# WMR - WMC Resources



## sam21poddy (13 August 2004)

*WMR - Will it rise today?*

I watched the Business News on Fox Channel last night and saw the CEO interviewed about its results.  Its profits are five times what they were last year and it has declared a 17c dividend (6c last time).  What I can't understand is that I watched this stock yesterday afternoon and saw it fall quickly (probably after the results had been delivered).  If it has such meteoric profits, why did everyone suddenly dump the shares late yesterday?  I am inclined to buy some this morning on open but will decide when I see the opening price.


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## sam21poddy (13 August 2004)

*Re: WMR - Will it rise today?*

I took a punt and bought 5,000 @ 4.98.  I only ever buy 1,000 at a time so this is a real gamble.  They occasionally fall as low as 4.66 so I hope this is not one of those times.


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## GreatPig (13 August 2004)

*Re: WMR - Will it rise today?*

Here's their chart.

Current price according to yahoo is $4.93.

Cheers,
GP


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## sam21poddy (13 August 2004)

*Re: WMR - Will it rise today?*

Thanks for the chart.   Yes it does seem to be following the fall as shown in the chart.  I like to trade WMR because it has a fairly predictable trading range.  I just thought that the good profit announcement would throw predictability out the window but it does still to be following its normal trading patterns.  If I end up having to hold it for a while I will console myself with the dividend.


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## crocdee (17 August 2004)

*Re: WMR - Will it rise today?*

could be intersting in the next day or two fcn falcon minerals in a trading halt. wmr have an interest in the collorubbie exploration mine out of kalgoorlie. good nickle sulphide results to date with the big one still to come. this could be it who knows.
suggest all to read the last few reports of fcn imo theres a quid to be made here.

regards croc


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## JetDollars (15 November 2004)

Dear All,

Do you guys believe RIO will try to takeover WMR? if that's the case then WMR will heading north again.

RIO been cash up for a while now....

Where will WMR go from here?

Your comments please.


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## sam21poddy (9 December 2004)

*WMR announcement of profit upgrade today*

Here is a part of the public announcement today:

"WMC Resources Ltd (“WMC”) intends to return up to $1 billion of cash to
shareholders for 2004 through its ordinary dividend program and additional
capital management initiatives announced today.
The announcement coincides with the upgrade of 2004 earnings outlook to
around $1.3 billion, materially above current analyst consensus estimates of
around $1.1 billion."

They have already paid a 17c dividend for the first half and say that the expected second half dividend will be 20c.  In addition, they are returning 30c capital (which will be debt funded).  By my calculations, the 50c to be paid during the next six months equates to a 7% return at the current price of $7.04.  I haven't heard any analyst's comments yet on the announcement.  But I can't understand why the price hasn't risen on the news.  Substantial volumes are going through but the price isn't going anywhere. I have bought 6,000 this morning based solely that I think 7% return is a high yield.  Do you think that the price hasn't done anything because analysts haven't digested the report yet or is there something negative happening that I don't know about?


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## GreatPig (9 December 2004)

*Re: WMR announcement of profit upgrade today*

I think they're trying to shake off the takeover offer by reducing the value of the company below the offer price. I gather they're not happy with the offer.

Generally I think share prices wouldn't increase for high dividend yields because after the dividends the company will be worth that much less, and the share price theoretically would drop by the amount of the dividends. So in that sense there's nothing to be gained from a dividend. It's primarily just realising some of the capital growth as income.

GP


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## whisky6210 (28 March 2005)

*WMC $13.50?*

An exiting week(s) ahead of us....BHP running with the ball with 2 beefy forwards (Xstrata/Rio) about to bury it's face in the quagmire....We are lead to believe it's all over bar the shouting.........What board of directors with an open cheque book would let the prize of the millenium escape from their grasp?.......Not to mention the fence sitters France,China,Canada,India !!!!
I mean...Roxby Downs with 30% of the worlds known uranium, Huge gold stocks, the fourth largest copper miner.(not forgetting huge nickel & zinc assets.
My friends this is "blue manna crab and cold chardonay".
I bought in @ $6.84 and had a dream it went to $13.50
"There comes a tide in the affairs of men which when taken at the flood leads on to fortune"..........


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## Investor (26 April 2005)

*Re: WMC $13.50 ?*

In mid 2004, after reading about the outlook for Uranium and the Kyoto Protocol, I bought shares in WMR at average prices under $5.

At the time, some brokers were recommending sell WMR. I ignored them.

I considered WMR a takeover target.

Soon, further uranium ore discovery at the mine in South Aust. raised WMR's known uranium reserves to 40% of global reserves. All in the same mine. Think of the economies of scale.

Xstrata made the opening move. 

I read the information provided in the independent valuation and decided to buy more at $7.11, just before Xstrata increased the bid price. 

