Xstrata targets iron ore, bids for Sphere Minerals

The off-market bid comes at a handy 61% premium to Sphere’s last trading price on Monday, before the bid was launched.
Sphere’s directors recommended the bid after considering strategies for the company’s projects and holding discussions with other parties. The directors will sell their shares and options into the bid, their holdings equating to 5.4% of fully diluted share capital.
Sphere is a West-Africa focused iron ore company, with interests in three iron ore projects in Mauritania. The projects comprise:
• the large-scale Guelb el Aouj project through a 50/50 joint venture with Socit Nationale Industrielle et Minire (SNIM), Mauritania’s state-owned iron ore producer;
• the near-term Askaf project, located 35km south of Guelb el Aouj; and
• the Lebtheinia project, located 90km from the coast.
Alexander Burns, managing director, Sphere Minerals, commented: “Xstrata’s offer provides our shareholders with an attractive cash premium which recognises the significant achievements of our team in developing the company’s portfolio of iron ore projects over the past ten years.
“Sphere’s projects have now reached the stage at which they will benefit from the robust financial capacity and support of a major diversified mining group to ensure they reach their full potential, for the benefit of all our stakeholders in Mauritania. We recommend that, in the absence of a superior proposal, shareholders accept Xstrata’s offer.”
Peter Freyberg, Xstrata Coal chief executive, said: “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 ore exports.
“The acquisition brings together Xstrata Coal’s proven bulk mining and project development capabilities and Sphere’s team of experienced iron ore professionals with a successful track record of operating in Mauritania. Xstrata has the financial and technical capabilities to expedite the development of Sphere’s greenfield growth projects and manage the inherent risks involved. We believe our offer provides Sphere shareholders with a full and fair risk-free cash premium for their investment.”
Xstrata and Sphere have entered into traditional “no shop” and “no talk” clauses, and the payment to Xstrata of a break fee of A$4.4 million in certain circumstances where a deal is not completed.
Contact: www.sphereminerals.com.au