News Bulletin

The first quarter of 2011 - a hive of M and A activity

The first quarter of 2011 so far has been a hive of M&A activity. The rumour mill continues to churn, with the media frequently speculating potential targets and bidders.

Iron Ore remains a key focus, specifically in the Pilbara region where we have already seen Iron Ore producer, Atlas Iron Limited initiating an offer on explorer, Giralia Resources Limited, and Regent Pacific Group Limited bid for BC Iron Limited.

The race is on in the Pilbara to get many of the developing projects in the area into production in the current high price environment. Miners planning to jump this gap from developer to producer are faced with the speculation that the current Iron Ore price levels may not hold. Companies in this position face the risk of becoming sitting ducks for the majors, who may start plucking assets at a discount to current market levels.

Currently, the region is highly populated with miners yet to produce, but if the price falls, it may present an opportune time for producers to sweep in, expand their holdings and resultantly heighten the already lofty barriers to entry in this market. The time may be nigh for miners not currently producing to consider an exit strategy and it’s possible that takeover activity may be a godsend for such companies.

Sources: ASX company announcements

     

      

     

     

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