Then BHP joined the fray, as I had hoped.

Last week, I saw a few trades at $7.83. Must have been forced selling. It did not occur to me that people would sell at $7.83 and $7.84 but some did. I should have placed a standing buy order at $7.83 as it would be like a risk free option to sell to BHP at $7.85 or even better hope for another bidder.

In the past few days, there has been speculation that Rio would enter the bidding. Today, this rumour gained momentum.

I reckon BHP buying at $7.85 would be a bargain, as spot prices for uranium are already at the top range of the independent valuation (based on DCF methods). 

If Rio does enter the fray, another significant rise in the bid price would be a fait accompli.

As Chip Goodyear stated: "It ain't over until it is over."

However, I hold BHP, RIO and WMR. A bit of left pocket, right pocket and back pocket!

Still, better than Xstrata walking away with the prize, IMO. 

Hope this end game plays for a few more months, due to reduced CGT, after 12 months.


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## RichKid (26 April 2005)

*Re: WMC $13.50 ?*

So what's the rumour with WMC- that Rio will jump in this week? I missed the rumblings but whoever has so much Uranium under their belt will reap some big rewards. Watch for BHP to go south if they are trumped, even if temporarily, they are awfully close to the recent trend line so I'm cautious and investors appear to be a bit weary of 'The China story' and the resources 'supercycle' atm.

Here's the chart showing the story. Closed today at 8.13


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## Investor (2 May 2005)

*Re: WMC $13.50 ?*

In an article on the kitcometals website, comes the following:

"Prospects for South Australia to play a much larger role in servicing the excess world demand for uranium are likely to dominate a two day review this week, which will look at the State’s mineral wealth and pace of development.

The options to explore for, and potentially mine new uranium deposits have emerged at a time when South Australia is enjoying its most prolific mining exploration and development activity in nearly two decades.

Prospects will come under the spotlight today and Tuesday when a record 260 delegates and 35 exhibitors attend the South Australia Resources and Energy Investment Conference.

“The uranium debate is heading for a meltdown at political, industrial, mining and investment levels,” Conference organiser, Mr Bill Repard, said.

“This is being fed by massive international investment, particularly in China, in new nuclear power plants, and, a growing recognition to ‘re-debate’ uranium as a future fuel, given the more public acceptance now of the negative environmental impacts of continued fossil fuel reliance.

“Simply put, the planet’s power demands are outstripping its resources. Many see nuclear power, derived from the precious yellow cake, as the panacea to the problem.

“South Australia occupies a unique position in this regard. The State hosts two operating uranium mines, with one single mining operation alone - Olympic Dam - home to more than a third of the world’s uranium resources. 

“In addition, there are other Australian targets which could take the country’s share of the world uranium resource, considerably higher.”

Mr Repard said the greater public and investor support for uranium exploration was evident in the number of new mining companies that now counted uranium projects in South Australia among their key targets. 

The 2005 South Australian Resources and Energy Investment Conference commences at the Hilton Hotel early this morning.

- 02 May 2005 "



BHP has extended the takeover offer to 3/6/05. 

Excellent. This saves me a chunk of CGT, by crossing the 12 months' holding period. Hope it plays out to after 30/6/05, to cross the next financial year. Can make more money from the "free float" of money for another year, before handing to ATO.


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## Investor (19 May 2005)

*Re: WMC $13.50 ?*

In recent weeks, I have read reports that suggest BHP could be paying too much for WMR. From my previous research into WMR and the global supply and demand equation for uranium, I still think $7.85 if achieved, is a bargain price for BHP.

The following article that I stumbled across is indicative:

Uranium is the hottest investment in the world, says James Dines

By Stanlie Hunt November 2, 2004  

Mr. Dines has over the years picked major trend moves right at the beginning for his subscribers. He is now HOT on all metals and especially Uranium which he states is the hottest investment in the World, because of the supply and demand factor and that some utilities will be going dark because of it.

Mr. Dines’ comments made me look even further and I was introduced to Australia Uranium company (Australia produces 40 percent of the World Uranium) so I asked the managing Director to explain to me where we were at this junction in the energy field. He stated we are at the beginning of a world crisis in energy. He reviewed the history of energy development from the year 1900 to 2004 and announced that North America has been in a huge growth curve since that time. He stated that Asia in comparison is where North America was in the year 1910. Other words we are in the start of the biggest energy crisis the world has ever seen. He fears that there is no way to keep up with the demand because it takes years and years of development to supply and meet such future demands. A bidding war could sky rocket Uranium towards $100.00. 

Mr. Dines has stated, that already he has made his followers lot of money in Uranium investments. If the energy crisis goes to the magnitude he predicts, all metals and energy companies will be continually be bid upwards.

