Climax owner wants to expand
TORONTO – The company that owns the Climax Mine near Leadville got the inside track Tuesday to become part of one of the world’s largest mining companies.Phelps Dodge, which will reopen the Climax Mine in 2008, will continue to negoiate a cash and stock offer with Inco, Ltd. The offer is worth worth 17.7 billion Canadian dollars ($15.7 billion). Inco is the world’s second-largest producer of nickel.Inco is trying to stave off a hostile bid of cash and stock by Canadian zinc miner Teck Cominco Ltd.To make that work, Inco also agreed to negotiate with Brazilian company CVRD to help keep Teck Cominco at arm’s length. CRVD has an all-cash offer on the table of 17.2 billion Canadian dollars ($15.3 billion).Inco’s board has consistently backed the Phelps bid, which began as a friendly merger between Inco and Falconbridge Ltd. negotiated last year. The deal was expanded to include Phelps Dodge as Inco sought to fend off Teck Cominco.”We are excited about our agreed combination with Inco, which will create both the world’s leading base metals company and a must-own stock for investors who want exposure to our leading positions in copper and nickel,” said J. Steven Whisler, chairman and chief executive officer of Phelps Dodge. “With an excellent outlook for sustained high copper and nickel prices, Phelps Dodge Inco will have tremendous earnings and cash flow potential. Our combination with Inco will be immediately and meaningfully accretive to cash flow and accretive to earnings in 2008, using our base case commodity price assumptions.”Phelps Dodge is one of the world’s leading producers of copper and molybdenum and is the largest producer of molybdenum-based chemicals and continuous-cast copper rod. The company employs 13,500 people worldwide. The jockeying for Inco became a three-way battle last week with CVRD’s offer of 86 Canadian dollars per share. The bidding began in May with an offer of 82.50 Canadian dollars in cash and stock from Teck Cominco. The cash and stock agreement reached with Phelps Dodge in June is now valued at slightly more than 80 Canadian dollars.CVRD, short for Companhia Vale do Rio Doce SA, is the world’s largest iron ore miner. If Inco accepts the offer, CVRD would become the largest producer of nickel – used primarily in making stainless steel and batteries – as well as one of the three largest diversified mining companies in the world, with positions in bauxite, alumina, manganese and ferroalloys.”The CVRD Offer could reasonably be expected to result in a ‘superior proposal,”‘ Toronto-based Inco said in a release. “This determination allows Inco to engage in discussions and negotiations with CVRD.”Inco, with 2005 earnings of $836 million on revenue of $4.5 billion, reiterated its rejection of Vancouver-based Teck Cominco’s $17.7-billion proposal. Last week, Inco advised shareholders to reject the bid, saying it was not superior to the offer by Phelps Dodge.Shareholders of Phelps Dodge Corp. will get a chance to vote on the proposed takeover of Inco on Sept. 25. The meeting date, announced Monday, eases some of the uncertainty around the U.S. copper firm’s bid, which is facing competition from other suitors and some shareholder dissent.The Associated Press contributed to this report.Vail Daily, Vail, Colorado
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