Mining

Hostile M&A makes a comeback

28 Nov 2004

There has been a rash of hostile action: Xstrata/WMC; Harmony/Gold Fields; Melrose/Novar; EADS/Thales; Bollore/Havas. The reason? Predators want bargains but targets don t want to sell on the cheap. Investors, though, may have a different view from managers.

Gold stocks aren’t sharing in gold boom

26 Nov 2004

Normally, unhedged gold stocks are a geared play on bullion. But not this year. There are three reasons why. The surging gold price may not be sustainable; mining firms costs are rising in dollar terms; and the industry is on an investment spree.

Gold Fields defence moves off the back foot

22 Nov 2004

For the first time, the gold miner has started to talk about value as it tries to repel hostile bidder Harmony. That s good. But there are two problems. The approach is inconsistent with recent strategy. It is also partly valuedestructive.

Xstrata goes hostile in A$7.4bn WMC cash bid

22 Nov 2004

The Australian miner has snubbed its bid but Xstrata doesn't want to pay a bigger premium on what it already sees as a frothy share price. So Xstrata is simply bypassing the board and taking its offer direct to investors.

Harmony’s clever tactics look like prevailing

15 Nov 2004

The South African miner is close to snaffling the larger Gold Fields, despite offering its own unattractive shares. Harmony has exploited Russian and South African politics, and a regulatory loophole. But Gold Fields' own errors made it easier.

Gold Fields should reconsider Iamgold deal

3 Nov 2004

The South African miner's case against attacker Harmony is strong. But so is Harmony's case against the proposed Canadian connection. Gold Fields is legally bound to recommend the deal. But new South African currency regulations provide a reason to be less enthusiastic.

Is Harmony bold or desperate?

29 Oct 2004

Either the company's management is irrational or it thinks Harmony's stock is overvalued. The miner's shareholders will give up value to get control of the Gold Fields. Optimistic synergy targets barely compensate.

Xstrata makes pre-emptive $5.4bn approach to WMC

28 Oct 2004

Mick Davis, Xstrata s CEO, clearly wants to make his company a mining major. But to date he's been price sensitive. He's trying to win over the Australian miner by making a cash approach. This may succeed, but if there's a bidding war, Xstrata may not win.

Russians back all-paper bid for Gold Fields

18 Oct 2004

Norilsk is offering its 20% of Gold Fields to upstart Harmony, mainly because it wants a safer haven outside of Russia. But other Gold Fields shareholders might be less enthusiastic. They have to believe that Harmony management offers a big improvement.

Xstrata buys back 10% of its shares

12 Aug 2004

It is a good time to be miner, especially one with mediocre assets. Xstrata would like to grow, but does not want to buy at the peak. It is starting to act as if it thinks the good times will last. But don't imagine that the mining group's expansionary management has abandoned acquisition ambitions. The buyback is reversible. And Xstrata thinks the commodity price boom will endure. So it's probably only a matter of time before it's sniffing out another big deal.

Commodities not entering a new paradigm

13 Jul 2004

Sure, prices are up. But the move is cyclical. As always, today s higher prices will lead to higher investments, and then to lower prices. Optimists are starting to say that this time will be different. But they underestimate the power of innovation.

Newmont merger talk may be fool’s gold

7 Apr 2004

Rumours of a Newmont bid for Canadian rival Barrick are persistent. And there is some logic to a deal. But Newmont should not let the frenzy of the gold market get in the way of good sense a Barrick takeover would be too expensive.

Gold bugs are on the G7 lookout too

4 Feb 2004

It increasingly looks as though the G7 won t muster any more support for the dollar this weekend than they did last November. If the dollar resumes its fall, the dollar price of gold would soar and, for the first time, rise in other currencies too.

Vedanta IPO shows volatility of mining stocks

1 Dec 2003

The Indian miner is due to float in December near the peak of the cycle and valuation ranges are huge. That makes investors lives harder, but is par for the course for the sector, which can trade at between 0.5 and 2 times NAV over the cycle.

Vedanta has all the makings of a hot IPO

21 Nov 2003

The Indian miner pushes many of the right buttons. It s a commodity play and it offers Chineselike growth, only without the communism. But whether investors should pay a premium for this is debatable. A luminarypacked board can t erase all corporate governance concerns.

AngloGold tightens its grip on Ashanti

15 Oct 2003

But AngloGold has the firm support of Ashanti s largest investor, Lonmin. Randgold looks outmanoeuvred. The South African miner has upped its $1.4bn bid. This may not be a knockout offer. It s still lower than Randgold s.

Rhodia CEO forced out

3 Oct 2003

The company needs their backing if it is to put its finances on an even keel. About time too. JeanPierre Tirouflet had lost the confidence of investors.

Randgold goes hard on $1.8bn Ashanti offer

24 Sep 2003

Rising gold prices have done wonders for Randgold s share price, and its audacious reverse takeover offer for the Ghanaian group. In just six weeks, the value of its bid has increased by a quarter, while Anglogold s rival offer has risen by less than 15%.

BHP rides high on economic recovery hopes

28 Aug 2003

Mining stocks have been among this year's best performers. Hopes of a global recovery and frothy commodity markets have lit up share prices. But the rises have come too far, too fast. Valuations now leave little margin for error.

Randgold makes indicative offer for Ashanti

11 Aug 2003

The UKbased gold miner has offered a bigger premium than rival suitor AngloGold. But the financing of the bid looks flaky. The bid battle is about political concessions as much as value. Ghana s government will have a big say in who walks off with the prize.