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Thursday, March 16, 2006

TORONTO -- Eramet SA of France is offering $270-million for Canada's Weda Bay Minerals Inc. in a friendly deal that would give it control of what could be one of the world's largest undeveloped nickel deposits.

Weda Bay chief executive officer Patrick Evans said the $2.70-a-share offer comes after the Toronto-based junior explorer began evaluating its strategic options in September.

Weda Bay is now under confidentiality agreements with 14 companies -- some Canadian -- that have been sniffing around its Halmahera nickel project in Indonesia, Mr. Evans said.

"Technically, we don't have the full capacity to develop this project," he said. "So we were looking for a strategic partner to support us. And Eramet decided that rather than partnering, they'd like to own us."

Asked whether a bidding war might erupt, Mr. Evans replied: "I really don't know. We have committed ourselves to supporting the Eramet offer and we will not solicit competing bids."

Weda Bay would have to pay Eramet a $10-million break fee if it embraces another bid.

"I think there's a good chance there could be another bid," Haywood Securities analyst Kerry Smith said, adding that Eramet's offer amounts to "about 2 cents per pound in the ground."

Eramet is already a major nickel producer, with facilities in New Caledonia and France.

On the Toronto stock market yesterday, Weda Bay Minerals shares were up 28 cents, or 11.26 per cent, at $2.68.

Eramet's offer will remain open for at least 35 days and requires that at least 75 per cent of Weda Bay's shares are tendered.

Mr. Evans describes the Halmahera nickel project as "the largest undeveloped nickel resource in the world."

Weda Bay recently completed a preliminary study and said the project could produce up to 60,000 tonnes of nickel per year.

The project could have a 50-year mine life, and will likely cost between $1-billion and $1.5-billion to develop, Mr. Smith estimates.

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