The Dines Letter is one of the oldest stock-market newsletters of its type in the world, offering advice on stocks and commodities.

Note: Smartstox finds these comments to be very scary for the future but it seems that the future is already here and that the bidding of metals and energy is a given factor. My question - Where are the investors in the junior resource sector??? This sector carries the cradle of new discoveries and developments that will fuel the World thirst for resources. Wake up everyone. This resource and energy sector will explode when the mainstream investor does wake up.


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## mime (19 May 2005)

*Re: WMC $13.50 ?*

I heard China and the US are going to build a large number of nuke plants.


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## ob1kenobi (19 May 2005)

*Re: WMC $13.50 ?*






Looking at these charts, if the WMR take over works out, the prices will go north, otherwise a loss of confidence will probably be reflected. Its already tending toward the oversold territory and there has to be a reason for that. Certainly poor commodity prices is an issue. At the moment, a highly speculative stock.
__________________
This is merely my opinion and does not constitute financial advice. When considering your financial objectives, please consult a suitably qualified and licenced professional.


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## Investor (21 May 2005)

*Re: WMC $13.50 ?*

South Africa will draw up special rules for mining uranium and make the ore a protected resource to help support its burgeoning nuclear industry, the country's minerals minister said yesterday.

South Africa has abundant reserves of uranium and plans to use this to source nuclear energy as it scrambles for new energy sources to meet rising demand for power.

"South Africa is at the forefront of developing high temperature reactors in the form of the PBMR (pebble bed modular reactor) and we will for that reason declare uranium a protected mineral resource," Minerals and Energy Minister Phumzile Mlambo-Ngcuka said in a speech to parliament.

"We will announce a special dispensation for licencing uranium exploration, prospecting and mining," she said.

The government sees nuclear energy as crucial to its future needs and plans to build a multi-billion rand pebble bed reactor near Cape Town to add to its existing nuclear facility.

The reactor is an advanced design that claims to dramatically enhance safety and efficiency, but which environmentalists say is unsafe.

Mlambo-Ngcuka said South Africa was committed to nuclear power and would use its uranium resources to ensure security of energy supply.

Nuclear energy from the Koeberg plant currently accounts for about 6% of South Africa's energy supply, with 88% sourced from coal.


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## Investor (26 May 2005)

*Re: WMC $13.50 ?*

BHP seeks closure. I now have some homework to do. My instincts tell me to hold, because the spot price of uranium has touched USD 29 per pound. 

The maximum value by Grant Samuel, the independent valuer, based on DCF, used USD 22 per pound. 

Copper and nickel outlook still looks reasonable. 

I can buy WMR at $7.83 at the moment. Interesting. Food for thought.

May 26 (Bloomberg) -- BHP Billiton, the world's largest mining company, said it doesn't plan to extend its A$9.2 billion ($7 billion) takeover offer for WMC Resources Ltd. beyond June 3 as it tries to speed acceptances from WMC shareholders. 

The company has received acceptances from holders of 4.49 percent of Melbourne-based WMC for its A$7.85-a-share cash bid, BHP Billiton said in a statement to the Australian Stock Exchange. The offer would automatically be extended for two weeks if the Melbourne-based company reaches more than 50 percent. 

Shares of WMC, the world's fifth-biggest nickel metal producer, have traded above BHP Billiton's offer amid speculation of a rival bid from companies such as Rio Tinto Group. WMC said in a separate statement it hasn't had any other approaches since BHP Billiton's March 8 bid. 

``WMC shareholders now need to make a decision,'' BHP Billiton Chief Executive Charles ``Chip'' Goodyear said in the statement. ``It is not in the interests of BHP Billiton or WMC shareholders to further extend the offer. Should the offer lapse, we will continue to follow our clearly set out strategy focusing on value-creating opportunities.'' 

BHP Billiton also has an economic exposure to 4.3 percent of WMC's shares through derivatives contracts, it said. 

WMC shares yesterday fell 1 cent, or 0.1 percent, to A$7.90 on the exchange. BHP Billiton stock yesterday fell 5 cents, or 0.3 percent, to A$16.20. 

WMC shareholders ``should act swiftly,'' because WMC's stock price may fall below BHP Billiton's bid if the offer lapses, WMC said in a separate statement to the exchange. 

``In the 11 weeks since the receipt of BHP Billiton's offer, your board has not had any other approaches,'' WMC said.


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## Warren Buffet II (26 May 2005)

*Re: WMC $13.50 ?*



			
				Investor said:
			
		

> I can buy WMR at $7.83 at the moment. Interesting. Food for thought.




I think the greed is going to prevail here. I will be interesting to see how this share falls once the offer close. I think if this scenario happens $7.83 is not near to be a good deal at all.

Let's wait until 3 June.

