Billiton trumps Noranda’s bid for Rio Algom

The big story during the Aug. 23-29 report period was the surprise $1.7-billion ($27 per share) cash offer for Rio Algom by British giant Billiton, which currently produces aluminum, iron ore, nickel and coal but has no major copper assets.

The offer, unanimously endorsed by Rio’s board, trumps the previous week’s hostile $1.5-billion ($24.50-per-share) offer from Noranda. The latter, if it succeeds with a follow-up bid, intends to sell half of Rio Algom to Chile’s Codelco (CORPORACION NATIONAL DEL COBRE DE CHILE).

In anticipation of a third offer, Rio Algom shares once again surged above the bid price, rising $2.45 over the week to $28.70. Noranda shares, meanwhile, fell 45 to $14.50.

With renewed attention focused on the base metal sector, several producers enjoyed heavier trading: Teck‘s B shares climbed 80 to $10.75; Cominco gained 70 to $21; Boliden fell 7 to $1.25; and Breakwater Resources edged up 8 to $2.40.

Nickel miners rallied as nickel prices rose a dime to US$4.02 per lb. and inventories tightened to near-critical levels: Inco jumped $1.35 to $25.25; Falconbridge was up 65 to $18.75 as the strike in Sudbury entered its fifth week; and Sherritt International soared 50 to $5.05.

By comparison, the precious metals sector was much quieter as gold prices languished, rising US15 on little volume to reach a London morning fix of US$272.60 per oz. on Aug. 30.

Canada’s gold majors were mixed: Barrick Gold fell 60 to $23.60; Placer Dome rose 20 to $13; Franco-Nevada Mining plummeted 75 to $15.25; Kinross Gold was unchanged at 96; TVX Gold gained 4 to $2.32 as it announced it would retain NM Rothschild & Sons as a financial advisor; and Cambior rose a penny to 53.

The top-performing junior was North American Palladium, which soared $2.90 to $15.15 after announcing a quarterly profit of $11.7 million (or 82 per share) on revenue of $25.4 million. The improvement was due to higher metal prices and a hefty boost in quarterly production to 25,842 oz. palladium, 1,520 oz. platinum and 1,391 oz. gold from the Lac des les open-pit mine in northwestern Ontario.

Aber Diamond, which continues to be seen as a potential takeover target, jumped 85 to $12.55. The rise is attributed to news that Aber’s partner at the Diavik diamond project in the Northwest Territories, Rio Tinto, has made a cash offer of A$1.85 per share for all of the issued shares of Ashton Mining. Ashton is Rio’s partner at the Argyle diamond mine in Australia. The offer beats an earlier A$1.62-per-share offer by De Beers Consolidated Mines.

During the period, De Beers all but completed its takeover of Canadian junior Winspear Diamonds, owner of the Snap Lake diamond project in the Territories. De Beers says it has acquired 91% of Winspear’s outstanding common shares, and has extended its bid to Sept. 8.