a decommissioned smelter, on the southern tip of the Western Limb of the Bushveld Complex is contiguous to the Elandsfontein mine Xstrata bought for $1bn in August 2007, making it a sensible and logical transaction.

Eastplats has a market capitalisation in South Africa of R15.6bn or $2bn.

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Eastplats also has a healthy pipeline of projects on the Eastern Limb of the Bushveld Complex it is looking to bring into production. It is currently producing 125,000 oz/year of platinum group metals and has resources of 100 million ounces.

“Eastplats has a massive organic growth profile over some 10 years. A company with a big balance sheet could compress that to five years and recoup some of their investment,” said the second analyst.

A third analyst said he found the announcement “suspicious”, adding he thought there were other junior platinum projects that could be taken over and that were “far more attractive than Eastplats.”

Great Basin Gold adopted a shareholder rights plan in May 2007. It is known that a large North American gold company has expressed an interest in acquiring Great Basin’s Nevada assets.