CSM - Consolidated Minerals

[questionall_42]

This TTL bid looks very fragile. It's a bit like South Australia bidding to takeover the rest of Australia by offering shares in South Australia.

Agreed. But it does create a "real" market baseline for CSM shareholders to get a better bid from Pallinghurst ($3.20 barring any collapse of the TTY sp). Smart move by Kiernan though as it opportunistic to use TTY scrip for the bid.

CSM will be sold; this is the war. The next couple of weeks will be interesting.

 

[noirua]

Agreed. But it does create a "real" market baseline for CSM shareholders to get a better bid from Pallinghurst ($3.20 barring any collapse of the TTY sp). Smart move by Kiernan though as it opportunistic to use TTY scrip for the bid.

CSM will be sold; this is the war. The next couple of weeks will be interesting.

Unfortunately TTY have crashed to $1.10 from $1.48 and that makes their bid worth $3.10. If I were a TTY shareholder I would be as mad as hell about this - an absolute no-goer at this stage.

 

[Rimtalay]

Don't be so sure, the fight has only just begun. I'm getting feedback from hundreds of ConsMIn shareholders on the Vote No and they'd rather have script from TTY and still own ConsMin assets than give the company to Gilbertson for chicken feed.
The battle is just starting.

 

[Rimtalay]

Will Gilbertson pay 50% of Newconsmin profits as dividends. I think not.
No mention in the scheme document. It would be foolish to think that because they paid 50% before that they will pay in the future.
I bet there will be little to no dividends paid to shareholders in the future.
Why not ask Baxter, I'm sure he'll tell you.
rbaxter@consminerals.com.au

 

[Sainter]

They're not paying 50% now anyway, despite that original promise. More kept for Gilbo to play with, assuming he wins control. For me a bid of $2 + 1.5 TTY shares per CSM share is about good enough. Or for Gilbo, $5 per share.

 

[noirua]

They're not paying 50% now anyway, despite that original promise. More kept for Gilbo to play with, assuming he wins control. For me a bid of $2 + 1.5 TTY shares per CSM share is about good enough. Or for Gilbo, $5 per share.

Unfortunately the bid is $2 + 1 TTY share. It looks as if this TTY bid has not been thought out very well at all. Worth just $3.05 and looking very shakey indeed.

 

[Rimtalay]

Vote NO for all bids at the current offer price.
ConsMin shareholders are being mislead by everyone.

Nobody is telling the truth, ConsMin would be far better off if the management were replaced and they just got on with doing the job. Unfortunately Baxter and Carter have put themselves in a no win situation and haven't the guts to step away, and say NO to everyone.
Both deals stink, Michael Kiernans is the best as ConsMin shareholders will still have a voice and the current management will go.
As I said nobody it telling the truth, and everything else is covered up.
Ie The scheme documents do not even mention BioHeap http://www.pacificore.com.au/
This is 38% owned by Consolidated Minerals, BioHeap are about to produce copper with China Western Mining using the BioHeap leaching process, could be worth many millions.
There is no mention of the dividend payment method in the scheme documents. The original 50% of profit paid as dividends as set up by Michael Kiernan will go, Nobody realises this, the management have not told shareholders about this.
I also take issue with Brian Gilbertson's statement “stronger short-term outlook for manganese-mainly driven by unusual supply disruptions from a number of key producers”.
There are many other reasons for the increase in manganese ore demand and pricing, ie.
a) Stainless steel 200 series production in China, which uses more manganese and ferro-chrome and less nickel.
b) Outokumpu, has also launched a duplex stainless product, LDX 2101, it’s a nickel-free s.s. and utilizes a greater percentage of manganese instead of nickel.
c) Hadfield Steel contains 13%+ manganese. This type of steel requires toughness and wear-resistance for applications in gyratory crushers, jaw crusher plates, rail steel and cutting edges for earth-moving equipment.
d) China plans to expand its rail system over the next decade. I note that last year China built 36,000 new railway carriages, and plan to build 66,000p.a. by 2010. Each carriage contains 5-6 tons of s.s. The railway system will need 20,000 km of new track. ( high manganese grade steel)
This increase in manganese ore pricing could continue for years.

 

[questionall_42]

Unfortunately the bid is $2 + 1 TTY share. It looks as if this TTY bid has not been thought out very well at all. Worth just $3.05 and looking very shakey indeed.

