Oxiana launches friendly takeover of Zinifex

Oxiana, the Australian miner, has launched an agreed £2.8 billion takeover bid for Zinifex Ltd, which operates the Century Mine, located at Lawn Hill in Queensland.

A merger of the two miners could create a diversified group with a market value of A$11.5 billion and operations in Australia and Asia.

Both companies have substantial zinc mining operations, in addition to copper, lead, gold and silver.

The move forms part of a consolidation trend which includes BHP Billiton’s bid for rival group, Rio Tinto, and the $90 billion bid by Vale of Brazil, for Xstrata.

Owen Hegarty, managing director of Oxiana, has made it clear that merger is the aim of both companies, stating: “The companies have agreed that they won’t be out there soliciting bids, that’s not the intention.”

The combined group would become Australia’s third-biggest diversified miner by market value, behind BHP and Rio.

It would earn around 63% of its revenue from zinc, 23% from copper and the remainder from gold, lead and silver.

The merger is expected to be completed in mid-2008, when the new entity will be given a name.

Barry Cusack, Oxiana’s chairman will become chair of the new company, while Mr Hegarty will become a director.