Mining Journal > Finance > Sphere rejects Sin-Tang bid, prefers Xstrata

Australian iron-ore developer Sphere Minerals Ltd has rejected a bid by closely held Sin-Tang Development Pte Ltd and recommended its shareholders accept Xstrata plc’s cash offer of A$514 million (US$520 million).

Sphere received a proposal from Sin-Tang to fund the Askaf project in Mauritania yesterday after the Australian markets closed and decided “to reaffirm its unanimous recommendation to accept Xstrata’s cash offer of A$3.00 per share,” it said in a statement today. The offer isn’t superior to Xstrata’s, it said.

Sin-Tang’s “proposal provides no certainty as to the timing for completion of any transaction,” Sphere said. “The proposal does not address the development and funding requirements in respect of Sphere’s larger-scale Guelb el Aouj and Lebtheinia projects.”

Zug, Switzerland-based Xstrata, seeking to improve its access to supplies of iron ore as prices climb, raised its offer for Sphere shares to A$3 from A$2.5 on Nov 3. The average spot price for iron ore delivered to China was US$145/t in the first half of the year, according to The Steel Index. That’s more than double the average US$69/t for the same period last year.

Xstrata said in a separate statement that Sin-Tang’s proposal to Sphere Minerals Ltd is “incomplete, complex, conditional and uncertain.”

Sphere’s board has rejected the Sin-Tang proposal, so it cannot proceed, Xstrata said. Sphere shareholders have until Nov 12 to accept Xstrata’s offer, “a risk-free 94% premium on the share price prior to the bid,” Xstrata said.

Nov 5 (Bloomberg)