DEALTALK-Baffinland shares trade above offers but no new bid

* Baffinland sitting on large iron ore deposit

* Shares trading at C$1.18 per share

By Pav Jordan and Julie Gordon

TORONTO, Nov 24 (BestGrowthStock) – Shares in Baffinland Iron Mines
(BIM.TO: ) are trading higher than the price of the latest
takeover offer for the company even though analysts and
industry observers say a higher bid is unlikely.

There are two takeover offers on the table for Baffinland,
including one from the world’s largest steel company,
ArcelorMittal, and there have been unsubstantiated reports that
other players are interested in the company and its mine in the
Canadian Arctic.

“I really think it’s getting late in the game for anybody
to come back with a superior offer,” said Peter Campbell,
senior mining analyst at Jennings Capital in Toronto.

Baffinland’s stock price more than tripled this year as it
searched for strategic partners to help it develop the mine.
The stock traded at C$1.18 on Wednesday, up from lows near 35
Canadian cents in July.

Baffinland is sitting on enough iron ore to supply all of
Europe in its Mary River project, but the estimated C$4
billion-plus ($3.9 billion-plus) cost of bringing it to
production is more than the company can bear on its own and it
has been actively seeking suitors or strategic partners.

Luxembourg-based ArcelorMittal (ISPA.AS: ) offered on Nov. 8
to buy Baffinland for C$433 million, or C$1.10 for each of its
common shares, as part of a push to own more of the raw
materials it needs to make steel.

The bid trumped a C$274-million, 80-cents-a-share offer on
Sept. 22 from Nunavut Iron, a company incorporated in Canada by
its private equity backers solely to pursue the takeover.

EXTENDED OFFER

Baffinland has embraced the ArcelorMittal offer, and
rejected Nunavut’s bid, even adopting a shareholder rights plan
to stave off a hostile takeover from the latter.

The so-called poison pill was struck down by authorities
this week and Nunavut said it would extend its offer to buy
Baffinland to Dec. 2 as it considered its options.

“All I can say is that Nunavut Iron is considering what its
next step will be,” a company spokesman said, declining to go
into details. “We are considering our options.”

They would have to sweeten the pot considerably if they
expect to sway investors already committed to ArcelorMittal,
although the company’s share price suggests some investors
think a higher bid could be possible.

“We can’t speculate why they extended the offer at 80
cents,” said Baffinland Vice-Chairwoman Daniella Dimitrov,
adding that the company had been in extensive joint-venture
talks with ArcelorMittal before the Nunavut bid was announced.

“Obviously, ArcelorMittal’s present offer to shareholders
is in the context of a whole new process,” she said.

Local media have mentioned Switzerland’s Xstrata (XTA.L: )
and Brazil’s Vale SA (VALE5.SA: ) as companies that might be
interested in Baffinland’s assets, especially Vale as
production from the mine could challenge its market share in
Europe.

“If Baffinland were ever to come on, they would ship all of
their lump ore to Europe, and Vale would lose their lump
business,” Campbell said. “The lump market is 20-25 million
tonnes, and that is about what Baffinland would produce.”

Lump iron ore is high-grade, unprocessed ore.

Mary River is expected to produce about 18 million tonnes
of iron ore per year when it is first built and output could
almost be doubled relatively quickly according to some
reports.

ArcelorMittal wants to add Baffinland’s Mary River project
to its portfolio as it targets being about 80 percent
self-sufficient in iron ore supply.

($1=$1.01 Canadian)
(Additional reporting by Arnika Thakur in Bangalore; editing
by Peter Galloway)

DEALTALK-Baffinland shares trade above offers but no new bid