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Proactive news summary: Afferro Mining, IMIC, Magnolia Petroleum, Caledonia Mining, Fluormin, Toledo Mining, AFC Energy

Published: 17:37 17 Apr 2013 BST

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The big news from the small cap sector on Wednesday came from Afferro Mining (LON:AFF), which confirmed a takeover approach from fellow AIM-lister IMIC (LON:IMIC) worth between 100p and 140p a share.

IMIC, which is much smaller than Afferro, first expressed an interest in making a bid late last year when the possibility of a takeover of the Cameroon-based iron ore group was first revealed.

Haresh Kanabar, IMIC's chairman, said it had carried out a substantial amount of due diligence on Afferro before launching its bid.

“Afferro has got a very good asset and very good resources, but it is stranded, so if we can bring in an infrastructure solution it would unlock significant value for our shareholders and the shareholders of Afferro who take IMIC paper,” he told Proactive Investors.

“The real key in unlocking value in iron ore, which is not called a bulk commodity for nothing, is infrastructure.”

He adds that the Chinese firms it has brought in to partner it on its plans for Afferro are looking at unlocking the potential of the whole of west and central Africa, and because they are Chinese firms they will get funding from China’s development banks.

IMIC confirmed it had signed a new deal with China Railway Materials (CRM) to organise the off-take of iron ore from Nkout.

A new deal has also been agreed with China Railways Eryuan Engineering, which will build the infrastructure from Nkout to port.

Afferro gave a guarded response to the indicated bid, saying the board could not make a recommendation until it gets a formal offer and receives confirmation that IMIC has the necessary finance in place. Shares in Afferro soared 13% to close at 72p each.

Magnolia Petroleum (LON:MAGP) meanwhile dominated the micro cap oil space with news of an impressive reserves upgrade.

The US explorer revealed a five-fold increase in the value of it oil reserves to US$94mln.

A new competent person’s report (CPR) estimated the group’s 3P – Proven, Probable and Possible – oil reserves at 2.8mln barrels of oil and condensate and 9.2mln cubic feet of gas.

These reserves are valued in the CPR at US$94mln and this underlines the value added to the company since it listed on AIM in November 2011; at that point its reserves were worth US$18mln.

“The CPR provides an independent assessment of Magnolia's first full year on AIM, which saw excellent progress made towards delivering on our strategy to build a significant US onshore oil and gas company,” said chief operating officer Rita Whittington.

Elsewhere in the resources sector, Caledonia Mining (LON:CMCL) shares resumed trading on AIM. It is understood they were suspended after a minor technicality related to the recent share consolidation.

In other mining news, Fluormin (LON:FLOR) looks set to become a subsidiary of Canadian-quoted Vanoil Energy, which last month launched a bid worth £14.3mln to buy the fluorspar producer.

Today the company revealed the deal will become effective on May 17, with the cancellation of the company’s shares on AIM shortly after. It comes after a court meeting where the majority of shareholders passed the proposed buyout.

DMCI Mining now owns almost 66% of Toledo Mining (LON:TMC) after snapping up an extra 27% of the company.

Fuel cell technology company AFC Energy (LON:AFC) shares dipped to 26p each after director Eugene Shvidler bought 2.5mln shares from his colleagues at that price.

Shvindler now owns more than 1% of the company after buying shares from fellow employees, including deputy chairman Ian Balchin and technical director Gene Lewis.

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