Fin24

African Iron surges after Exxaro bid report

2012-01-09 16:26

Johannesburg - Shares in Australia-listed African Iron rose more than 9% on Monday after an online report that South African diversified miner Exxaro [JSE:EXX] was in talks to buy the iron ore company.

A spokesperson for Exxaro declined to comment on the Wall Street Journal report, but a source at Investec, a South African bank which was said to be advising on the transaction, admitted a deal was in the works.

African Iron’s flagship asset is the Mayoko Iron Ore project in the Republic of Congo. It is expected to start production in 2013 at a rate of 5 million tonnes per year, according to the company’s website.

Exxaro, South Africa’s second-largest coal producer and a major supplier to power utility Eskom, is scouting Africa and Australia for projects to expand into other commodities, especially iron ore and even copper.

Its $130m bid for Australia’s Territory Resources was trumped by Noble Group last year, but Exxaro said it remained keen to buy iron ore assets and eventually produce 10 million tonnes of the steel-making ingredient a year.

Shares in Exxaro were down 2.07% at R172.84 in afternoon trade, compared with a 0.26% rise in the JSE Top 40 - Tradeable [JSE:J200] blue-chip index.