Switzerland-based mining colossus Xstrata plc has announced that, in relation to its $3 cash per share offer for Australia-based miner Sphere Minerals Limited, Xstrata subsidiary Sidero Pty Limited's acceptance for Sphere shares exceeds 50 percent of shares currently on issue, after reaching 51.12 percent.
According to a company release of November 11, Xstrata has given written notice to Pacific Custodians Pty Limited, the facility agent in respect of the acceptance facility, confirming that Xstrata will declare its offer, free from all conditions as soon as practicable.
The board of Sphere, on the other hand, has recommended its shareholders to accept Xstrata's offer, which is to remain open until 7:00 pm November 25, warning that otherwise they will become a minority shareholder in Sphere. Xstrata had set a deadline of November 12 to gain at least 50 percent acceptances otherwise it said it would pull the offer, which was extended after a 50 percent threshold was reached.
The value of $3 cash per share offer, which values the company at AU$514 million ($516 million), has 94 percent premium to the pre-announcement closing Sphere share price.
Xstrata seeks to be active in the iron ore market, which carries high margins, to compete with larger rivals - Vale, BHP Billiton and Rio Tinto.
Sphere has interest in three projects in West African country Mauritania including half of the $1.65 billion Guelb el Aouj development with Societe Nationale Industrielle et Miniere, the country's state-owned iron ore producer. It is estimated that the mine can produce around 7 million mt of ore annually, with potential to increase.