Caledon Resources said it was in preliminary talks with “a number of parties” that may lead to an offer for the company, in an indication of bargain-hunting in the stricken junior mining sector.
Shares rose more than 30 per cent in the Aim-listed Australian coal miner. However, they still traded near historic lows, despite Caledon starting production of high-quality coking coal – used to make steel – at its Cook mine in Queensland, Australia.
To date Chinese companies have been the most active bargain buyers of junior miners, hunting primarily in Australia, whose mines are relatively close to China and in a convenient time zone.
John McGloin, analyst at Arbuthnot, said a Chinese company was a likely suitor.
“There is a shortage of good quality coking coal,” he said, “and Caledon has a good asset that the market recognises”.