Aquila provides investors with trifecta

There's been a lot of interest in Como-based carbon steel resources producer and developer Aquila Resources Ltd in recent times.

Investment radars were heightened last week when the company revealed it had employed financial advisers Macquarie Capital Advisers Ltd and Citigroup Global Markets Australia Pty Ltd to assess its options in regards to future spin-offs, the sale of assets, stock-based mergers and a possible change of control.

Aquila is emerging as a trifecta for investors, boasting extensive coal resources in the Bowen Basin and iron ore tenements in the Pilbara, and with speculation of a takeover intensifying.

The skyrocketing prices of iron ore and coal over the past five years has helped place the company behind only Woodside Petroleum Ltd, Fortescue Metals Group Ltd and Wesfarmers Ltd in the top 100 ASX companies offering solid returns to shareholders.

Aquila appears to be in an ideal position in the market, operating in both the lucrative coal and iron ore sectors, particularly iron ore which in 2002-03 was selling at $US20.38 a tonne, compared with a price of $US88.72/t this year.

Baillieu Research earlier this month gave Aquila a valuation range of between $14.44 to $16.65, with shares trading at a 52-week high of $17.95 and a low of $3.06.

The company was trading at $16.75 on August 26.

Its performance on the stock market is very much indicative of its position on the list of the top 100 ASX companies in terms of market capitalisation, which again is topped by major resources companies.

Behind Aquila on the list is uranium-focused Paladin Energy, iron ore exporter Portman Ltd, international exploration and mine developer Equinox Minerals, iron ore producer Mount Gibson Iron and global mineral sands player Iluka Resources rounding out the top 10.

But, the spotlight is on Aquila, with takeover talks intensifying this week following reports that China's Wuhan Iron and Steel Corporation had signed a confidentiality agreement and was interested in the iron ore assets of Aquila in particular.

Mining giant Xstrata and Brazil's Vale, one of the largest iron ore producers in the world, are both tipped as purchasers of at least some of the company's assets if it decides to go down that road, and have reportedly been looking over the company's books.

All options are thought to be on the table including further joint ventures, a partial sale and possibly an outright sale.

Aquila company secretary Raymond Wood said while Aquila was currently undergoing a strategic review of its business and operations, discussions with third parties remained "preliminary and incomplete".

Aquila has been exploring coal in the north-central Bowen Basin region of Queensland since 2002, when it successfully applied for a series of exploration tenements and formed a joint venture with American Metals and Coal Industries.

This week, the company launched a quest to turn the Belvedere Coal project in Queensland, in which Aquila has a 24.5 per cent interest, into a multi-long wall operation capable of producing 7 million tonnes a year by 2014.