RE: Would Xstrata Sell Falcondo to GMIMakes sense, however Xstrata says they are looking for nickel acquisitions. This could be a smart time for them to make a cheap bid for GMI's nickel. Ni is weak and GMI share price implies low expectations for nickel value.
Sale of the Falcondo smelter is an interesting idea, but I think it would be hard for GMI to come up with cash in the current market so no deal unless XTA were willing to be paid in GMI debt or equity.
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Xstrata: Market Turmoil Creates Nickel M&A Opportunities
DOW JONES NEWSWIRES
August 6, 2008 5:44 a.m.
KALGOORLIE, Australia (Dow Jones)--Xstrata PLC (XTA.LN) said Wednesday the turmoil in debt and equity markets coupled with weakness in nickel prices have now created nickel acquisition opportunities for the Switzerland-based miner.
"We've looked at some opportunities which, just given the price coming off and the inability to raise funds, we have seen some almost distressed situations which represent good value," Xstrata Nickel Chief Financial Officer Shaun Usmar told reporters on the sidelines of the Diggers and Dealers conference in Kalgoorlie.
Usmar said he expects some improvement in the nickel price late in the third quarter of this calendar year or early in the fourth quarter, and that the market didn't seem to be fully recognising that falling prices are making some higher-cost sources of supply unviable.
Xstrata is currently developing the US$3.85 billion Koniambo laterite nickel project in New Caledonia and Usmar said the miner has looked at other potential laterite projects and would be willing to pursue them as long as it is convinced that the technical risks are not too high.
Laterite nickel projects involve much more complicated processing than nickel sulphide deposits and many projects around the world have suffered lengthy delays and cost blowouts, including the Ravensthorpe mine in Western Australia recently opened by BHP Billiton Ltd. (BHP.AU).