Xstrata Coal, part of the big Swiss-UK mining house, Xstrata, continues to open its wallet for Australian mining assets, especially coal.
It has now offered or done deals worth around $2.3 billion so far in NSW alone this year.
It yesterday revealed a $960 million cash offer for Hunter Valley coalminer Resource Pacific months after its failed tilt at Gloucester Coal.
The $2.85 a share offer easily topped a hostile, $754 million paper offer from Queensland coalminer New Hope which had been rejected by the Resource Pacific board.
The offer is 26% above the implied New Hope price and valuation, but it was 6c under Resource Pacific's closing price Tuesday.
Resource Pacific shares had risen 20% in the last hour or so of trading Tuesday
Yesterday punters pushed the price well above $3 a share, to a peak of $3.06, before they eased back to close at $3.01, up 10c on the day.
The market is punting on a counter offer, but New Hope will have to add cash to its all share offer to have a chance and seeing it didn't include a cash component first up, that might be a struggle.
The offer came two months after Xstrata agreed to pay $982 million for two mines from cash-strapped Centennial Coal, including its newly approved Anvil Hill mine in NSW. Xstrata paid $425 million for Anvil Hill mine alone.
Xstrata has 10 mines in the Hunter Valley area of NSW and earlier this year it failed in an attempt to purchase another regional miner, Gloucester Coal for $391 million when Hong Kong commodities trader Noble Group and private US coal group AMCI purchased blocking stakes in the target. Noble now holds 19% of Gloucester.
Resource Pacific has encountered problems with meeting its production targets at the Newpac mine in the Hunter Valley because of problems with new mining methods and equipment delays.
The proximity of the Resource Pacific mines to Xstrata's will allow for significant cost savings over time, if the offer succeeds.
"Our cash offer recognizes the full value of Resource Pacific's Newpac mine and offers an attractive and risk-free premium to shareholders,'' Xstrata Coal, CEO, Peter Coates, said in a statement to the ASX yesterday.
Xstrata has grabbed a head start on New Hope by reaching agreement with Resource Pacific's largest shareholder, Marubeni Corp., to buy the Japanese trading house's 10.2% stake, to give it a 15.56% stake.
Xstrata this morning emerged with a 15.5% interest in Resource Pacific after the Anglo-Swiss miner entered a cooperation agreement with Japan's Marubeni. Marubeni held a 10.2% interest.
Like so many Hunter Valley coal mining companies, resource has the capacity to produce washed high quality soft coking coal for the steel industry, lower quality coal for the pulverised coal injection process for the steel industry (especially in Japan), or to switch to unwashed thermal coal for the electricity and cement industries.
