2ND UPDATE:Nunavut Iron Ore Boosts Bid For Baffinland;Seeks 50.1% Of Co.
16 Dicembre 2010 - 7:19PM
Dow Jones News
Nunavut Iron Ore Acquisition Inc. has increased its offer for
Baffinland IronMines Corp. (BIM.T) to C$1.35 a share from C$0.80,
and is now seeking 50.1% of the target company's shares instead of
all of them, a move that could spur a bidding battle with
steelmaker ArcelorMittal (MT).
The offer competes with a C$1.10-a-share bid for all the
Baffinland shares from ArcelorMittal made in November. Baffinland
has recommended the ArcelorMittal offer.
Nunavut Iron Ore has also further extended its bid for the
junior miner, this time to Dec. 30. The 50.1% stake it's seeking
includes the Baffinland shares it already holds.
"We are aware of Nunavut's revised hostile offer, which is a
partial bid and doesn't constitute a superior offer under the terms
of the support agreement," an ArcelorMittal spokesman told Dow
Jones Newswires. "We continue to believe ArcelorMittal is the best
strategic partner for Baffinland."
In a release, Baffinland said its board is reviewing Nunavut's
revised offer and "will respond in due course."
ArcelorMittal already has a significant iron-ore presence in
Canada and is in the process of expanding its iron ore output to
become more self sufficient.
Baffinland, meanwhile, wants a strategic partner to help develop
its Mary River iron-ore project on Canada's Baffin Island in
Nunavut.
"As it would probably be more beneficial for an integrated steel
company to develop BIM's Mary River project, we would not be
surprised if a competing bid from ArcelorMittal emerges," said
Desjardins Securities analyst John Redstone.
Baffinland previously said the Mary River property has 365
million tons of proven and probable reserves with a grade of 64.7%
iron, and 500 million tons of additional resources.
In a previous feasibility study the company said development of
the mine, which is north of the arctic circle, would require
capital expenditure of $4.1 billion, a figure that could be
upgraded, analysts said.
The mine is still probably five years away from production and
will require 150 kilometers of rail to be built and a port on the
southern island of Baffin.
Mining in such arctic conditions occurs year-round in Canada but
poses challenges such as dealing with permafrost.
ArcelorMittal said it currently plans to ship iron ore from the
Mary River project by sea to its steel facilities in various
locations including in the European Union.
Nunavut Iron Ore is owned by Iron Ore Holdings LP, a limited
partnership owned by Bruce Walter, Jowdat Waheed and funds managed
by The Energy Minerals Group.
In Toronto Thursday, Baffinland recently traded 2.4% higher at
C$1.27.
-By Carolyn King and Devon Maylie, Dow Jones Newswires;
416-306-2100; carolyn.m.king@dowjones.com
(Ben Dummett in Toronto contributed to this article.)
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