Coalminer A Hot Property

Sydney Morning Herald

Wednesday December 5, 2007

Jamie Freed

THE NSW coalminer Resource Pacific became a hot commodity in the last hour of trading yesterday. Resource Pacific shares rose almost 20 per cent amid speculation that a suitor - potentially Xstrata Coal - was circling.

Resource Pacific, the owner of the Newpac underground mine, has already rejected a hostile, $754 million scrip offer from THE Queensland company New Hope.

It is understood that as of last night Resource Pacific had not received approaches from a potential rival bidder, nor had it sought out a white knight to thwart New Hope's bid.

ABN Amro emerged with a substantial holding of 5 per cent in Resource Pacific after the market closed yesterday, but that only covered trades through last Friday. There was speculation that ABN Amro was responsible for yesterday's heavy buying.

It recently served as the broker for the Hong Kong commodities trader Noble Group, which increased its stake in the NSW miner Gloucester Coal to 15 per cent to thwart a friendly, $391 million cash offer from Xstrata.

But another theory was that Xstrata - having not bought any Gloucester shares ahead of its scheme of arrangement - had learnt its lesson and was building a strategic stake in Resource Pacific in preparation for a bid.

After trading closed yesterday the dealing desk of Goldman Sachs JBWere said there was a buy order for 10.6 million shares at $2.85. There was also speculation that some overseas shareholders could be approached overnight.

Resource Pacific shares reached a record high of $2.99 during trading yesterday before closing 48c higher at $2.91.

The company is an attractive takeover target given coal prices are expected to be settled at record highs this year. Resource Pacific has the ability to switch between producing thermal coal and semi-soft coking coal, depending on market conditions.

In a letter to shareholders released to the stock exchange yesterday, the company's managing director, Paul Jury, said it was ready to deliver on its next growth phase at Newpac after a recent $165 million rights issue.

"New Hope's chairman has referred to the mine as 'an excellent asset' and his company's bid is an attempt to seize the mine's potential upside for itself, depriving Resource Pacific shareholders of the full benefit," Mr Jury said.

© 2007 Sydney Morning Herald

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