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CSM - Consolidated Minerals

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Hi Rimtalay,

Yes enjoyed your tongue-in-cheek post about Michael of July 12th re his trucking background. Having been a CSM holder for over 5 years I knew of this background.

I too gathered that Michael was a straight shooter & my support for him has nothing to do with the fact that my father was in the trucking industry also.
Another successful trucker was Lindsay Fox - no nonsense, direct & knows where he wants to go & what what he wants to do - 'driven with a passion' similar to Michael. Look at the growth of Lindfox. Pity there's no vision, drive & passion to be found in current CSM management - only .....well that's been covered before.

Still no word out at 5.55pm AEST from Territory Resources - perhaps something within the next couple of hours about the next offer. Dividend record date tomorrow.

Appreciated reading Wintermute's messages too - plenty of fire-in-the-belly by CSM shareholders as there should be right now. Noirua's welcome comments have added balance to this forum also.

We're in for an interesting week - buckle up for the ride, there could be many routes taken or offered on this journey.

Regards

Kooka
 
ConsMin suitor hits out at rivalKevin Andrusiak | July 16, 2007
PALLINGHURST chairman Brian Gilbertson has launching a stinging attack on the ethics of his rival in the fight for Consolidated Minerals, Territory Resources' Michael Kiernan, saying his bid amounted to "putting the foxes in charge of the chicken coop".

Although he was content to sit on the sidelines as Mr Kiernan and his financiers prepared Territory's offer for ConsMin - which relies on funding from Noble (ConsMin's biggest customer for manganese), DCM and US bankers Lehman Brothers - the hard-nosed South African businessman yesterday said Territory's plans to reconfigure its own board if its bid was successful created "potential for significant conflicts of interest" and made a "mockery" of board independence.

The ConsMin board has backed Pallinghurst's offer of $1.68 cash for each ConsMin share and two shares for every five held in a new company to house the ConsMin business.

Pallinghurst is on the verge of unveiling the acquisition of a South African chromite mine. It is also believed to have signed a Memorandum of Understanding to acquire an Australian coking coal asset.

"Noble is an intimate participant in the price-setting process for ConsMin's manganese," Mr Gilbertson said. "The interests of an agent in his marketing fees and commissions and in the associated logistics contracts are not well aligned with the interests of the principal."

Mr Gilbertson also questioned the intentions of Mr Kiernan and Noble's Richard Elman - who was also a board member of ConsMin during Mr Kiernan's eight year tenure with the company - as to why they sold ConsMin shares in September and October 2005 as the company negotiated lower-priced manganese contracts and just after they had backed a $40 million share placement.

Mr Kiernan announced his intention to resign just seven days before ConsMin unveiled the softer pricing outlook.

He also claimed that Bank Austria Creditanstalt, the preferred institution of DCM, could be in breach of the Corporations Act - if rumours that it bought 500,000 ConsMin shares prior to a June 25 ConsMin announcement that manganese prices had firmed were true.

ConsMin agents have sought to "out" the mystery buyer of the shares, but to no avail.

Mr Gilbertson also pointed out that Noble was rumoured to have been behind a purchase of 1.7 million ConsMin shares in the weeks leading up to the June manganese pricing outlook.

"Flawed corporate governance is a poor foundation on which to build a great company," Mr Gilbertson said.

Territory will go into a trading halt this morning before it announces its cash/scrip bid for ConsMin, likely to be around $2 cash and possibly 1.5 Territory shares. An alternative all-scrip component of 3.3 Territory shares is also on the cards.

Mr Kiernan also lashed out at Mr Gilbertson.

"I'm surprised Brian Gilbertson has descended into the sewer to make these grubby comments," Mr Kiernan said.

"This is the man who wanted me to be managing director or chairman of NewCSM, but I rejected the idea."

Neither Noble nor DCM could not be contacted for comment.

Mr Kiernan said no one had complained previously, when Mr Elman was a ConsMin board member. He said Territory would install up to four independent directors if its ConsMin bid was successful.