WBII


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## Investor (27 May 2005)

*Re: WMC $13.50 ?*



			
				mime said:
			
		

> I heard China and the US are going to build a large number of nuke plants.




From WMR's Target Statement, in Annexure C, according to the World Nuclear Association, as of Oct. 03, there were 441 nuclear power plants in the world.

From The Bulletin Magazine; "Global annual demand for uranium is about 77,000 tonnes but mines only produce about 36,000 tonnes. The difference is made up from stockpiles, which are rapidly depleting and from sources such as decommissioning of nuclear warheads. 

WMR and other miners believe they will have to step in and fill much of this gap before long, especially if demand for nuclear power expands.

The Uranium Information Centre says China and India intend to quadruple their nuclear power generation capacity by 2020.

There are 28 new nuclear reactors being built around the world, another 30 seeking finance and another 50 being proposed. If all get to fruition, it is a 25% increase in nuclear plants. 

Olympic Dam is well placed to cash in. It has the reserves and the government approvals. Any expansion by WMR will be cheaper than a new mine because much of the infrastructure is in place. Then there is the fact Olympic Dam's uranium ore is enriched with copper and gold. Capping all these is the premium price that Australian producers receive because they have a record of reliable supply."


My comments: 

Clearly, demand for uranium will soar. The new plants are being built. When the construction is finished, the owners (mainly governments) will have to buy uranium (to state the obvious). The government buyers have deep pockets to spend. They must buy at whatever price they have to pay.

South Africa's government has locked up their supply (national treasure). This reduces a huge supply source. This fact alone might have prompted BHP to get on with the bidding process of trying to lock up WMR.

The spot price of uranium has continued its upward trend from USD 20 per pound (six months ago).

When the 28 new nuclear plants are completed, it is logical that the spot price of uranium will soar. How much? USD 35 per pound would not be unrealistic. USD 50 per pound would probably still be paid, if the buyers cannot get supply. In the former scenario, WMR's DCF could be worth $9 to $10 per share, provided copper and nickel prices hold. 

Looking at the supply and demand equation and the fact that most uranium buyers will be governments with buying power who must buy at whatever price they have to pay because they have already built the new plants, I would say that BHP is getting a  bargain at $7.85 for WMR. Yet, the hedge funds will deliver WMR to BHP at this price and BHP will extend the bid by another 2 weeks, after passing the 50% holding mark on June 3, unless another bidder emerges at the 11th hour.


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## Investor (27 May 2005)

*Re: WMC $13.50 ?*

In The Australian today:

May 27, 2005
BHP has thrown down the gauntlet to Rio Tinto - put up or shut up.

In the process, it will force Rio to publicly resolve its internal differences. But the BHP decision also exposes a deep strategic debate in BHP that seems to have been resolved in favour of removing WMC's top people at the Olympic Dam uranium/copper complex and replacing them with BHP talent. 

If that's what BHP does, its shareholders have every reason to be nervous, given the sensitive nature of uranium production and the major expansion that is planned. 

If BHP goes into uranium along a high-risk management path, then the board must accept the blame if anything goes wrong. 

I now think it is unlikely Rio will make a WMC bid. *The hedge funds that effectively control the company cannot risk big losses, and so are likely to deliver control of WMC to BHP, just as the June 3 deadline approaches*. 

It's clear a number of Rio directors, led by chairman Paul Skinner, were very tempted to make a WMC bid. 

*BHP's bid price wasn't high and Rio's Ranger and Rossing uranium mines have limited lives, so Rio needs a company like WMC to be a long-term uranium player. Skinner believes in greenhouse and the role uranium will play in reducing carbon emissions*. 

But his chief executive, Leigh Clifford, was very cautious about taking on BHP over WMC. 

Clifford has done a wonderful job for Rio but will probably retire in the next couple of years. 

Clifford and Skinner are nervous about the US economy and the possibility of a resources price correction, which might affect the worth of WMC. 

Moreover, as a uranium producer, Rio knows that WMC's Olympic Dam is a tricky management challenge. It was built to a price and, as a result, in the early years it was plagued with breakdowns. 

WMC's directors have invested in special expertise to make Olympic Dam reliable. 

Had all Rio directors determined last month that they did not want WMC at the BHP price, it would have been easy to claim that BHP had bid too much and withdraw. But instead, when asked if Rio would bid, Skinner said "no comment" at the annual meeting, indicating a WMC bid was still under consideration. 

And to underline this point, a few days earlier he told me: "It is never over until the ... lady sings." 

Given the difference in emphasis between CEO and chairman, Rio naturally hoped BHP's bid might fail. The odds are now that it will not fail -- unless Rio unifies behind a bid. 

