Agincourt Up 25% on News of Oxiana Takeover Offer

MELBOURNE AUSTRALIA 30 January 2007 - It is humbling and perhaps reassuring that following delivery of yesterday's Daily Reckoning and your correspondent's twitterings on Black Range Resources (ASX: BLR) , that the shares actually fell from their higher levels achieved earlier in the day.  It is pleasing to see that our influence stretches near and narrow.

While we were busy wishing we were correct with BLR.AX, the market had more pressing things to attend to, namely they were looking at a different uranium - and gold - producer, Agincourt Resources Ltd. (ASX: AGC) which received a $415 million takeover offer from Oxiana Resources (ASX: OXR).

Oxiana managing director, Owen Hegarty told the media "The acquisition of Agincourt continues the Oxiana strategy of owning, developing and operating quality resource assets in the Asia-Australasian region.  Long-term we are looking at diversification, but this also is a way of saying that we are very much in the gold business."

Analyst Ted Leschke from Shaw Stockbroking in Sydney told Reuters, "Companies are finding out that having all your eggs in one country does not necessarily work.  This is a way for Oxiana to mitigate its Laos assets."

Oxiana's bid for Agincourt was reflected at the open of trade yesterday as Agincourt opened at $1.84 and continued to trade there or there abouts for the entire day.  By the close it was trading at $1.80, an increase of 25% from Friday's closing price.

We are certain that this will be nowhere near the last mergers and acquisitions activity of the current resources cycle.  For every small resources company that is taken over by a bigger company there appears to be an army of new resources companies waiting in the wings ready to list on the Australian Securities (not Stock) Exchange.  For instance, of the twenty-seven companies currently scheduled to list on the ASX, at least nineteen of them are related to the resources sector.

It hardly seems possible that there could be that much going on out there for this many companies to be raising money.  But clearly there is, and given the size of this country and the amount that remains unexplored, it seems even less possible that the appetite for minerals will suddenly cease.

If we believe Shane Oliver from AMP Capital Investors, he has the China phenomenon running for around another thirty or forty years.  Imagine the number of small cap miners that can be listed and taken over during that time!

And why not, as we've reported a couple of times already, the Chinese economy is still ticking over in the double-digit growth range.

But what is the industry that is potentially just as lucrative, if not more so?  All it takes is for Australian private enterprise to take the initiative.  But what are the chances of that when they are obviously making so much money from their current activities.  Why spoil things and risk stuffing up?

As Alan Kohler pointed out in his Eureka Report yesterday, "As for investing in water, Australia is way behind.  Australia is one of the many nations in water deficit and becoming obsessed with the politics and finger-pointing of water crisis."

The reason?  Well, hysteria about having to drink poo is one of the scare tactics that was used in the referendum in Queensland last year, despite the fact that the recycled water was demonstrated to be crystal clean.  The second is that private enterprise is most likely convinced that the state or federal governments will eventually come to the rescue, so why bother investing billions of dollars of private money when there could be a huge stash of unaccountable public money waiting to be splurged.

It may seem counter intuitive, but the surest way for anything to be done on water is for the government to categorically state that it will leave everything up to private enterprise.  The lure of some lovely profits should soon whip them into action quick smart.

The reality is that the governments will just dither for the next few years while industry carries on making profits from mining and resources.

Kris Sayce
for The Daily Reckoning Australia

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