MEL to pay $25m for 45% more in Aussie co Lincoln

June 23, 2008

June 23rd (The Economic Times) – Bangalore-based iron ore miner Mineral Enterprises (MEL) plans to shell out $25 million for an additional 45% stake in Australian firm Lincoln Minerals. The acquisition may spread over 5-6 months and will take the Indian company’s holding in the Australian group to 50%.

The company is already in the process of acquiring 20% stake in the ASX-listed Lincoln, which will make it the single largest shareholder of the mining group.

Lincoln Minerals, which also has interests in other metals, such as zinc, copper, uranium and gold, owns iron ore reserves of roughly 250-300 million tonne.

Recently, MEL had announced that it would increase its shareholding in the Australian firm to around 20% by partially underwriting a proposed $4.9 million capital raising. Sources say that after acquiring 20% of the company’s shareholding, the Indian firm will push for a 50% stake by raising another $20 million.

When contacted by ET, the company’s spokesperson declined to comment. Besides increasing stake in Lincoln, MEL will increase its interest in the firm’s gum flat iron ore exploration project to 50% by pumping in additional $2 million, said a source. In August last year, ME Australia, a wholly-owned subsidiary of MEL, had entered into a JV with Lincoln Minerals.

Under which it had acquired mining rights for 40% of the iron ore deposits, which required investments worth $2.5 million.

The funds raised will enable Lincoln Minerals to extend its aggressive exploration program on Eyre Peninsula, including the gum flat, Cummins and Wanilla iron ore projects, Cockabidnie nickel project and Wilcherry uranium project. On the other hand, MEL would start exporting iron ore to China, one of the largest buyer of Australian ore, once the mining work commences, sources said.

It is also learnt that MEL, which also has interests in power, infrastructure and biodiesel, is aggressively scouting for acquisitions of coal reserves in South Africa and Indonesia. The company is even looking at setting up a pellet plant in either China or Malaysia, a source said. Mineral Enterprises has been extracting iron ore for over four decades and has reserves of around 2.5 million tonnes in South India.

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