If BHP gains 100 per cent of WMC then, like most successful bidders, its executives will want to replace the target's top people with their own. There is no doubt that if BHP uses the "conqueror" approach in WMC's head office, or in nickel, there is little risk because the bidder has the required talents. 

But, apart from the Magma exercise, BHP has limited experience in producing copper metal and none whatsoever in uranium. 

WMC's uranium/copper operation will report into BHP's copper division, which is based in Chile and under the control of that country's Diego Hernandez. He is a long way away and will need the right people on the ground. 

Many BHP copper executives believe Olympic Dam has not performed and needs a new approach. Others wanted to retain WMC's senior skills base at Olympic Dam until the company fully understood what was involved in making uranium - especially as it is uranium that makes the stock worth $7.85 a share. 

WMC engineers say the messages currently coming out of BHP are very similar to the noises that came out of the old Billiton: "We are the greatest." 

If the top couple of people at Olympic Dam are given the boot by the conquerors then, given the global shortage of talent, key parts of the uranium skills base may go out the door. 

Nevertheless, it is possible BHP will transform the profitability of Olympic Dam. But if they get it wrong and there is another major breakdown it will invigorate anti-uranium forces and delay expansion.


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## Investor (27 May 2005)

*Re: WMC $13.50 ?*

Also in The Australian today:

BHP calls Rio's bluff with deadline
Andrew Trounson
May 27, 2005

THE world's largest miner BHP Billiton knocked the speculative wind out of the share price of its $9.2 billion takeover target WMC yesterday, when it threatened to walk away from the bid at the end of next week.

Frustrated with 11 weeks of waiting for his bid to gain traction as speculators continued to punt on a counter-bid from Rio Tinto, BHP chief executive Chip Goodyear finally called the market's bluff. 

Amid widespread expectations that BHP would again extend the time frame of its offer, Mr Goodyear instead warned that unless BHP secured more than 50 per cent of his target the bid would close on schedule on June 3. And he kept the bid price unchanged at $7.85 a share. 

"Should the offer lapse, we will continue to follow our clearly set-out strategy focusing on value-creating opportunities," Mr Goodyear said. 

That unnerved speculators, who rushed to sell their WMC shares. 

Having last month traded as high as $8.14 a share on red-hot talk of a counter-bid from Rio, WMC shares fell 7c to $7.83, the first time they have finished below BHP's offer price since March 8. 

There was heavy turnover, with 35.8 million shares -- or about 3 per cent of the stock -- changing hands. Ahead of BHP's announcement hedge funds were believed to control over 30 per cent of the company. 

"To me it indicates that the game is over," Paul Xiradis, director at fund managers Ausbil Dexia, told The Australian. 

But BHP hasn't given WMC shareholders much time to sell, with the bid due to close at the end of next week. For US investors there is even less time, as Monday is a public holiday there. 

So far BHP's bid has secured it only 4.5 per cent of WMC, though it holds an additional 4.3 per cent economic interest through a swap deal with its advisers, Deutsche Bank. If BHP does get to 50 per cent by June 3, its bid will automatically be extended by a further two weeks. 

Reiterating that he believed his bid to be "full and fair", Mr Goodyear said "WMC shareholders now need to make a decision." 

WMC's board has already endorsed the bid, and in a letter to shareholders yesterday, chairman Tommie Bergman said there had been no other approaches from a rival bidder. 

"In the 11 weeks since the receipt of BHP Billiton's offer, your board hasn't had any other approaches," Mr Bergman said. 

He warned that WMC's share price might fail if BHP's bid lapsed. 

Since trumping Swiss-based Xstrata's $7.00 a share bid in March, BHP's bid has been dogged by persistent speculation of a rival offer, most likely from Rio. 

Rio hasn't made it any easier for BHP by refusing to rule out a bid. 

And Rio was at it again yesterday, a spokesman declining to comment. 

*WMC is a key asset in the global mining game. 

Rising demand from China, Brazil and India has put pressure on tight mineral and metal supplies.* 

*WMC is the world's fifth-largest nickel producer and boasts the world's single largest uranium deposit at its Olympic Dam copper and uranium mine in South Australia.* 

The company plans a massive, $5 billion-plus expansion at Olympic Dam that would double copper production and treble uranium output.


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## Warren Buffet II (27 May 2005)

*Re: WMC $13.50 ?*



			
				Investor said:
			
		

> My comments:
> 
> Looking at the supply and demand equation and the fact that most uranium buyers will be governments with buying power who must buy at whatever price they have to pay because they have already built the new plants, I would say that BHP is getting a  bargain at $7.85 for WMR. Yet, the hedge funds will deliver WMR to BHP at this price and BHP will extend the bid by another 2 weeks, after passing the 50% holding mark on June 3, unless another bidder emerges at the 11th hour.




