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BHP Billiton launched a A$204 million ($188.8 million) takeover offer for prospector United Minerals on Friday, in a bid for more ground in the iron ore rich Pilbara district of west Australia.
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AP |
The offer is conditional on United dropping a deal to sell an 11.4 percent stake to China Railway Materials Commercial Corp (CRM). That deal has yet to receive Australian foreign investment clearance.
BHP's offer also hinges on UMC breaking a preliminary agreement to sell CRM 30 million tonnes of iron ore over 10 years.
BHP is offering A$1.30 a share in cash for all UMC shares, a 43 percent premium to last traded price of A$0.91 on Tuesday.
Brett Lambert, managing director of Thundelarra Exploration, United's top shareholder with a stake of 13 percent, this week told Reuters his stake was up for sale, but would not indicate at what price.
UMC's iron ore deposit lies between two of Rio Tinto's haulage rail lines and is a western extension of a zone leading to BHP's large Area C and Area B mines 20 kilometres away.
BHP and Rio separately plan an iron joint venture in the Pilbara.
Geologists believe the deposit contains about 158 million tonnes of ore, more than one year's total output for BHP, the world's No. 3 producer.
"BHP Billiton is the logical owner and developer of the deposit given the proximity to BHP Billiton's iron ore deposits and established mine and infrastructure," BHP's iron ore division head, Ian Ashby, said in a statement.
The purchase of UMC and a quick development start could accelerate BHP's plans to lift its annual Australian iron ore production 50 million tonnes to 205 million by 2011.
Chinese companies are making a big push to help so-called "minnows" such as UMC get up and running as Beijing seeks to reduce its reliance on Rio and BHP for Australian iron ore.
Funds have been promised for everything from bulldozers to rail lines to guarantee supply agreements even before the holes are dug.
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