Consolidation in the Australian nickel sector looks far from over, following recent speculation and events surrounding Perth-based Albidon Ltd.
Consolidation in the Australian nickel sector looks far from over, following recent speculation and events surrounding Perth-based Albidon Ltd.
Following on from the acquisition of Perth-based Jubilee Mines by international miner Xstrata and Zinifex’s majority acquisition of Allegiance Mining NL, Albidon could be the next company up for the taking.
Its attraction to potential predators has only heightened as its Munali nickel project starts production in the very near future, making it one of only two nickel mines worldwide to start production this year.
Adding to its allure is its share price, which Fat Prophets Gavin Wendt said had been trading at modest levels and therefore made the company a good buy.
“Given the market and that they’re just about to hit producer status, the common theme seems to be growth right through the sector,” Mr Wendt said.
“It’s a case of get bigger or get taken over in this sort of market, and I would imagine that there’d be a lot of companies running the ruler over Albidon.”
While speculators line up possible companies that could launch a takeover bid, all eyes are on resource investment house Lion Selection Ltd and it’s partly owned private equity fund African Lion, which holds a 20.5 per cent stake in Albidon.
Last month, Albidon was forced to note media speculation that African Lion could sell its stake however stopped short of confirming or denying the rumours.
Then adding fuel to the fire was Newcrest Mining Ltd’s agreement with Perth-based Beadell Resources to sell its 70 per cent share of the Cracow gold mine.
That agreement is conditional upon resource investment fund Lion Selection, which holds the remaining 30 per cent in Cracow, waiving its pre-emptive right to acquire Newcrest’s interest.
So far the fund has not decided its position on the mine – it has until the end of June to do so – but its part ownership of African Lion, which holds the 20.5 per cent Albidon stake, has given legs to takeover talk over Albidon.
Lion Selection, through private equity fund African Lion holds an indirect 5.7 per cent interest in Albidon.
WA Business News understands that, based on this indirect holding and Lion’s goal of becoming a gold miner in its own right, Lion could sell what shareholding it can to acquire Newcrest’s stake in Cracow.
A Lion spokesperson said if African Lion were to sell its Albidon stake, it would only net it around $40 million, which is not enough to cover the purchase of the mine.
“Cracow and Albidon are mutually exclusive; one’s with Lion and the other with Africa Lion,” the spokesperson said.
“If Lion was a direct shareholder in Albidon, obviously it would have more of a tangible difference on the decisions that the Lion board makes.”
Last week Albidon announced it had appointed the Royal Bank of Canada as its corporate advisor to assess potential corporate opportunities and progress ongoing growth strategies.
