INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

VEDANTA BUYS STERLITE GOLD FOR RS 285 CR

Metals and mining major Vedanta Resources has acquired Sterlite Gold, a gold mining company listed on the Toronto Stock Exchange, for Canadian $68 million (about Rs 285 crore).

The acquisition marks the company's entry into the precious metals business. Vedanta, listed on the London Stock Exchange (LSE), until now was active in mining and manufacture of non-ferrous metals like copper, aluminium and zinc.

Vedanta's intention to enter the precious metals business through Sterlite Gold. As part of this transaction, Vedanta has entered into an agreement to acquire the entire share capital of Twin Star International (TSI), which holds 55% of Sterlite Gold's common shares, for C$37.68 million (Rs 157 crore) in cash. This represents a price of C$0.258 per underlying Sterlite Gold common share.

The company will also make a cash offer to acquire all of Sterlite Gold's outstanding shares. Vedanta shares fell 5% to pence 1,119 on LSE while Sterlite Gold shares were up 187.50% to C$0.230 on TSX.

According to Vedanta chief executive officer Kuldip Kaura, ``The acquisition will position the company well to pursue opportunities, including those in India .'' Sterlite Gold's principal assets are located in Armenia and include an open pit gold mine in the city of Zod and a gold processing plant at Ararat. In October 2004, Sterlite Gold announced resources estimated at 2.1 million ounces.

Vedanta in a release stated that the acquisition offers an attractive low-risk exposure to gold. The board of directors of Sterlite Gold has appointed a committee of independent directors to review the terms of the proposed Sterlite Gold offer.