AGM - Allegiance Mining

[alicemaude]

I have held this share for a fair while now and of late the chart gives the apperance of an uptrend, which you would expect with production just around the corner. My biggest problum is that I watch my shares too intentely and loose heart just when they come good and sell to soon. This time I am determined to hold hold hold, as the number of times I have sold to early brings me to tears.

 

[Sean K]

ZFX takeover for AGM. Wonder if the market will expect another offer from someone else. Not sure who that could be? Might be interesting to lok at other Ni juniors who receive flow of support at the idea of further acquisitions...

17 December 2007

Zinifex Offer for Allegiance Mining

Highlights:

• All cash Offer for Allegiance
• Two tiered pricing – A$0.90 per Allegiance share, increasing to A$1.00 per Allegiance share if Zinifex acquires more than 30% or if the Allegiance Board recommends the Offer
• Zinifex’s Offer represents a significant premium over Allegiance’s last closing price and 1 month VWAP

 

[nioka]

The offer for AGM is well below the price I would expect AGM to be worth when they are producing. I personally would expect the SP to be in excess of $2 following successful start up of production. This is a opportunistic offer well below the potential value. Compare the history of SMY and the SP rise following successful production. I hope the directors hold out against such a low offer.

 

[prawn_86]

nioka,

its true that a rerating usually occurs after production, but generally there are teething problems at first.

I can think of at least one co where the SP has gone down once production started, and i couldnt see any reason why...

 

[grace]

I have held this share for a fair while now and of late the chart gives the apperance of an uptrend, which you would expect with production just around the corner. My biggest problum is that I watch my shares too intentely and loose heart just when they come good and sell to soon. This time I am determined to hold hold hold, as the number of times I have sold to early brings me to tears.

Just as well you held onto this one! I've been waiting too, but I think the Zinifex offer is way undervalued as well.

 

[shag]

I think if they or someone upped it to near 1.20-its historical max then she'd be all go as i'm a bit sick of the slow ride up and fast decline. but i guess thats a big premium over 70 odd cents.
so much upside in company from resource potenmtial to alternative projects but i guess many companies out there like such.
cheers shag.

 

[nioka]

nioka,

its true that a rerating usually occurs after production, but generally there are teething problems at first.

I can think of at least one co where the SP has gone down once production started, and i couldnt see any reason why...

SMY had plenty of production problems but still managed an increase of over 600% for me. I still expect AGM to appreciate considerably and well past the offer price in the very near future. I have mailed AGM asking that they dismiss the offer.

 

[nioka]

The directors of allegience unaminously have the view that shareholders should take no action regarding the Zinifex takeover offer until the board has fully considered the offer. They say the offer is unsolicited and opportunistic.

 

[hoppielimp]

Hi Guys,

Absolutely...AGM is a Co. with a cash cost around $3. Producing 8500 Tonnes of Ni per Annum, even at USD 11/lb clears $8/lb.

I think Zinifex are secretly dreaming.

Possibly AGM is worth anywhere between $1.45 to $2.16 depending on what P/E's are used.

Zinifex, you aren't getting my shares at those levels.

 

[prawn_86]

Hoppie,

Is AGM actually producing yet though?

There is a big difference between actual annd forecast EPS

 

[hoppielimp]

Hi Prawn,

True, AGM are not producing yet, but I'm doin my numbers on what I think, not what AGM advise. USD 11/lb is significantly below current metals price and I have also assumed $8/lb clearance and full tax on this, which will not be the case as they will have many costs to off-set, so I am being very conservative.

However yes, I agree, Actual is not Forecasted, however I guess you have to start believing at somepoint, otherwise even for an established company you can still apply Actual is not Forecasted, then I guess you would just put it in the bank, and hope they don't have a massive sub-prime exposure and go belly up.

//Edit AGM are only months away from producing, so unless something going horribly horribly wrong, I would think that producing is a foregone conclusion...I could be wrong, but....

 

[jonojpsg]

Let's not get too caught up in conservatism here - AGM have most of the construction complete and mining/stockpiling of ore is well under way. There really is nothing to stop (discounting acts of God, earthquakes, terrorist attacks, etc.) the nickel being produced as of early next year. Whether there are minor delays because of bad weather (always a possibility on the West Coast of Tassie ) makes little difference.

Now the nickel price is obviously a large factor, but as has been pointed out, even at $11/lb AGM will be rolling in it.

I agree that $1.50 minimum would (should) be required to get the board interested.

 

[Sultan of Swing]

I went for a drive around Zeehan a few weeks ago and the place is buzzing. It's the first time in a lotta years. There are also other mining projects happening down the West Coast too. They're looking for a bunch of miners and related trades over the next year or two.

