Stockpile: Xstrata takes hit as takeover attempt stalls

The London market has frowned on a pair of announcements from Xstrata this week, leaving the Swiss company as one of the most notable fallers of the period.

On October 27, Xstrata told the market its US$383 million offer for Sphere Minerals Ltd was unconditional in an attempt to expedite the takeover process. The announcement came after Xstrata had only received acceptances for the offer representing 8.2% of the shares in issue (when over 50% is required).

This announcement was followed on October 29 with Xstrata saying the Queensland government had approved an A$274 million (US$266 million) expansion of the George Fisher zinc mine in Queensland.

After reacting sharply to the news about the Sphere Minerals offer, Xstrata (which reached a 52-week high earlier this month) shed 5% for the week.

Elsewhere, UK Coal plc showed signs of a recovery after a treacherous 12 months where well over half its value has been lost. The company was the week top gainer, adding more than 8% with a boost in third-quarter production from its underground and surface mines.

The next best performer was Finnish company Talvivaara Mining Co, which advanced close to 5% on news that it had discovered 54% more nickel in its deposits. The larger resource may allow the company to increase output to 80,000t/y.

On the diamond front, Namakwa Diamonds Ltd was 2% higher after talking up intentions of improving production in the 2011 financial by 300%. With its assets in southern Africa in line to ramp up, Namakwa is aiming for output of 316,000-370,000ct.
Of the remaining major miners, BHP Billiton was marginally higher, while Rio Tinto and Anglo American fell 2% and 3%, respectively. The biggest faller of the week was International Ferro Metals Ltd, with a drop of more than 11%.

Brinkley Mining plc was the top gainer of the AIM shares this week with a 28% increase. Shareholders recently approved the takeover offer by large shareholder Eurogold Ltd, and the latter company acquired approximately 4.2 million shares in the week, increasing its stake to 42.28%.

Shares in Condor Resources plc added nearly 23%. During the week, the company sold its shareholding in Grafton Resource Investments Ltd at a paper loss of £878,000, but said it had been looking for a buyer for months and could now conduct verification drilling and trenching at the recently acquired La India concession. 

Condor acquired its shares in Grafton on June 12, 2009 at an aggregate value of £1,400,000 as part of a share swap arrangement. It sold the shares for US$1.11 million.

Uranium explorer Forte Energy NL added almost 15% this week. The company said it had commenced drilling at the A238 uranium anomaly in Mauritania. The A238 prospect, located 55km south-east of the town of Bir Moghrein and 135km north-west of the company’s Bir En Nar project, is the first target in a planned 5,000m programme of RC drilling in Mauritania, to be followed by a 1,500m programme of diamond drilling scheduled for November and December 2010.

Shares in Conroy Diamonds & Gold plc shed over 17% in the week after the company sold shares at £0.06/each raising £1.8 million. In addition, the company capitalised £600,000 of debt owed to chairman Richard Conroy at the same share price.