Meanwhile, ConsMin has also hit out at Mr Kiernan's claims that the miner had performed below shareholder expectations despite it posting a big turnaround in full-year profit to $31 million for 2006-07, in unaudited accounts.

Managing director Rod Baxter said: "When I started as managing director in July 2006 (taking over from Mr Kiernan) the company was in poor shape.

"Shareholders had lost confidence and the company's reputation in the marketplace was not good."
 
Ann out late today-TTY is putting in an offer tomorrow. Will be interesting to see how it stacks up, given the jump in CSM today.
 
Territory makes its move - MINING NEWS

Kate Haycock
Tuesday, 17 July 2007

AFTER a tense wait yesterday Michael Kiernan's Territory Resources has made its $966 million counter-bid for Consolidated Minerals, prompting ConsMin to postpone its shareholder meeting to decide the fate of the original Pallinghurst group offer.


Territory's official offer is for $2 cash and 1.5 Territory shares for each ConsMin share, which values the company at $966 million on a fully-diluted basis, based on Territory's current $1.10 share price.

The company's previous cash and scrip proposal for ConsMin was for $2 in cash, plus one Territory share.

The offer also represents a 32% premium to the high case valuation of ConsMin by PricewaterhouseCoopers, Territory said in its official bid today.

ConsMin is already the subject of a private equity takeover play led by Brian Gilbertson's Pallinghurst Group, worth $1.68 per ConsMin share, plus two shares in the "new ConsMin" for every five shares currently held.

Market observers have indicated the Pallinghurst bid is worth around $700-800 million.

Territory also confirmed today that the funding for the play will come from the company's major backers, Noble Group and DCM DecoMetal, which market much of ConsMin's manganese and chrome production and together hold around 12% of ConsMin's issued shares.

The two companies have given equity commitments to provide $150 million and $25 million respectively in an equity placement worth $1 per Territory share.

Further funding will come from US investment bank Lehman Brothers, which will provide an additional $320 million credit facility on commercial terms to fund the offer, some $70 million more than the $250 million credit offer Territory originally flagged.

In a market announcement this morning following Territory's offer, ConsMin said it would seek a 28-day adjournment to the scheme meeting on the Pallinghurst bid, and would confirm the new shareholder meeting dates once the court orders are received. The meeting was to be held this Thursday.

The board is considering the Territory proposal and will provide guidance to shareholders shortly, ConsMin said.

Shares in ConsMin fell 2c to $3.43 while Territory's shares were up 3.5c to $1.135 after it came out of its trading halt to make the takeover play this morning.
 
Consolidated bid battle marks miners out as a hot commodity
By Nic Clark
Published: 16 July 2007


Consolidated Minerals, the focus of a bidding war between rival Australian mining barons, has resurrected its fortunes in 2007. The group, which listed on the Alternative Investment Marker four years ago, posted net profits of $31m for the 12 months to the end of June 2007, reversing losses of $6.5m the previous year.

The management team can take huge credit for overhauling a strategy that was not working. It cut costs in its manganese division, diversified into nickel and expanded out of Australia. Coupled with the strength of commodity prices this year, Consolidated Mining's share price has almost doubled in eight months.

Success brought the inevitable takeover interest, which seems to have become a clash of egos between Brian Gilbertson, of Pallinghurst Investor, and Michael Kiernan, of Territory Resources.

Mr Gilbertson put out a joint statement with Consolidated in February outlining the benefits of a tie-up and will today up his takeover bid from $1.38 per share to $1.68. Consolidated's former chief executive Mr Kiernan asked shareholders to delay their votes on Pallinghurst's offer until he had finalised his own later this week.

The industry will watch with interest as the battle intensifies, although the board is expected to oppose Mr Kiernan, despite a higher prospective offer, as he intends to oust the current management.

Phil Swinton, an analyst at Hanson Westhouse, said that whatever the result, prospects looked "very good" for Consolidated. "They are making the right moves, and operationally they should improve further," he added.
 
Kiernan talks up ConsMin plans

Kate Haycock
Tuesday, 17 July 2007

TERRITORY Resources boss Michael Kiernan was the picture of confidence today after his company made its eleventh hour bid for Consolidated Minerals, claiming the play had shareholder support and detailing his plans for the future of ConsMin post acquisition.


