ArcelorMittal ups Baffinland price
- Publishing Date
- 21 Dec 2010 12:33pm GMT
- Mining Journal
ArcelorMittal has responded to a new offer for Baffinland Iron Ore Mines Corp by Nunavut Iron Ore Acquisition Company with an increased bid of its own.
The company says it will now pay C$1.25/share for all of the shares in the company from its previous bid of C$1.10/share. This values the company at about C$493 million (US$483 million).
Last week, Nunavut Iron Ore Acquisition Inc (a company backed by private equity firm The Energy & Minerals Group) increased its hostile offer to C$1.35/share but for only 50.1% of the shares in issue, compared with 100% previously. In September the company made its first approach with an C$0.80/share offer, having already accumulated a 10.3% stake through open-market purchases and tender agreements.
Baffinland shares were trading at about C$0.56/share before Nunavat’s first approach.
A statement from the steel giant said that Nunavut’s revised offer was “coercive” because it “forced” Baffinland shareholders to decide on the offer without knowing what price the shares not taken up would trade at following deal closure.
Baffinland owns the Mary River iron-ore property located on Baffin Island, in the Qikiqtani Region of Canada’s Nunavut Territory. Proven and probable reserves are estimated at 365Mt grading 64.7% Fe, plus 500Mt of additional measured, indicated and inferred resources.
A definitive feasibility study in 2008 indicated a US$4 billion project, with full production of 18Mt/y and the ability to expand to 30Mt/y. Total operating costs were estimated at US$14.62/t.
ArcelorMittal has also received all regulatory approvals for the acquisition of Baffinland Iron Ore Mines Corp. The Commissioner of Competition has issued a ‘no action’ letter to ArcelorMittal, while Industry Canada had already said the offer is not subject to review under the Investment Canada Act.
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