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March 11, 2008 |
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ZINIFEX LIMITED: Sees Major Acquisition Once Merger Sealed Australian miners Zinifex Limited and Oxiana Ltd. will be looking at major acquisitions once their AU$12 billion merger goes through, Zinifex CEO Andrew Michelmore, as quoted by The National. The size of the merged group, which will be the world's second-largest producer of zinc and a substantial producer of copper, lead, gold and silver, would enable it to look at acquisitions of up to AU$4 billion, Mr. Michelmore added. "I think both of us have been looking at how to grow our businesses," Mr. Michelmore told the Australian Broadcasting Corp. "There are some smaller opportunities, but there are some bigger opportunities, and I think they are a big step for each of the companies standing alone. If we put the two companies together, that's a much lower-risk opportunity for us, much better to fit into the portfolio, and I think that's what size does." According to The National, the two companies announced last week they had agreed to a "merger of equals", with shareholders of both miners taking a 50% stake each in the merged entity. The group will be renamed once the merger is approved by shareholders and implemented in June or July. The merged company would be looking to further build its copper and zinc base, but it will look also for other opportunities, The National reports, citing Mr. Michelmore. "We certainly like copper and zinc, we like the futures of them, so we'll continue to build those as our base blocks, Mr. Michelmore told The National. "But we certainly like other metals. Both of us like nickel." The National notes that Zinifex has made a recommended AU$852 million takeover offer for nickel miner Allegiance Mining NL. Both Zinifex and Oxiana have been seen as possible takeover targets by major global miners like Switzerland's Xstrata, and Mr. Michelmore did not rule out the combined company facing a bid. "You can never say never," Mr. Michelmore told The National. "I think one of the things we're seeing as we put information together is that the combined company is an even better opportunity for someone to pick up." About Zinifex Limited As reported on Mar 5, 2008, Fitch Ratings has placed Zinifex Limited's 'BB+' long-term foreign currency Issuer Default Rating on Rating Watch Positive, following the announcement of a merger proposal with Oxiana Limited, whereby both companies will own 50% each of a new company yet to be named. The rating watch is expected to be resolved within six months by which time the structure of the merged entity, including its debt structure, will be clearer. |
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