LionOre buys out Anglo’s Tati stake (May 06, 2002)

LionOre Mining International (LIM-T) has struck a US$75.9-million, all-cash deal with Anglo American (AAUK-Q) to buy the latter’s nickel interests in Botswana.

The assets comprise 43.35% in Tati Nickel Mining Company, a 7.5% direct interest in BCL Limited, and a 12.65% stake in Botswana RST Ltd., which owns 85% of BCL Ltd.

As a result, LionOre will own 85% of Tati, with the government of Botswana continuing to hold the remaining 15% interest.

The Botswanaian government must still approve the transaction, which, if given the green light, would take effect from Jan. 1, 2002.

Tati Nickel operates two mines in Botswana near Francistown: the Selkirk underground mine and the Phoenix open-pit mine. Ore from Selkirk is concentrated and then smelted on a toll basis at a plant owned by BCL Limited at Selebi-Phikwe, Botswana. Meanwhile, Phoenix ore is treated at the mine then further upgraded and smelted at BCL, with nickel matte sent to third parties for refining.

In 2001, Tati produced 6,305 tonnes nickel and 2,157 tonnes copper, and the company is now commissioning an expansion what will double production.

For its part, BCL mines and processes ore in Botswana to produce copper, nickel and some cobalt. Last year, BCL produced 12,600 tonnes nickel and 14,900 tonnes copper in matte form.

LionOre will finance the acquisition by a combination of debt and equity. The help with the second part, the company is bringing on board brokerage houses RBC Capital Markets and Haywood Securities to privately place special warrants on a best-efforts basis.

The combined production from Tati and its new Emily Ann nickel mine in Australia should boost LionOre’s annual nickel output to 35 million lbs. (15,890 tonnes) of nickel metal, making the company one of the world’s ten largest nickel producers.

LionOre has also had recent success at its exploration-stage Waterloo nickel-platinum-group-metals deposit in Western Australia.

In its gold business, LionOre is building the Thunderbox gold mine in Australia, which is expected to produce 220,000 oz. gold next year at a cash cost of US$112 per oz. Ownership is divided between LionOre (60%) and Australia’s Dalrymple Resources.