Trading Market reported that Shares in Anglo Russian iron ore miner Aricom PLC were up 50% after the company announced it was in preliminary discussions with gold miner Peter Hambro Mining about a possible offer for the company at a substantial premium to its share price.
Aricom said that the preliminary discussions may or may not lead to an all share offer, and that there is no certainty that any offer will be forthcoming. Aricom, which spun off Peter Hambro in 2003 and Peter Hambro declined to provide further comments. It said late 2008 that it will slow the development of its main iron ore projects to reduce funding requirements in an uncertain economic environment.
Peter Hambro is expected by analysts to be cash self sufficient in 2009. Mr Mikhail Stiskin analyst from Troika Dialog said that Aricom would benefit from the possible deal because, as a relatively small miner, it would hardly be able to get external financing for its Greenfield projects, adding that the combined company would find external funds for its projects easier.
Aricom said that it was in preliminary discussions with Peter Hambro, which focuses on gold and that the talks may or may not lead to an all share offer being made at a substantial premium to the group’s current share price. The company, which was until recently a member of the FTSE 250, was spun out of its larger peer in 2003, and the two group’s have maintained a close relationship ever since, with Jay Hambro, Peter’s son, running Aricom, so the deal is expected to move reasonably quickly.
Both groups think that given the tough financial conditions, and weakening commodity prices, they would be much stronger together again. This is particularly the case for Aricom, whose projects still require significant investment and are not economically as attractive as they once were in the current environment. Further down the line a combination would also give the enlarged group more political clout. Aricom rose 5½p to 16p and Peter Hambro gained 7¼p to 405p.
(Sourced from tradingmarket.com)