I don't think it is a fair criticism to claim that the TTY bid is not thought out well. Kiernan is behind it and, given the ASX media release today, Noble, DCM DECOmetal and Lehman Brothers are too. Opportunistic maybe, but well timed (in relation to TTY's sp rise and the Pallinghursts protracted bid for CSM).

"Territory Resources Limited (ASX:TTY), an independent Australian resources group, confirms if access to due diligence is provided, Territory is prepared to consider a $2 per share cash consideration and 1 Territory share per CSM share or 3 Territory shares in an alternative proposal.
Territory is also pleased to announce Noble Group and DCM DECOmetal have committed to provide $200 million of acquisition funding comprising $175 million at $1.00 per TTY share together with a $25 million loan.
In addition, global investment bank Lehman Brothers has provided a “highly confident” letter for up to $250 million of bridging funding on commercial terms and subject to due diligence.
Territory has also appointed institutional broker, Euroz Securities Limited, to raise the balance of funding through European and Australian institutions."

 

[ta2693]

TTY's cap is 195m
CSM's cap is 704m

CSM is more than 3 times bigger than TTY. How come is TTY going to take over CSM?
I think CSM takeover TTY is more likely than vice versa.

 

[Rimtalay]

The problem is, CSM is being run by a pack of half-wits.
The management is in a no win situation.

I've gone on record that I do not support either bid, this is the concensus of all Vote No shareholders. I hope that they both start a bidding war.

Kiernan to view ConsMin accounts
Kevin Andrusiak
July 05, 2007
MANGANESE miner Consolidated Minerals has relented and allowed a second bidder to enter its quasi-auction process, opening its accounts to former managing director Michael Kiernan.
The ConsMin board was left with little wriggle room after a Territory Resources-led consortium revealed the funding sources backing its firm offer for ConsMin, which effectively puts a floor price under the scrip-based component of its indicative offer.
Territory has nine days to complete due diligence and make an offer to shareholders before a July 19 scheme-of-arrangement vote on a rival Pallinghurst Resources-led bid.
Territory advisers from Deloittes, Clayton Utz and Lehman Brothers (part of its bid team) will roll up to ConsMin today to wade through accounting, taxation and financial documents.
Mr Kiernan, now chairman at Territory, led ConsMin for eight years before he resigned under pressure from the board.
He said he wanted two weeks for due-diligence access, but was confident it could be done within the tight time frame.
"This board has finally buckled under immense pressure from shareholders and institutions," he said.
"Subject to no serious bombs or landmines in the ConsMin accounts or legal affairs, I'm sure we can meet the July 13 deadline. It's a tall ask, but we will roll up our sleeves and it starts now."
Territory advisers will get limited access to ConsMin's legal, accounting, taxation and financial advisers before it firms up its offer for the company. Early indications are that the Territory offer (partnered with Hong Kong commodities traders Noble Group, Lehman Brothers and DCM DECOmetal) will pay $2 cash and one Territory Resources share for every ConsMin share held.
Noble and DCM will each subscribe for 175 million Territory shares at $1 each and provide $50 million in loans.
Lehman has given Territory a "highly confident" letter to provide $250 million in bridging finance to complete the deal.
It comes as the Pallinghurst-led consortium, which is offering $1.68 cash for every ConsMin share held plus 40 per cent in a new company which will house the ConsMin business, flies to Africa in the hope of securing another chrome-based asset to lure undecided shareholders before July 19.
Pallinghurst's offer is being made in conjunction with Investec Bank and US coal miner AMCI.
ConsMin shareholder Glenn Stedman, who has orchestrated a public campaign against the Pallinghurst bid, said ConsMin management had put itself in a no-win situation.
"Both deals stink," Mr Stedman said. "Michael Kiernan's is the best as ConsMin shareholders will still have a voice and the current management will go. Some shareholders are talking about a class action against the company and directors. I know that the information of manganese and chrome ore had been withheld from the market for more than six weeks."
ConsMin shares closed down 2c at $3.07, valuing ConsMin at $699 million.

 

[kooka873]

I too would be happier with CSM if both Baxter & Carter stepped down and were replaced with quality managers.

As for TTY bid - I have lingering concerns about how robust the TTY share price would be in future if TTY is successful. Whether my fears are well founded or not - I no not.

Again I agree with Rimtalay. Best outcome would be a vote NO for both proposals & for the present management to step aside, would that happen? Well if shareholders make their concerns/desires known anything is possible.

Focus on what we want guys - not on what we don't want.

