Canada's LionOre Mining International Ltd. said on May 8 that a 5.3 billion Canadian dollar ($4.8 billion) offer by Norilsk Nickel was superior to a rival bid by the Swiss mining group, but in a surprising move Tuesday the Swiss mining company increased its original offer by about 35% to $5.6 billion.
"We are surprised and disappointed that the announcement includes an unreasonably high break fee payable to Xstrata of approximately 4.9 percent of the bid's value, which is over 300 million Canadian dollars (about $272 million) and well above the previous 2.8% break fee," said Norilsk Nickel's General Director, Denis Morozov.
LionOre is a global nickel and gold producer with operations in Australia, Botswana and South Africa. In 2006, LionOre produced 34,094 metric tons of payable nickel and 155,203 ounces of gold, Norilsk Nickel earlier said in a statement posted on its Web site.
Xstrata, which last year took over another Canadian nickel company, Falconbridge Inc., had until May 14 to exercise its matching right and propose to increase its previous offer. LionOre said Tuesday it approved Xstrata's offer.
Norilsk Nickel said it was examining the information released Tuesday in Xstrata's announced offer and would evaluate its alternatives together with financial and legal advisors.
