Xstrata wins first round in battle for miner Sphere

By James Regan

SYDNEY (BestGrowthStock) – Australia-listed iron ore prospector Sphere Minerals (SPH.AX: ) on Friday fended off an attempt by its biggest shareholder to derail its agreed $522 million takeover from global miner Xstrata (XTA.L: ).

Sphere said it had received a counter-proposal from China’s Sin-Tang Development Pte Ltd, which owns 12.74 percent of the company, offering to fully underwrite an A$111 million ($112.6 million) share issue at A$3.25 a share and arrange for $350 million in debt.

The proposal held a “significantly higher level of risk and uncertainty” for Sphere shareholders than Xstrata’s offer, Sphere said.

Sin-Tang proposed that the funds be used to develop Sphere’s Askaf mine in Mauritania. The deposit sits 35 km (22 miles) south of its larger Guelb el Aouj project, a joint venture with Mauritania’s government.

The cost of development is estimated at around $300 million.

Sphere’s shares have been suspended from trade, pending an update on the potential new offer, which was announced after the close of trading.

The stock last traded at A$2.94.

Xstrata holds 8.15 percent of Sphere.

This week Xstrata raised its offer to A$3.00 from A$2.50.

Xstrata, one of the world’s biggest base metals and coal miners, has only dabbled in iron ore, a fast-growing bulk commodity used to make steel. Its only other exposure is a small magnetite iron ore extraction plant it is building in Australia.

Xstrata’s offer closes November 12 unless it gains more than 50 percent acceptances. It has said the offer is final and would not be raised again.

(Editing by Michael Smith)

Xstrata wins first round in battle for miner Sphere