Zinifex makes bid for Allegiance Mining
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SYDNEY (Reuters) - Australian zinc producer Zinifex Ltd launched an all cash bid worth up to A$775 million ($668 million) for nickel miner Allegiance Mining on Monday as it looks to diversify out of zinc and copper.Zinifex said on Monday the offer for Allegiance would be two tiered at 90 cents a share for the first 30 percent of Allegiance, rising to A$1 a share for all shareholders if it gets more than 30 percent.At A$1 per share, the offer is worth A$775 million, based on Reuters' calculations, which is a 41 percent premium to Allegiance's 71 cent closing price on Friday.Zinifex, which has a A$1.7 billion war chest for acquisitions after spinning off its zinc smelting interests into a joint venture, said the deal would be an entry point into nickel.Allegiance owns the Avebury nickel project in Tasmania, which is due to start production in early 2008 with expected production at 8,500 tonnes per annum. Zinifex owns the nearby Rosebery mine in Tasmania and Century mines in Queensland."Avebury is just the start of our strategy to vigorously grow in Zinifex's chosen base metals of copper, nickel and zinc," Zinifex Chief Executive Andrew Michelmore said in a statement.Zinifex spun-off its zinc smelting interests into a joint venture with Belgium's Umicore earlier this year to create Nyrstar , the world's biggest zinc producer.Zinifex said last month it was prepared to go hostile in a search for acquisitions.Merger and acquisition activity in the mining sector has been spurred on by BHP Billiton's proposed offer for rival Rio Tinto , worth around $140 billion when it was announced.($1=A$1.16)(Reporting by Michael Smith; Editing by James Thornhill)
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