Investor,

I do now know much about this deal and I do not hold WMR anyway, but I read a lot about many companies and this deal got my attention this week. I see in your comments that you believe the hedge funds will deliver WMR to BHP but how can they do that if they only control 30% of the company ?

And there has been massive sell this week which I believe are from Hedge funds, so that means less than 30% control? who else is going to sell?

Any comments?

WBII


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## Investor (27 May 2005)

*Re: WMC $13.50 ?*



			
				Warren Buffet II said:
			
		

> Investor,
> 
> .. who else is going to sell?
> 
> WBII




This is what Warren Buffett calls "The Institutional Imperative". A suggestion that such institutions often move in "herd like" behaviour. All it takes is 2 to 3 large institutional shareholders to start the sell and others will probably follow. There is lower risk of standing out like a sore thumb by moving with the pack. That way, the excuse is "everyone else was doing it." More on this later in the Buffett thread.

However, the institutional shareholders have already "booked" the WMR share trade profits into their performance tables and will not want to risk damaging that "performance" by risking a price fall by holding on. Different for me - I do not have anyone to report to but myself - I can afford to risk short term price falls for the potential of longer term gains (I enjoy the challenge of pitting my own analysis against the market's - you might call it greed but I merely enjoy the challenge).

BHP's appointed investment bank was busy buying yesterday and today in the open market. By now, BHP might have collected 10% (includes the derivatives). If it collects all the hedge funds selling, it will not take much to reach tipping point. However, WMR might still end up merely as a subsidiary of BHP. I am happy either way. 

WMR's board of directors are selling their own shares to BHP next week unless another bid emerges. 

Here is what The Age says:

BHP warns 'last chance' over WMC
By Barry FitzGerald
Resources Editor
May 27, 2005

BHP Billiton has cracked the whip over WMC Resources shareholders, telling them that its slow-moving $9.2 billion takeover offer was all they would be getting and that its bid would not be extended beyond next Friday unless it had more than 50 per cent of WMC in the bag.

The get-tough move by BHP means it has withstood pressure from some quarters to sweeten the offer to take account of booming uranium prices or to at least make it more tax friendly by offering a scrip alternative.

Although its bid is more than 11 weeks old and is endorsed by WMC directors, BHP's offer has attracted acceptances for only 4.49 per cent of WMC. Most WMC shareholders, including the hedge funds that hold 30 to 40 per cent of the company, showed no inclination to accept while there was a chance of a counter-bid.

Speculation that Rio Tinto would take on BHP and make a counter-bid has been enough to keep WMC shares trading at levels above the BHP bid price of $7.85 a share. Rio has not felt the need to help BHP's cause by ruling itself out as potential counter-bidder.

BHP's decision to stampede hedge funds and other shareholders into accepting its offer by next Friday is not without risk, as it now needs to get to 50 per cent of the company by next Friday. Should it get there, it will be able to declare the offer unconditional, while the bid itself is automatically extended by two weeks.

The sharemarket yesterday gave BHP good reason to believe its tactic would work. WMC shares fell 7  ¢ to $7.83 on heavy turnover of 35.8 million shares. That is the first time the stock has closed below the bid price of $7.85 since BHP launched the offer on March 8, knocking out Zug-based Xstrata's $7-a-share bid (ex dividend) in the process.

BHP chief executive Chip Goodyear said WMC shareholders now needed to make a decision. "We believe that our cash offer of $7.85 per share is full and fair. All the necessary regulatory approvals have been received and shareholders have been given sufficient time to allow them to assess the merits of our offer."

He said it was not in the interests of BHP or WMC to further extend the offer. "Should the offer lapse, we will continue to follow our clearly set out strategy focusing on value creating opportunities," he said. The market believes that in the event that it does not get WMC, BHP is likely to buy back its own shares.

WMC itself became something of a cheer squad for the BHP tilt yesterday. WMC chairman Tommie Bergman said the offer represented "excellent value" and that since the offer was announced, no other approaches had been made. He said directors would be accepting for their own shareholdings, without saying when, but only if a superior offer did not emerge.

The company warned that its share price could fall below the offer price if BHP's bid lapsed.

WMC managing director Andrew Michelmore has the biggest shareholding among the directors. He was last listed as holding 556,128 shares, worth $4.3 million at BHP's bid price. Executive director and executive general manager for nickel Alan Dundas holds 311,284 shares worth $2.4 million.

Although more than 500 WMC corporate jobs are likely to be lost on BHP being successful, insiders said yesterday there was relief that BHP had finally achieved some momentum in its offer.


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## Investor (27 May 2005)

*Re: WMC $13.50 ?*



			
				Warren Buffet II said:
			
		

> Investor,
> 
> .. who else is going to sell?
> 
> WBII




Also, most retail investors would sell to BHP, because not many people use DCF analysis. 

