Metals News
UPDATE 2-Exxaro Launches $349 Mln Bid for African Iron
industry news

* Exxaro aims to secure 75 percent acceptance

* Exxaro seeking operational exposure in iron ore

* African Iron shares jump after news on deal

Jan 11 (Reuters) - South African diversified miner Exxaro Resources made a bid worth up to A$338 million ($349 million) for African Iron, targeting the Australian-listed company's Mayoko iron ore project in the Republic of the Congo.

The cash offer of up to A$0.57 a share sent African Iron's shares up, to close 40 percent higher at A$0.56 on Wednesday, indicating investors expect the deal to go through.

Exxaro, South Africa's second-largest coal producer and a major supplier to power utility Eskom, is scouting Africa and Australia for projects to expand into other commodities, especially iron ore and also copper.

Exxaro said Africa Iron's assets would provide it with an opportunity to meet its objective of gaining exposure in iron ore. It believed the deal would go through.

Last year, Exxaro's $130 million bid for Australia's Territory Resources was trumped by Noble Group, but the company said it remained keen to buy iron ore assets and eventually to produce 10 million tonnes a year of the key ingredient for steel-making.

"(The bid for African Iron) is good. The project is in its early stage and it doesn't break the bank for them (Exxaro), they can afford that ... they can decide how they want to build the project and the project itself seems reasonably good in terms of resources," said a Johannesburg-based analyst who asked not to be named.

Production at the project is expected to start in 2013.

Exxaro has lined up a 19.99 percent stake from African Iron's top shareholder, Cape Lambert Resources, which owns a further 5.26 percent stake.

Key to the outcome will be African Iron's other big shareholder, Equatorial Resources, which owns the neighbouring Mayoko-Moussondji project.

Equatorial, which bought a 19.99 percent stake in African Iron last year at A$0.30, did not say on Wednesday whether it would accept the offer.

"Exxaro's announced takeover offer for African Iron confirms the significant exploration and development potential of iron projects in the Mayoko region and highlights the advantages of the investment friendly jurisdiction of the ROC," Equatorial said in a statement to the Australian stock exchange.

African Iron expects the deal to go ahead with 75 percent approval, even if Equatorial doesn't accept the offer.

Exxaro has already received approval from Australia's Foreign Investment Review Board and South African approvals.

Cape Lambert's shares closed 2.9 percent up at A$0.54 and Equatorial's shares ended 0.52 percent lower at A$1.91, after rising to more than A$2.00 after the news on the deal.

Exxaro shares were down 0.03 percent at 173.50 rand as of 11:08 GMT.

Exxaro is being advised by Investec and law firm Gilbert+Tobin. African Iron's legal adviser is Freehills.



Exxaro Resources
African Iron
Mayoko iron ore project
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