In a conference call this afternoon, Kiernan said that Territory's bid for ConsMin, worth some $966 million fully diluted, was a fair offer for the manganese miner.

"I've been saying that under any stretch of the imagination our offer would be superior to the current scheme," he said.

According to Kiernan, the Territory scheme is worth around $3.70 per ConsMin share while the competing Brian Gilbertson-led Pallinghurst Resources private equity offer is worth around $2.90.

Kiernan also said the acquisition would give Territory shareholders a fair return and rejected charges that the offer of $2 cash and 1.5 Terrtory shares for every ConsMin share was too high.

"Our bid is not overpriced, the Pallinghurst bid was seriously underwhelming," he said.

Kiernan also confirmed that Territory would be selling ConsMin's nickel assets if the takeover was successful. However, he said this did not indicate the initial decision to take on these assets, taken while he was the managing director at Consmin, was an error.

"Underground mining is a very different psyche, and any underground operation – which is the nickel and also the investment in Jabiru – will be divested so Territory Resources can focus on being an open pit miner," he said.

"I've simply made a strategic decision that Territory does not want to be an underground miner."

Kiernan went so far as to call ConsMin's nickel interests, including Widgiemooltha and ConsMin's strategic stake in Jabiru Metals, "wonderful assets", and said that the company would pursue an aggressive exploration and development program of the company's wholly-owned assets before opening them up for sale.

"I made it no secret that, somewhere between six to twelve months, would be when the nickel would probably be on the market. It's going to require six months at least of kicking ass and shaking trees," he said.

Kiernan also said that his financial backer, US investment bank Lehman Brothers, was "very relaxed" about the $320 million credit facility.

After divesting the nickel, which would be worth between $250-350 million, he predicted Territory would have a healthy balance sheet.

"Our proposal, going forward, is that Territory would have very little debt once everything settles down and would have some $200 million of cash in the treasury to go and be worrywarts somewhere else with."

Kiernan also said there were already signs of shareholder support for the Territory bid, saying he had confirmed about 20% of ConsMin shareholders supported the company's offer.

"From our point of view, we've considered that the board has been an irrelevance for some time, and we've pitched our correspondence at the shareholders at ConsMin," he said.

"I think the shareholders are very pleased that they've got an alternative offer."

The new structure of the company post-acquisition and after divesting the nickel assets would see several subsidiaries operating Terrtory's various iron ore projects, as well as a Pilbara Manganese operation and a chromite subsidiary out of ConsMin's assets.

Kiernan also said he was not interested in "bidding wars" and would not comment on whether he would be willing to raise his offer for the company should Pallinghurst come in with another offer.

However, he made it clear that he didn't believe the Pallinghurst offer would appeal to ConsMin shareholders, and again referenced his history with ConsMin.

"Brian [Gilbertson] said that it was like putting the foxes in charge of the chicken coop – well us foxes built the chicken coop," he said.

"And in our days it was a bullring – it's only now that it's been stuffed with chooks."

Kiernan also flagged more acquisitions for Territory should the acquisition of ConsMin go ahead to create a "balanced portfolio of broad-based commodity supply".

Shares in Terrtory ended the day down 3.5c to $1.065, while ConsMin shed 10c to $3.35.
 
Macquarie: CSM - The Game Has Just Begun
18/07/2007

Territory Resources (TTY) has formally announced an off-market takeover bid
for Consolidated Minerals (CSM). The offer price consists of $2.00ps cash
and 1.5 TTY shares for each CSM share, implicitly valuing the bid at
$3.60ps. Macquarie Research Equities (MRE) believe that CSM is worth
considerably more following the recent movements in the global manganese
market. In fact, MRE believe that it is possible that the bid price moves
closer to $4.00/ share.

Coming over the top. The TTY bid compares with the current
Pallinghurst/AMCI/Investec offer for CSM of $1.68ps cash plus two shares in
NewCSM for every five shares in CSM. At the CSM closing price yesterday of
$3.35ps, the Pallinghurst bid implies a value of $3.02ps.