Kooka

 

[Rimtalay]

I can see NO good reason to accept either bid.
Both bids undervalue ConsMin.
Remember manganese sales for this quarter are at US$7.50/dmtu which will relate into a $200 million profit before tax. Chrome ore is up 100% and should result in FY08 pretax profit of $25 million +. Nickel is now unhedged and if they target 5000-6000 tons for the FY08 it will mean a gross income of AUD$200 million.
Why sell consmin to someone else.
Why not put in good management to the run the show.
At the time of the vote on the 19th July we need shareholders to stand up and vote NO to the pallinghurst deal and a vote of NO confidence in the management.

 

[noirua]

I still think that the Pallinghurst Consortium (Pallinghurst, AMCI and Investec) bid for Consolidated Minerals will win out in the end. The basic plan, to eventually form a large mining company, seems to be the best idea by far, providing "The Price is Right".
A bid of $2 cash will come in time, and that will value the bid at $3.22 with CSM at $3.08 a share.

The AMCI coal set-up appears a strong part of the plan to have a diversified mining company. Glennies Creek Mine (85% AMCI) is 12km North of Singleton and the Ashton Mine (55% Felix Resources) - AMCI own 19.2% of Felix - is 14km North West of Singleton. These are two mines in the Hunter Valley that AMCI seem to have forward-plans to bring together in a greater NewConsmin. There are many more examples.

 

[Sainter]

But if that happens we'll be left with the same donkey (Ass, mule, take your pick) running the show and that is not good for shareholders. I'm with Rim that neither deal is acceptable ATM, but really, this thing is a 'steel' (haha) at current prices. Even the conservative Huntley's has an 'accumulate' on them at the current price, with a 'hold' from $3.20-$4.20. Their research and angle looks uncannily like what Rim and I have been posting, but I can assure you neither of us works there!
Remember, look at the dollar value of CSM. Add 0.1 and there is my previously projected 07/08 PER. Would I pay $3.20 for a stock on a PER of 3.3 and central to the China story? Too right I would, and I have.
Cheers!

 

[Icharus]

Bigger is not always better.
If Pallinghurst wanted to make a large mining house where all shareholders would benefit from the amalgamation they would do it now. Instead the other assets that are speculated to be folded into the new CSM will be done when pallinghurst has control. You can guarantee that there will be a control premium added to the purchase price which will only further dilute the 40% that current CSM shareholders will have.

Speaking of premiums for control, where is the premium for the pallinghurst bid? Are you seriously suggesting selling your shares at $3.33 a paltry 8.12% above fridays close?.

At $1.19 friday close the TTY bid 3 for 1 values CSM at $3.57 and you haven't lost anything. Control of TTY will then be in the hands of CSM shareholders. You will have new management in the form of MK and an iron ore project that is still undervalued by the market.
Also there is the blue sky of a potential manganese project capable of producing 500 000 tpa and exploration on the francis creek site to double the iron ore project

At least there is enough blue sky and value to maintain $1.19 for TTY and if you wanted out, you get an effective $3.57/ share.

In fact I was first and still are a shareholder in TTY and when MK made a bid for CSM I started to buy some CSM because I believe that in the end a 3 for 1 deal represents good buying.

However if someone outbids TTY bring it on! A profit is a profit but why sell yourself short on the idea of bigger is better?

BTW Wilson HTM has a buy recommendation on CSM valuing them at $3.80 plus. I believe Andrew Peddler is the analyst.

 

[noirua]

If TTY drops the bid for CSM then the share price may return to $1.48 - that tells the story. Is TTY's effort just a spoiling bid ??????????

 

[Rimtalay]

