Jien Nickel increases stake in Metallica

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By Jiang Wei (China Daily)
Updated: 2009-05-13 08:03

Nickel producer Jilin Jien Nickel Industry Co Ltd has increased its stake in Australian miner Metallica Minerals to 19.95 percent from 15.1 percent by acquiring 22.85 million shares at a cost of A$5.16 million to secure its overseas resource supplies.

The Chinese firm acquired the shares through its Australian subsidiary Jien Mining at an average share price of A$0.2259, it said in a filing to the Shanghai Stock Exchange.

With this Jien has become the largest shareholder in Metallica. Last month it acquired the Metallica shares held by Kagara Ltd.

"The move will help increase reserves of nickel and sharpen competitive edge," Jien Nickel said in a statement. "But it may also bring about certain risks in currency exchange, management or overseas operation."

Haitong Securities said the deal serves as the foundation for the company's future expansion and diversification plans. However, nickel prices are not that high enough at present to bolster the company's performance.

Jien Nickel shares yesterday jumped 4.74 percent to close 27.41 yuan.

The Queensland-based Metallica is a multi-commodity resource company with major interests in nickel, coal and bauxite. It fully owns the NORNICO nickel mineral project and the Lucky Break nickel project.

NORNICO has proven nickel laterite reserves of 25.55 million tons, which includes total nickel content of about 281,910 tons. Lucky Break has 1.02 million tons of nickel ore, which includes 8,195 tons of nickel content.

Wu Shu, director, Jien Nickel Industry, has joined the Metallica board as Jien Mining, nominee, Metallica said yesterday.

The deal is part of Jien Nickel's plans to increase its overseas resources after some other Chinese metal companies managed to acquire overseas assets when prices of resources fell sharply due to the global financial crisis.

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