Albidon (ALD)
22/05/2008
Takeover murmurings The recent sale of major shareholder African Lion's 20.5 percent stake in Albidon (LSE, ALD) as well as the company's appointment of corporate advisors, has certainly sent the takeover rumour mill into top gear. As of late, Albidon has been making positive strides on a number of fronts and Africa Lion's sale could give a potential suitor just the leg-up it needs to mount a bid. Indeed, we reiterate our view that the company represents a strategic and valuable acquisition for any company with growth ambitions in Africa. The combination of one brand new cash flow generating project at Munali, and the likelihood of another at Chirundu, has enhanced Albidon's corporate appeal to a host of likely suitors. And as such, we view the recent appointment of a corporate advisor (RBC Capital Markets) as a defence measure to deal with any potential takeover activity. African Lion has not given any details as to the identity of the likely buyer of its Albidon stake (which will generate around A$37 million) and we await the release of further details with great interest. Central to its appeal, Albidon's flagship Munali nickel project is set to generate its first production and cash flow this month. The company is also committed to an expansion, which will boost production further by the scheduled start-up date of January 2009. Meanwhile, at Chirundu the company is currently involved in formulating a decision on whether it progresses with a full Bankable Feasibility Study (BFS) on its uranium project. The Chirundu project is one of three joint ventures between Albidon and joint venture partner, African Energy Resources (AER). Albidon holds a 30 percent stake in the Chirundu JV, with AER having earned a 70 percent project interest by completing the Pre-Feasibility Study and Indicated Resource Report. Albidon also owns a 100 percent interest in the Kariba Valley and Luano Valley joint ventures, with AER earning an initial 30 percent interest by sole-funding exploration programmes on a number of uranium prospects. Both joint venture partners believe that there is good potential for locating additional uranium resources that could be processed at the centralised Njame facility through extensions to known mineralization and from exploration within the Chirundu JV Project and the nearby Kariba Valley JV Project. With two attractive projects encompassing nickel and uranium, plus exciting exploration results being generated from its emerging Sunnyside nickel project in Botswana, it is clear why Albidon is generating such strong corporate interest. 
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