A Potash Auction?

The giant Anglo-Australian mining concern BHP Billeton (LSE: BLT) -- which has a stock symbol that reminds me of a sandwich -- has bid $38.6 billion for Potash Corp., of Canada, and has also put on something of a charm offensive, seeking to persuade Canadians that locals will continue to run the place.

Canadian regulators have taken a permissive attitude of late toward foreign companies who want to take over the mining concerns of the Great White North. Xstrata, of Switzerland, bought Falconbridge (a nickel miner) without a fuss, for example.

Anyway, the key question here is: how much will Potash go for? Can the incumbent board set off an auction? You need more than one bidder for a good auction. Potash is apparently in discussions with a couple of Chinese concerns: the Sinochem Group and Hopu Investment Management.

As you can see from the chart, the course of BHP's stock price has been pretty rocky since April. Nonetheless, the company has deep pockets, and analysts are convinced it can sweeten its offer if it has to.

Indeed, Marius Kloppers, the CEO of BHP, has referred to the bid -- which stands at US$130 per share, as "full and fair." If he had wanted to say "last and best," he would have done so.

Palmiere resigns at HudBay Minerals

HudBay Minerals is a mining company working copper and zinc deposits especially in Manitobe. It trades on the Toronto Stock Exchange.

Its chief executive, Allen Palmiere, has resigned in the face of shareholder discontent resulting from a failed effort to acquire Lundin Mining, another Toronto-listed compamy, last year.

SRM Global Master Fund LP is seeking to replace the whole board at HudBay, and a special meeting has been called for March 25 at SRM's request for the purpose of this vote.

The official announcement of Palmiere's departure says the usual nice things: "The Board of Directors thanks Allen for his service to HudBay, first as chairman, then as chief executive officer and director." But there is no effort to answer the obvious question: why?

SRM doesn't call the shots yet, surely, so its discontent can't be the only operating factor here. Did Palmiere jump or was he pushed?

Let's get the Sccoby-Doo gang to work on this mystery. Maybe the new interim CEO, Colin Benner, will end up telling them "I would have gotten away with it too, if not for you meddling kids!"

Probably not. I'm just free associating.

What a cool name for a hedge fund!

Noront Resources Ltd., a Toronto-based minerals-exploration company, has a shareholders meeting scheduled for October 28.

Its incumbent board faces a challenge led by a hedge fund named Rousseau Asset Management Ltd., which owns or controls approximately 9.2% of Noront's common shares.

I know very little about the underlying dispute. But I was intrigued by the name. Rousseau Asset Management? Do they often use the acronym "RAM".

I'm reminded of the song "High Hopes." Maybe they should wage a proxy fight against some company that has just finished construction of a million kilowatt dam.

Aside from the acronym: Is "Rousseau" the family name of the founder? Or was he paying a tribute to the famous painter?.

Or perhaps, less likely I suppose, it was a tribute to the philosopher of the state of nature and the debilitating consequences of civil society.

More prosaically, there's an Henri Paul Rousseau who was the chairman and chief executive of Caisse de dépôt et placement du Quebec, from 2002 until earlier this year. Does RAM have any connection to him or his kinfolk?

If anyone in the wide readership of Proxy Partisans knows anyone connected with RAM, let them know I'm curious. About the name, as about the specific strategy and performance record. [I don't see any "Rousseau" in the TASS database.] Curiosity may have killed a cat or two but I doubt its done any harm to a RAM of late.

BHP/ Rio Tinto

The BHP/Rio Tinto saga is complicated but important. Its important because it involves nothing less than control of a large chunk of the worlds active mines excavating iron ore, copper, coal, and a variety of other minerals.

Its complicated because the word "control" in the above sentence has both a corporate and a national significance, and because the laws of several different nations will play a part in helping determine this.

A little less than a month ago, on November 8, BHP Billiton announced a bid for control of Rio Tinto. In a sense there would be four companies involved in any such acquisition because both Rio and BHP have a dual identity: each is both a British and an Australian corporation -- with separate sets of shareholders but with only one board of directors and managerial structure.

BHP is the larger of the two, but Rio has the more illustrious history. It began with Spanish mines so old the ancient Roman empire had minted coins from the metal taken from that earth. In 1873, two Rothschild firms -- the Parisian and the London -- joined with other investors to buy the Spanish government's interest in these mines. They restructured the company and turned it into a profitable business run from London.

The dual national nature of the company came about in the 1960s, when BHP bought a majority stake in the Aussie firm Consolidated Zinc.

But, to the point: the board of directors of Rio has resisted BHP's offer, claiming that it significantly undervalues the company.

It is often the case that when the directors of a target company resist such an overture, they realize and accept the fact that they are "in play," they their days as an autonomous operation are nearing an end, but their looking for a "white knight," a friendlier company willing to make a higher bid for the damsel.

The government of China, and corporations it sponsors, may be about to put on the white shining armor in this scenario. China Investment Corp. has US$200 billion at its disposal. Yet so large is the scale of Rio's assets and prospects that there is also talk that by the time the auction is over, that might not be enough.

There's much more that might be said about this matter, but I've just offered you a score card -- or at least sketched the outlines of the score card -- for what may be a long game. We'll see how it fills in.