The reason I went down? To go check out the house I bought. It settled this week. Rents are going up quite a bit as there's now a large housoing shortage. Like always happens, I should have bought a couple of houses a year ago as they've almost doubled in price the past year but there's still quite a bit of upside IMO.

We also tried to go for a drive past the mine but only got to the entrance. I told them I owned the mine (well, a wee little bit of it but apparently I still had to make an appointment.

Oh well, it was a fun day.

And yes, I agree there's a lot of upside with the AGM SP too.

 

[mexican]

Min of one year production first, in that time more Ni discoveries in tenement should occur adding more value and mine life.
If anything ZFX have made alot of media coverage with take over offer ($1 LOL), some investors who did not know AGM before know who AGM is now

 

[nioka]

AGM was once one of the most talked about stocks on ASF and HC. The construction phase, because it took time, resulted in a lot less company news and announcements than there had been when the prospecting and drilling announcements were anticipated. Lack of news meant lack of interest. It was a good time to accumulate. Zinifex did at least draw attention to the stock which was undervaluated by the market. This is proven by the Zinifex offer and the following price increase in the SP.
In the past I have compared the SP of AGM to that of SMY. They have followed similar paths with a time distance of about 18 months. SMY have had a price 5 to 8 times that of AGM. Given the market cap and the difference in the number of shares in each it would be fair to say that there is a good argument for the SP of AGM to be around the $3 mark once production starts. An examination of the facts should result in this statement not being accused of being just a ramp.
AGM directors claim to have found a new nickel province which further drilling will show, drilling which they will concentrate on after the commissioning of the plant for production. Further finds should add to the value of the company.

 

[andy.]

Prawn,

AGM presented at the recent London Mines and Money Investment Forum, and they said they were confident of a March 2008 startup.

I took the opportunity to speak to Tony at the stand, and he is confident they will meet the revised date, so until he says otherwise, I'm going along with that.

With mining stocks there's always a delay, and we have already had one here, (it's par for the course), and there may well be another, as you rightly say, so if this causes a concern then the mining sector probably doesn't match your risk profile.

AGM have done very well for me, and I expect them to continue to do so in the future, regardless of any small delays.

 

[banska bystrica]

AGM will probably get cleaned up at around $1.20-$1.25. ZFX or whoever ends up with it will have paid top dollar on what AGM have identified so far. The big question is whether this is a new nickel province. Only future drilling will answer the question.
AGM management have got caught with their pants down and those shareholders who were prepared to hold for 5 years will miss out big time. The fact is AGM was severly undervalued and the crunch came with the delay in production. The share price never really recovered. The share price should have been around the $1 mark and then this opportunistic bid would never have been made. $1.40 would have been the starting bid rather than the ending bid and as I say, I'm not so sure anyone will pay $1.40 in this market. Having said all that, I have made a sizeable play on AGM at 98c after the bid came. There's no downside from 98c and a quick 25-30% seems a formality.

 

[nioka]

The directors have posted a message to shareholders advising them to do nopthing in regards to the Zinifex offer. They once again referred to the offer as opportunistic and that Allegience is at the beginning of a very exciting journey. Work continues at the Avebury mine with production scheduled to commence in the first quarter 08 and start delivering it's potential to shareholders.
I guess we can expect another offer from Zinifex. I won't be interested in anything under $2. Maybe if they offer that and their SP keeps falling a change from AGM to ZFX could be considered. Even then I think I would lose out in the long run.

 

[banska bystrica]

A purchase at $1.04 is money for jam. I have just taken another slab of AGM now averaging $1.01. $1.20 would be the minimum and personally I can't see too many shareholders even accepting $1.20. $1.40 will probably get the instos and small shareholders are really at the mercy of the bigger players. It's a crying shame because long term I believe we would see much much higher prices. Alas, management were slow off the mark with resource upgrades and therefore were a sitting duck for ZFX. AGM had to concentrate on getting production started so were caught between a rock and a hard place.
I am not interested in a scrip offer. $1.40 will probably get me as I have sold some solid blue chips to take this fairly big punt. I wonder why many existing AGM holders are doing just that. Holding instead of buying more? There is no downside to the current price. I have spoken to a few shareholders and they are not buying more, just sitting. It's got me beaten. If all shareholders were in there buying more, the price would firm up anyway ensuring the next bid was a reasonable one and not opportunistic. If the takeover falls through, AGM will drop in price short term but shareholders will still be better off in the long run by holding through 2008, 2009 and beyond.

 

[mexican]

For me I am more than happy to sit on AGM, as I jumped on at .37c.
Remember it is a Ni provience it is just a matter of how much is there (Melba flats and so on)
It also is a top grade Ni depsoit, one of the best in the world. Not your normal every day pig Ni.
Could jump on again, but more than happy with my outlay and profit.
Good luck and it is a NO from me ZFX.
I am here for the ride with AGM.