To be fair, $7.85 is a tidy profit from the $5 a year ago, especially when special dividends of $0.20 are taken into a/c. A 61% profit excluding the ordinary dividends that were paid.


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## Investor (28 May 2005)

*Re: WMC $13.50 ?*

*BHP routs Rio and even outplays the hedge funds*
By Alan Kohler, The Age
May 28, 2005

Leigh Clifford seems to be that bidder at the auction who has his paddle poised but is paralysed by indecision. The timorous Rio Tinto chief is looking across the room at the lean, aggressive-looking American who has just barked out the last bid, and is muttering to himself: "Damn, I should have bid. But that bloke looks so determined what's the point? Oh well, I'll bid on the next one."

Except there is no next one like WMC Resources.

The strangest thing about the auction for WMC, apart from the fact the company was split and put up for sale by its board in the first place - which is one of the strangest things in the world - is the absence of Rio.

*You would think it needs WMC more than BHP Billiton: it is about to run out of uranium in the Northern Territory and Namibia; in about five years it will go from supplying 10 per cent of the world's uranium to zero*.

With this in mind, CEO Leigh Clifford dispatched due diligence teams to look over WMC, especially the Olympic Dam uranium/copper mine. He then watched meekly as Chip Goodyear made a decisive play and sent the original bidder, Xstrata, packing.

Then, on Thursday, the hedge funds were sent packing when BHP's Chip Goodyear said the bid would definitely close next week if BHP didn't get 50.1 per cent. The funds had placed a perfectly logical bet on a Rio counter-bid, taking WMC's price as high as $8.14 - nearly 30  ¢ above the BHP offer - but they lost the bet.

As they would say in real estate, Goodyear has played a beautiful auction and comprehensively defeated Leigh Clifford.

*Perhaps it's because the talk around the industry that he is planning to retire within two years is correct, and his mind is on more short-term matters*.

Why Rio stood out of the auction is not actually known because, unlike Coles Myer's John Fletcher, Clifford has chosen not to share his thoughts on the subject. (Fletcher put out a statement this week explaining why he had not bid for Foodland - leaving it to Woolworths to overpay alone. It was a good idea: Roger Corbett of Woolworths had a victory but Fletcher doesn't look like a loser.)

In any case, it looks a crucial lost opportunity for Rio Tinto: BHP is on the threshold of an acquisition that will give it as decisive a lead over Rio as Woolworths is opening up over Coles Myer.

Hedge funds, which now own around 30 per cent of WMC, will accept BHP's price next week and tear up their betting slips with a mild curse.

*Meanwhile the polling of retail investors, who together own 20 per cent, suggests that half will accept and half will not*. Meanwhile, most fund managers will probably accept next week as well.

*That means unless Rio belatedly stirs into action, BHP Billiton will have between 50 and 90 per cent by the end of next week and will declare the bid unconditional.*

Mopping up the rest will be helped by holding the bid open until after July 1, because a lot of retail investors want to put off accepting until the new tax year.

At the same time as the mop-up is happening, as I understand it, at least the top two people in each WMC operation will be replaced by BHP people.

Apparently the need for some cultural realignment, plus the opportunity to inject a wave of career development and movement into BHP's global ranks, is too great to ignore, so few if any senior WMC people will be kept.

Six Australian mining operations will join the BHP portfolio, so six homesick expatriates spread around the BHP empire - upon which the sun never sets - will get to return home.

This apparently will include Olympic Dam, which is being successfully managed by Seamus French and Bruce Farmer (a former Rio executive), even though BHP has no uranium operations of its own.

But as WMC is dismembered and consumed by BHP, it is worth reflecting on the extraordinary sequence of events that got us to this point.

*Five years ago BHP, then managed by Paul Anderson, approached the then WMC chief Hugh Morgan to discuss a takeover*.

According to Alcoa, WMC's alumina partner, Morgan then approached Alcoa to act as a white knight. Alcoa proposed a bid but it wasn't enough.

The demerger plan was hatched as a means of forcing Alcoa to make a firm bid at a higher price, but it didn't work: its chief Alain Belda refused in a huff. Morgan desperately tried to get bids out of BHP, Rio and Anglo American, but failed.

So the demerger had to go through: Hugh Morgan retired with an explosion and WMC's adviser Deutsche Bank got $22 million in fees (which it wouldn't have got because there would have been no bid to defend against).

If WMC had been kept whole - with Olympic Dam, nickel and the alumina cash flow - it would now be looking to expand, perhaps bidding against Xstrata for mining assets around the world.

As it is, a great Australian company that had been run down, but was in the process of becoming great again, was destroyed.


