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. Last Updated: 07/27/2016

Norilsk Profits Soar as LionOre Accepts Bid

Norilsk Nickel said Friday that its 2006 net profits more than doubled with help from higher nickel prices, as Canadian miner LionOre expressed support for Norilsk's $6.36 billion takeover bid.

Net profit under international financial reporting standards rose to $5.99 billion from $2.36 billion, Norilsk said. The increase was due to higher nickel prices and a one-time gain from discontinued operations, it said.

Revenue rose to $11.6 billion from $7.17 billion as nickel prices more than doubled, while cost controls helped operating profit climb to $7.02 billion from $3.18 billion. The firm also recorded a $933 million gain from the operations of former subsidiary Polyus Gold.

"These results are very close to our expectations and the consensus forecast," Alfa Bank analyst Vladimir Zhukov said.

Meanwhile, LionOre Mining International said it would immediately terminate an agreement with Xstrata, which pulled out of a bidding war over the Canadian company when it decided not to match Norilsk's increased offer.

LionOre said its board of directors would unanimously recommend that shareholders accept the offer from Norilsk and deposit their shares into the offer. LionOre's board had previously said the Russian company's offer was superior to Xstrata's bid.

In connection with that, LionOre said it would pay Xstrata the breakup fee of 305 million Canadian dollars ($288 million) on Friday.

Norilsk Nickel produces one-fifth of the world's nickel. Mikhail Prokhorov, who was the firm's general director until early April and still sits on its board, said late last month that the sweetened offer for LionOre was "too risky."