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UPDATE 2-CAMEC gets offer approaches, shares soar

Published 07/16/2009, 11:34 AM
Updated 07/16/2009, 11:48 AM
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* Statement follows press speculation

* Shares up 33 percent (Adds analyst comment, background, updates shares)

By Julie Crust

LONDON, July 16 (Reuters) - Central African Mining and Exploration Co (CAMEC) said on Thursday it had received offer approaches, sending shares in the diversified producer up 40 percent.

Shares in the Africa-focused firm, whose assets include copper, platinum and cobalt operations, rose as much as 40 percent to 16.75 pence. At 1526 GMT, the shares were up 33 percent at 15.75 pence, valuing the company at about 434 million pounds ($712 million).

Brazilian mining group, Indian-focused mining group Vedanta Resources Plc, Kazakh miner Eurasian Natural Resources Corp Plc, and a Chinese materials group have all been mentioned as potential buyers.

"Vale probably is our first pick in the speculative sense," said Nick Mellor, an analyst at Ambrian Capital.

He noted that Vale recently opened a regional office in the Democratic Republic of Congo.

The DRC is where CAMEC's majority-owned Mukondo Mountain cobalt and Luita copper project are based.

"Vedanta might be interested in the copper assets," said Mellor. "Although CAMEC may wish to retain the copper assets themselves and become a pure copper miner."

CAMEC also has coal operations in the DRC, as well as holdings in the Bokia platinum project in Zimbabwe, a bauxite operation in Mali, and a stake in a flourspar operation in South Africa.

Mellor said a lot of value can be added by the potential buyers just moving up the development curve with CAMEC's assets.

On a trading multiple basis, CAMEC's assets would be valued at a higher level if they were acquired by a larger mining group whose assets typically have a higher valuation than those of their smaller rivals.

ENRC, the world's largest ferrochrome producer, earlier this month was said to be considering a bid for Sierra Leone-focused African Minerals, banking sources said.

Shares in CAMEC, whose chairman is former England cricketer Phil Edmonds, have jumped eight-fold this year.

The company has been boosted by higher copper and cobalt prices as well as a flurry of positive corporate news including the resumption of copper and cobalt production in the DRC, resource upgrades and an offtake agreement. (Additional reporting by Rosalba O'Brien; Editing by Rupert Winchester) ($1=.6095 Pound)

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