POS Poseidon Nickel Limited

Three potential bidders remain in the running for BHP Billiton Ltd.'s (BHP) failed Ravensthorpe nickel operation in Western Australia, with final bids due Nov. 25, people familiar with the situation said Friday.

Australia's Minara Resources Ltd. (MRE.AU) as well as Poseidon Nickel Ltd. (POS.AU) and China Metallurgical Group Corp., or MCC, are all still taking part in the sales process for the idled nickel laterite operation, two people familiar with the bidding process said.

Confirmation that there are three potential bidders in the process and that a date is set for final offers will raise market hopes that BHP may yet be able to extract some value from the failed US$2.1 billion operation, which it wrote off in January just eight months after it was commissioned.

Some analysts had predicted BHP could be forced to sell the mine for a nominal amount, given the risks and costs associated with restarting it, while others think BHP will still aim for several hundred million dollars.

BHP declined to comment on potential bidders but said the operation continues to attract "considerable interest."

A spokeswoman for the miner said it is evaluating divestment, restart or closure options, adding that "a formal evaluation of the divestment as an option is progressing well and as planned."

One person familiar with the situation said MCC, Poseidon and Minara all remain in the bidding, adding that there is also interest from other companies without elaborating.

However, Poseidon moving ahead seems doubtful because of its small size and the participation of MCC in the bid.

One person familiar with the deal said Poseidon had been seeking Chinese backers for its bid but that it now seemed unlikely that another Chinese state-owned enterprise would enter the final stages of the sale process and compete with MCC.

Poseidon has a market capitalization of A$43.3 million compared with Minara which is worth A$969.3 million and also has a weighty backer in the form of international commodity trader Glencore International AG with a shareholding of 70.6%.

Minara has technical expertise it can apply at Ravensthorpe, having already successfully revived one troubled nickel laterite project at its Murrin Murrin mine in Western Australia using a high-pressure acid leach process.

Up to now, MCC's activities in Australia have been largely confined to the iron ore sector, in particular its purchase last year of the Cape Lambert Iron magnetite project in the Pilbara region.

But further to the north, in Papua New Guinea, MCC operates the US$1.4 billion Ramu nickel venture, which is due to finish construction by the end of the year. Forecast to produce 31,150 metric tons a year of nickel, Ramu is also a high-pressure laterite processing venture and MCC could use expertise gained in its construction to speed up the revamp of Ravensthorpe.

Nickel laterite mines are much more costly and complicated to operate than sulfide ore bodies, and BHP commissioned Ravensthorpe at a time of plummeting nickel prices and struggled to turn a profit.

Earlier this month, China's Jinchuan Group exited from the bidding process, as did Australian mining magnate Clive Palmer.

Minara has confirmed its participation in the sale. A spokesman for Poseidon, chaired by Fortescue Metals Group Ltd. Chief Executive Andrew Forrest, declined to comment.

MCC also declined to comment.

Forrest has experience with challenging nickel laterite projects, having headed troubled miner Anaconda Nickel, which was later revived as Minara.

At a Sydney Mining Club lunch Thursday, Forrest declined to confirm a bid by Poseidon but went on to say he expected Ravensthorpe "to succeed eventually" and "to be purchased."

-By Elisabeth Behrmann, Dow Jones Newswires;

61-2-8272-4689 elisabeth.behrmann@dowjones.com

(Stephen Bell in Perth contributed to this article)

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