Xstrata offers cash for Mauritanian iron ore company

Finance

Publishing Date: 24 Aug 2010 12:09pm GMT
Author: Mining Journal

Xstrata plc has made a A$428 million (US$383 million) cash offer for all the shares in Sphere Minerals Ltd, owner of the Askaf iron-ore project in Mauritania.

The announcement is another in a trend of recent acquisitions by majors diversifying into new commodities, following Vedanta’s offer for Cairn Energy’s Indian assets and BHP Billiton’s bid for PotashCorp.

Xstrata’s offer at A$2.50/share is at a 61% premium to Monday’s closing price. The offer has been recommended by Sphere’s board of directors.

Sphere’s has three iron ore assets in Mauritania, namely the Guelb el Aouj joint venture with Mauritania’s state owned producer, the Askaf project and the Lebtheinia project.

“Xstrata’s acquisition of Sphere will add a range of organic growth projects in iron ore to our portfolio. This includes potential near-term production from the Askaf project and longer term growth potential from the large-scale Guelb El Aouj project in Mauritania, a country with an established history of iron projects.

In November last year, Xstrata announced that it was spending US$50 million on a pre-feasibility study to earn a controlling stake in the Zanaga iron ore project in the Republic of Congo.