Xstrata Bids for Sphere and its Iron Ore Projects

Xstrata plc and Sphere Minerals entered into an agreement in late August 2010 whereby, upon receipt of necessary approvals, Xstrata will acquire Sphere for approximately A$428 million in cash. Sphere in an Australia-based junior company with interests in three iron ore projects in Mauritania, West Africa: the largescale Guelb el Aouj project through a 50:50 joint venture with Société Nationale Industrielle et Minière (SNIM), Mauritania’s state-owned iron ore producer; the near-term, 100%-owned Askaf project, located 35 km south of Guelb el Aouj; and the 100%-owned Lebtheinia project, located 90 km from the coast.

Xstrata’s offer is conditioned upon on acceptance by 90% of Sphere’s shareholders.

Xstrata is not currently a producer of iron ore. Upon closure of the transaction, Sphere’s properties will be placed in Xstrata’s Xstrata Coal commodity business.

“The acquisition brings together Xstrata Coal’s proven bulk mining and project development capabilities and Sphere’s team of experienced iron ore professionals with a successful track record of operating in Mauritania,” said Xstrata Coal Chief Executive Peter Freyberg.

The Guelb el Aouj project is based on coarse magnetite-quartzite deposits that currently have JORC-compliant resources and reserves of 851 million mt and exploration targets estimated at l.5 billion to 2 billion mt. Sphere earned its 50% interest in the project by funding a feasibility study for development of a project producing 7- million mt/y of direct reduction pellets. The property is believed to have potential to produce as much as 30 million mt/y.

As featured in Womp 2010 Vol 08 - www.womp-int.com