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## Investor (28 May 2005)

*Re: WMC $13.50 ?*

The Daily Resource    
By Dave Forest  
May 27, 2005 
www.caseyresearch.com 

Are the world’s largest national uranium reserves being opened up to mining? That’s the message that came from Australia yesterday, with the federal government calling on Aussie states to end bans on yellowcake extraction. "At a time when export prices are off the charts and we need the exploration dollars,” Industry Minister Ian Macfarlane told The Australian, “potential investors must look at a jurisdictional map of Australia and think it's all too hard and confusing."

It indeed looks the world will increasingly need that uranium, with China’s SinoCast China Business Daily News reporting that the National Development and Reform Commission of China has just approved new nuclear reactors in the northeastern Jilin province. The new capacity will reportedly total 5GWe.


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## Investor (29 May 2005)

*Re: WMC $13.50 ?*

From The Weekend Australian:
Andrew Trounson
28may05

WMC shares continued to weaken yesterday with hopes of a late counter-bid to BHP Billiton's $9.2 billion offer all but dashed.

BHP brought matters to a head this week, refusing to extend its offer and warning that unless it secured 50 per cent of WMC by the end of next week it would walk away from its $7.85-a-share bid. 
That was enough to spook speculators who had been punting on a rival bid from Rio Tinto. Having shed 7c on Thursday, WMC shares gave up a further 1c to finish at $7.82, their lowest close since BHP launched its bid in March. 

Brokerage Merrill Lynch tipped the bid as a done deal with a late counter-bid unlikely. Mining analyst Vicky Binns said there were no indications that Rio or Canadian nickel producer Inco were going to bid, and that *Anglo American boss Tony Trahar had made it clear he wasn't interested in acquisitions at a time of high metal prices*. - _note that this rules Anglo American out as a potential bidder for ZFX - speculation on the ZFX thread_. 

Having previously touted the possibility of a counter-bid, Commonwealth Securities said there was now little chance of a rival offer. 

"The risk of losing this takeover premium now outweighs the risk of potentially higher bids," CommSec said. 

WMC chairman Tommie Bergman will reiterate his recommendation that shareholders accept the offer when he fronts the annual general meeting in Melbourne on Monday. 

BHP's bid is due to close on June 3, but will be extended by two weeks if it secures 50 per cent. BHP yesterday increased its holding to 5.2 per cent, which, combined with an economic interest held through a swap deal, gives it 9.5 per cent. 

But while BHP appears set to win its battle for WMC, it faces another in Peru where protesters have forced it to close its Tintaya copper mine indefinitely. 

Protesters are demanding that BHP increase its agreed $1.5 million investment in the area to $20 million. BHP said it had invested $2 million in local projects. Some 2000 people rallied at the mine on Tuesday, vandalising mine property. 

Local police claim the protest has been whipped up by the Shining Path Marxist guerilla group, which has largely been defeated since the capture of its leader in 1992. 

According to police, a Shining Path pamphlet called on locals to "rid our land of treacherous dogs and these wretched gringos who steal our resources". 

Tintaya accounts for less than 1.5 per cent of BHP earnings.


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## Investor (1 June 2005)

*Re: WMC $13.50 ?*

In The Australian newspaper today:

Robert Gottliebsen

BHP's $7.85 bid for WMC was significantly above the low bids from Xstrata and will be sufficient to gain strong institutional support. But in the unlikely event that BHP does not secure 50 per cent by Friday evening the bid will be withdrawn and WMC shares will fall sharply. Of course, any big fall will doubtlessly cause Rio Tinto to redo its sums. 

If BHP gets 50 per cent of the stock it will declare its bid unconditional and remaining WMC shareholders will need to decide whether to stay with a WMC minority position for the longer term. Those who decide not to accept, again face the near certainty that their shares will fall in the short term. 

Longer term, any independent WMC shareholders are staking their fortunes on uranium. *I think it likely that uranium will be one of the world's most valuable minerals because China and India are swinging to nuclear and the US is likely to follow*. 

The independent report valued WMC at $8.24 using a low uranium price of $US22 a pound. *A more realistic price would be above $US30 a pound which would make WMC worth above $9. Some individual WMC shareholders have big capital gains tax liabilities and may prefer to ignore the share price fall and ride the uranium boom*. 

WMC tried to get BHP to offer a share exchange alternative but the big Australian refused. Because of the likely WMC share price fall, BHP will probably win 100 per cent control. But BHP is an ethical company and if there is a significant minority stake in WMC they will not be raped. 

The current stories coming out of Olympic Dam say that the former Billiton elements in BHP have won the internal battle and will remove top Olympic Dam expertise and try to control Australian uranium production from the copper operation in Chile. If these stories are half right then BHP shareholders will be grateful for a WMC minority stake which would prevent BHP from taking such a big management risk, given it has no experience in uranium production.


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