I agree the bid from TTY is far superior to that of Pallinghurst. But why accept any bid. ConsMin has the potential to do a capital raising and acquisition if necessary, on our terms, not Gilbertsons.
Forget about the bull about AMCI folding in coal assets. Just wishful thinking.
They may sell it to New CSM at premium, we'll only hold 40% of the company and cannot say boo.
Part of Ryan's Notes - take on the deal
After Territory Resources increased its original proposal
for Consolidated Minerals’ (CSM) stock, CSM’s board
granted Territory limited access to conduct due diligence to
assist Territory to determine whether it will make a formal
takeover offer. Access is conditional on due diligence being
finalized by July 13. However, CSM’s board emphasized
that Territory has not made an offer and that Pallinghurst’s
bid, which CSM’s board favors, is due for a vote on July 19.
CSM’s earlier rejection on Territory’s first request for due
diligence came under fire by both Territory’s and a few of
CSM’s shareholders. “CSM’s Directors are merely custodians
of the company’s assets which places on them a fiduciary
duty to act in the best interests of all the shareholders,"
Territory’s Chairman, Michael Kiernan, said. "The shareholders
of CSM should be provided with an opportunity to
receive a superior alternative proposal to the scheme currently
before them."
Territory’s revised offer is A$2 per CSM in cash and one
Territory share or three Territory shares. According to
Territory, the new offer has a headline value of A$3.25 per
share based on Territory’s share price.
CSM’s directors have questioned the value of Territory’s
shares, saying that current stock prices don’t reflect the actual
value of the company.
Territory also answered CSM’s questions on funding. The
Noble Group and DCM DECOmetal will provide A$200-
million in acquisition funding comprising A$150-million at
A$1 per Territory share together with an A$25-million loan.
In addition, Lehman Brothers has provided a "highly confident"
letter for up to A$25-million of bridging funding on
commercial terms and subject to due diligence. Euroz
Securities has been appointed as Territory’s institutional broker
to raise the balance of the funding through European and
Australian institutions.
The ball is now in Pallinghurst’s court. Most analysts think
even with CSM’s board backing, it will lose unless it substantially
increases its bid. "CSM’s current directors are toast
if Territory buys CSM," one analyst pointed out. "Their fate
is in the hands of Pallinghurst."
Finally, Pallinghurst, in a possible move to bolster its bid,
is the subject of rumors that it wants to take an interest in
Kalahari Resources, with a Pallinghurst executive saying the
company has signed a MOU on a major manganese project
in southern Africa. "It’s either Kalahari or Samancor
Manganese," another observer suggested. "And, both are
long shots."
Meanwhile, Kalagadi Manganese is aiming to decide on
"preferred" strategic partners (two or possibly three), to
negotiate with by the end of July 2007 in order to conclude
a deal with the most appropriate partner.
In terms of selection criteria, the overarching criteria are
the anticipated value added that the prospective partners will
bring to Kalagadi Manganese and its current shareholders, a
Kalagadi advisor explained. The proposed price to be paid
for an interest in Kalagadi is important, as it will limit the

dilution of Kalahari Resources participation in Kalagadi
Manganese going forward. Remaining criteria includes the
partner’s ability to facilitate project (debt) financing, operational
expertise (mining / processing / smelting) which need
not be manganese specific, securing / committing to product
offtake, and the level of control that the partner wishes to
secure.
A separate IPO for Kalagadi Manganese or Kalahari
Resources is definitely under investigation, specifically as an
alternative to sourcing funding from a SEP.
Japan Oil, Gas & Metals National Corp. will host a tender
for 11,073.5 mt of standard-grade ferromanganese (73-78%
Mn) from the Japanese national stockpile on July 20.
Japanese consumers and producers can bid for the material
but traders cannot. Japan Oil, Gas & Metals will set up the
minimum price. In April 2004, Japan Oil, Gas & Metals sold
15,000 mt of high-carbon ferromanganese. The national
stockpile contains 32,665 mt of high-carbon ferromanganese
equivalent of 31.8 days of national consumption.

 

[Sainter]

BTW Wilson HTM has a buy recommendation on CSM valuing them at $3.80 plus. I believe Andrew Peddler is the analyst.

Hey, I wonder why this isn't up on the CSM website? All those that reckon the Pallinghurst bid is good (huh?) seem to be on there.

 

[kerosam]

i rather have M Kiernan who knows the in and outs of the coy since he founded the coy. and too uncomfortable for me to let someone else control 60% of a company and take the rest of the shareholders as suckers.

 

[kooka873]

Is Michael Kiernan still a shareholder in CSM? If so anyone know how much stock he retains?

A pity Michael Kiernan got too greedy with his proposed increase in pay towards the end of this term as MD with CSM. Had he been a little less greedy or waited a while whilst CSM grew in capital value perhaps shareholders would have been more at ease with his desired increased pay AND we wouldn't find ourselves in this situation - but that's the past.

If CSM really is valued at $3.80+/share by Wilson HTM - then this really does expose current CSM management doesn't it.

Appreciate the continued research & comments in this forum. Certainly helps/ed me make an intelligent & informed decision whilst drastically reducing the amount of time required on research. Again..not much research or intelligence required to know that the Pallinghurst Consortium proposed deal smells most foul.

This way to the door Mr Baxter - do not pass go, do not collect $200. Good bye.