SFP looking to make acquisition

Source: Metal Bulletin, 26 June 2009

London cobalt trader SFP Metals is looking to buy an undervalued asset, company director Nick
French told MB on Friday.

“We have our sights on an appropriately symbiotic acquisition, which we consider to be
significantly undervalued at the moment. You will understand that we can say no more at present,”
French told MB in an email.

Speculation about SFP's intentions has been rife since the company sent an email to its cobalt
press review subscribers on Thursday evening explaining why it had not published its
summary recently.

“SFP's research department is currently fully occupied as a matter of commercial priority
supporting a major investment project for the company and has thus been obliged to temporarily
freeze production of the weekly SFP cobalt press review until this project is completed,” company
researcher Greg Smart said in the email.

French declined to comment on whether SFP’s target is a mining, processing, smelting or trading
operation, joking that “any suggestion that SFP is an alternative buyer for Anglo American is
greatly exaggerated”.

Market participants could not immediately think of any asset that SFP is likely to buy, but said they
believe the company is more likely to take on a trading operation than a physical metal producer.
The news that SFP is going to buy an asset comes at a time of renewed mergers and acquisitions
activity in the metals markets.

Xstrata approached Anglo American regarding a “merger of equals” late last week, and, in the
minor metals market, Wogen recently received a bid from a management team within the company
regarding a possible buyout of the company’s public shares.

The Wogen management team is led by cobalt trader Damian Brousse, who worked with French
when he was md of Wogen.

SFP, where French works alongside cobalt veteran Stephen English, is a major trading presence
in the cobalt and cadmium markets.

Low-grade cobalt metal rose to trade at $14.70-15.70 per lb from $14.25-14.95 per lb previously
on Friday, while high-grade cobalt rose at the bottom end of the quote to trade at $15.45-15.95 per
lb from 15-15.95 previously.

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