Mining giant Xstrata has agreed to acquire Australian iron ore developer Sphere Minerals for A$428 million (approx. €300 million), it has been announced.
Buying Sphere will increase Xstrata’s iron ore presence in Africa through the Australian company’s three iron ore projects in Mauritania. These include the $1.65 billion Guelb el Aouj development, operated asa 50/50 joint venture with Société Nationale Industrielle et Minière (SNIM), Mauritania’s state-owned iron ore producer.
There is also Askaf project, located 35 kilometres south of Guelb el Aouj; and the Lebtheinia project, located 90 kilometres from the coast.
The $2.50-per-share offer values Sphere at a 61 per cent premium to its $1.55 closing price yesterday.
Commenting on the deal, Peter Freyberg, Xstrata Coal chief executive, said: “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.”
Alexander Burns, managing director of Sphere Minerals, added: “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.”
He continued: “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.”
Mauritania has been exporting iron ore since 1963. Sphere has been active in Mauritania since October 2000, having secured the three large scale iron ore projects, all of which lie within close proximity of SNIM’s existing iron ore rail and port infrastructure.
Headquartered in Zug, Switzerland, Xstrata’s operations and projects span 19 countries worldwide.
