Mick Davis, CEO, Xstrata
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Xstrata would consider Pt investment
David McKay
Posted: Mon, 11 Jun 2007

[miningmx.com] -- XSTRATA, the UK listed mining group, said it would consider investing in the platinum industry.

Speaking to Miningmx in an interview conducted in May, Mick Davis, CEO of Xstrata said: "There will be a time when we look at the platinum market. At the moment, we’ve just been doing other things.”

Davis said the group was "overweight base metals" and was interested in diversifying its asset base. Iron ore interested the company. “If we could wave a wand, we’d get other revenue streams,” said Davis.

Xstrata recently bid C$25/share for LionOre Mining International, a nickel producer with assets in Africa. However, Norilsk Nickel increased its offer for LionOre to C$27.50/share, equal to C$6.8bn.

More recently, Xstrata has been linked with a bid for Eland Platinum. According to Business Report, a South African newspaper, an offer speculated to be worth R8.5bn-plus, is being prepared for Eland Platinum by Xstrata. More details on Eland's plans could be made available within "two weeks", Johan Jansen van Vuuren, a spokesman for Eland, told Business Report.

The South African platinum firm, which is trading under a cautionary announcement to shareholders, has seen its share price rocket since the beginning of the year. The stock is now at R117.90/share compared to about R37/share in January. The share price appreciation supported by a sound platinum market.

Eland Platinum is a near-term, open-cast platinum producer. The company has already stockpiled ore and is set to begin producing concentrate from its developing Elandsfontein mine as early as October, with an underground expansion pencilled in for 2011.

According to previous announcements, Eland's mine - which is near Brits, in South Africa's North West province - will have steady-state output of 160,000 oz/year of four platinum group elements. The underground operations will boost annual output to 270,000 oz of the four elements.

Eland has been visible in the market with a number of announcements, including an offtake agreement and another R106m deal to buy a contiguous property. "There's a lot of heat over the stock at the moment," said Mark Tyler, joint head of mining and resources at Nedbank Capital.

The offtake agreement is with Anglo Platinum's Rustenburg Platinum Mines but interestingly the agreement is not for life of mine. Instead, the agreement covers a certain mass of platinum or a certain time. No further details were provided.

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In an earlier announcement, Eland Platinum said it would buy 66% of a mining property held in Madibeng Platinum Holdings, and contiguous with Elandsfontein from Allan Hochreiter, an independent financier. The deal was to secure Eland Platinum's position as a million ounce/year producer in the future, it said.

David Salter, MD of Eland Platinum, told Miningmx in March the company had received "expressions of interest" from other companies. "We have a project that is attractive to any mining company not just platinum companies,” Salter said. “We’ve had no approaches of any substance, but there have been lots of enquiries.”