Xstrata tables $1-billion bid for S Africa''s Eland Platinum

Swiss-based Mining group Xstrata Alloys has launched a $1-billion takeover of South African platinum producer Eland Platinum, saying it had the "irrevocable undertakings of support"of investors controlling 51 per cent of Eland''s shares and the backing of its board of directors.

The London Stock Exchange-listed Xstrata said that its offer for Eland was 53 per cent higher than the average share price when calculated over a 30-day period that valued the South African company at 105 rand (approximately $14.98) per share, to be financed through Xstrata Group''s existing cash resources.

Xstrata will also acquire an additional 9-per cent stake in Eland''s Elandsfontein Project for an additional $14 million, increasing its own interest to 74 per cent in the project that has a shallow 183 million tonnes UG2 resource with an estimated 22.7 million ounces of platinum, palladium, rhodium and gold

The offer is subject to various regulatory and other approvals, including acceptance by at least 75 per cent of Eland shareholders.

Boosted by strong demand and rising commodity and metals prices mining companies have been looking at mergers to add capacity and reduce costs through synergies in combined operations. Last year Xstrata bought Canadian nickel miner Falconbridge and attempted to buy another Canadian miner, LionOre and also Australia''s Gloucester Coal.

The Swiss company says that Eland''s production of concentrate in the very near term and strong growth pipeline would provide it an ideal platform from which to develop a world class platinum group metals business.