Andrew Michelmore, the chief executive of the Australian mining group WMC Resources, will tell investors in London this week that the world faces a shortage of uranium and that his company has the world’s biggest deposit of the metal.
Michelmore will use the looming shortage to reinforce his argument that a hostile A$7.4bn (£3bn) bid for WMC from Xstrata, the London-listed miner, seriously undervalues the company.
“I’ll be telling investors we have around a third of the world’s uranium resources,” he said. He will point out that the price of the metal, which is used as a fuel in nuclear power stations, has already doubled since 2003.
“With independent experts forecasting long-term valuations of between US$20 and US$30 per lb, against our production costs of under US$5 per lb, WMC has a unique opportunity to benefit from this imbalance.”
Michelmore also rejected allegations that an independent valuation of the company released as part of its defence document is misleading because it makes the assumption that a takeover has gone through.
He flew into London on Friday to persuade UK-based investors to reject Xstrata’s A$6.35-a-share bid. WMC shares are trading at A$7.21.
(January 16, 2005)
