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Jubilee Surges On $3.1 Billion Offer
October 29th. 2007 - Australasian Investment Review – (AIR)

Jubilee Mines (JBM) rose by as much as 42% today after Swiss mining giant Xstrata made a $3.1 billion bid for the Western Australian mining and minerals exploration company.

Xstrata, which is seeking to expand its nickel business worldwide, has offered 23 dollars cash per Jubilee share, representing a 35 percent premium to Jubilee’s closing price on Friday.

The Jubilee Board of Directors has unanimously recommended that shareholders accept Xstrata’s Offer in the absence of a superior offer.

As part of the deal, the Jubilee directors and senior management have pledged to sell their combined 17.5 per cent stake to Xstrata even if a higher offer emerges.

“This is a great offer to be able to recommend to Jubilee shareholders and an important milestone for Jubilee, representing the culmination of 20 years of exploration success, growth and development,” said Jubilee Executive Chairman Kerry Harmanis.

“The Jubilee Directors believe that Xstrata is well placed to continue Jubilee’s development, and that Jubilee’s employees, suppliers, contractors and other stakeholders will benefit from Xstrata’s capital, expertise and significant nickel mining and marketing capabilities.”

Xstrata and Jubilee have entered into a Bidding Agreement, which includes customary deal protection including traditional “no shop” and “no talk” clauses, and the payment to Xstrata of a break fee of A$31.3 million in certain circumstances where a deal is not completed.
If successful, this deal will mark Xstrata’s first move into Australia nickel mining.
Jubilees’ prime assets include its Cosmos Nickel Project as well as a number of other projects in development and exploration projects, all in Western Australia.

“The combination of Jubilee with Xstrata Nickel marks an exciting step in our strategy to create a world-class nickel business, and represents our entry into Western Australia, one of the world’s great nickel provinces, “ said Xstrata CEO, Ian Pearce.

“Jubilee offers Xstrata Nickel immediate access to additional production, geographic diversification and introduces substantial near term growth potential into its portfolio.”

“We look forward to optimizing Jubilee’s growth potential, creating additional employment opportunities and increasing capital and community investment in the region, for the benefit of shareholders, employees and the stakeholders in Jubilee’s current and future operations.”

Mr Pearce said Xstrata will establish a regional base in Perth for its activities and future growth in Western Australia, which is to be managed by existing members of Jubilee.

Xstrata’s offer is conditional upon 90% acceptance and approval from Australian regulators.

Xstrata expects to dispatch its Bidder’s Statement to all Jubilee shareholders by the end of November, with the offer to be available for a month subsequent.

Jubilee closed the day at $23.81, up by 39%. On Friday, the nickel miner closed at $17.10.

Perseverance Valued At $282 Million On Bid

Shares in Perseverance Corporation (PSV) rose by as much as 35% today after it announced that Northgate Minerals is making a bid to acquire the Australian goldminer, valuing it at $282 million.

The Transaction will be implemented via schemes of arrangement between Perseverance and its shareholders by which a wholly owned subsidiary of Northgate will acquire all of the shares in Perseverance.

Under Northgate’s offer, Perseverance security holders would receive 20 cents cash per ordinary share; 8 cents cash for each of the Perseverance options issued as part of the recent $26.5 million placement as well as $100,000 plus any accrued interest per convertible subordinated note.

The directors of Perseverance have unanimously agreed that the transaction is in the best interests of security holders and recommend that all Perseverance shareholders vote in its favour, in the absence of a superior proposal.

Perseverance Corporation Limited is an Australian based gold producer and explorer, operating gold mines at Fosterville and Stawell in Victoria, and with exploration tenements covering over 7,700km along major trends within the Victorian goldfields.

Northgate Minerals Corporation is a Canadian gold and copper mining company with assets in north-central British Columbia and northern Ontario.

“We believe Northgate’s offer takes into account the current status and value of the existing operations and exploration potential,” said Chairman of Perseverance, John Quinn.

“In addition to providing our shareholders with a significant premium, I expect that the operational expertise and financial resources of Northgate should allow the assets to prosper going forward.”

The Perseverance Directors have stated their intention to vote all their securities in favour of the Schemes.

Perseverance said successful completion of the transaction will create a leading mid-tier gold producer with three producing gold mines in politically favourable mining jurisdictions.
“Northgate has the management expertise and financial capability to efficiently fund current development projects, accelerate mine improvements at Perseverance and capitalise on other growth opportunities,” the company said.

Mr Quinn said Northgate has a plan to contribute the capital to fund the required development of Fosterville’s underground infrastructure and to reinvigorate exploration on the Company’s extensive tenements.

Northgate also has agreed to acquire all of Perseverance’s existing bank debt of $33.5 million and to provide a new bridging facility of up to $25.0 million.

Northgate has agreed to acquire the bank’s exposure of approximately $48.0 million to Perseverance’s gold hedges and, after the close of the transaction, Northgate will close out this hedge position, the company said.

CEO of Northgate Ken Stowe said the company’s development goal has been the acquisition of a 200,000 ounce producer in a politically stable jurisdiction with exploration potential and the opportunity for Northgate management to secure additional value through its track record as a strong operator.

“With this acquisition of Perseverance, we will add two attractive assets in Australia, which allow us to meet that goal.

“This acquisition will add over 200,000 ounces of production in 2008, in the prolific Victorian gold belt in Australia with over 7,700km2 of exploration area.”

Mr Stowe said Northcoat also intends to expand the existing Perseverance exploration program to identify additional reserves and extend the life of the camp.

Meetings of Perseverance shareholders and optionholders to approve the Schemes are expected to be held in mid January 2008 with the transaction planned to be completed in early February 2008.

Perseverance changed hands in heavy volumes today, with almost 37 million shares changing hands, more than 6 times its daily average.

The stock closed the day at 19 cents, a 4.5 cent gain on Friday’s close.

Otto To Make $30 Million Through Galoc Acquision

Shares in Otto Energy (OEL) rose by 11% today after the Australian oil and gas company announced that it had acquired an 18% interest in the Galoc Oilfield in offshore Phillippines from Goloc Production Company.

Otto’s share of the profits generated from the Galoc field production in 2008 is anticipated to be more than $US30m.

Drilling of the Galoc development wells is already underway and the field is expected to commence production in April 2008 at a gross production rate of approximately 18,000 barrels of oil per day (bopd), with Otto’s beneficial share approximately 3,300 bopd.

“The Galoc Field acquisition is an excellent strategic fit for Otto’s Philippines portfolio and further strengthens the company’s vision to becoming a significant oil and gas producer,” said CEO of Otto Energy, Alex Parks.

“With near-term production expected in April 2008, the Galoc Oil Field will provide cash flow to expedite the progress of Otto’s other longer term exploration activities in the region.”
GPC has a debt finance facility in place, thus Otto’s share of the project is fully funded through to first oil.

Alex parks said revenues generated from the Galoc oil field will be used to fund Otto’s other “aggressive exploration programs” in the Philippines.

Completion of the agreements is subject to necessary shareholder approvals at the Company’s annual general meeting.

5.5 million Otto shares changed hands today, more than 7 times its average daily volume.

The stock rose by 4 cents to close at 37 cents.

Copyright Australasian Investment Review.
AIR publishes a weekly magazine. Subscriptions are free at www.aireview.com.au




	
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