Booming manganese. Record manganese ore price levels were recently confirmed
for sales to China between August and October. Landed prices range between
US$7.25-7.50/dmtu CIF, representing more than double the average price
received for 2H07 (US$3.50/dmtu CIF). We have upgraded our FY08 and FY09
received manganese price assumptions (by c90% in the case of FY08).

FY07 result. CSM announced unaudited FY07 NPAT of $30-31m (pcp $6.5m loss)
with its June quarter production report. This was broadly in line with our
forecast of $33.8m after accounting for higher corporates (associated with
the Pallinghurst transactional work) and Jabiru equity accounted losses.

Macquarie Research Equities Recommendation
MRE maintain outperform recommendation on CSM and price target upgraded to
$3.80ps.

In an environment of mining equities typically trading at premiums (many
significant) to their fundamentally derived DCF value, and at much higher
short-term earnings multiples, CSM continues to look pretty attractive.

Given the recent movements in the global manganese market, CSM is now worth
considerably more than it was several months ago. In our opinion, both
bidding parties will need to, and are probably capable of, paying closer to
$4.00ps (in risk-weighted value terms).

Traders looking for maximum exposure to short-term movements in the above
mentioned share prices should consider the following equity warrants for a
high-risk, high-return strategy.

Investors and traders looking for short to medium-term leveraged exposure to
the banks’ share price should consider Macquarie Instalments for a higher
risk, higher return alternative to direct share investment.
 
guys, anyone had a look at the technical indicators? traders bullish on this one? i wanted to try it on Protrader. as its just a 'try out' disc, i only have info till 7th July.
 
Gilbertson spits the dummy. Not happy that the scheme meeting has been delayed.

Gilbertson flies in for a glass of whine
Jamie Freed
July 19, 2007


Wasted trip ... Brian Gilbertson.

A meeting to approve BHP's merger with Billiton six years ago, Brian Gilbertson was famously deemed the "faceless man" by an outraged investor.

The slur may have been justifiable, given the architect of the biggest mining deal in history didn't even bother to show up.

Six years on, with a bid for Perth miner Consolidated Minerals on the table, Mr Gilbertson was eager to prove to the Australian market that he'd changed.

So, understandably, the legendary mining boss wasn't in one of his better moods when he landed in Perth yesterday afternoon, jet-lagged and tired, only to be told his journey from London was unnecessary.

While he was in the air, ConsMin received court approval to delay a scheme meeting originally scheduled for today. The company's board wanted time to consider a rival offer from Territory Resources, a junior iron ore miner led by former ConsMin managing director Michael Kiernan.

At the meeting, now postponed until August 16, the Perth miner's shareholders will decide whether to accept a partial takeover offer by Mr Gilbertson's private equity group, Pallinghurst Resources. In the meantime, the man one former associate deemed a "grandstander" is threatening to withdraw his offer altogether.

"I came across for the scheme meeting only to find there was no scheme meeting," Mr Gilbertson said. "I made it clear that I did not wish it to be postponed."

He said Territory's rival offer, which includes a higher cash component than the Pallinghurst bid, was "clearly inferior".

He noted his advisers had told him it was one of the most conditional offers they had ever seen. For the record, it contains 17 conditions.

Mr Gilbertson's frustration was all the more palpable because Pallinghurst has spent months amassing projects for a revitalised ConsMin under its control.

Pressed for details, Mr Gilbertson said he had "no intention whatsoever about telling anyone about those now". He said Pallinghurst was promised a $5 million break fee if the ConsMin board recommended a rival offer. For its part, ConsMin says its board had no choice but to postpone the meeting.

As for Mr Gilbertson, it looks like he's trying to make the best of his unnecessary trip to Australia. "Right now I'm going to go out to a restaurant and have a nice glass of red wine," he said.
 
When the war starts, if the both sides are equal in strength, the war will keep on for a long time.
If one side is overwhelming powful, the war will end very soon.

The bidding war on CSM is on. One side is TTY + LB + Noble group.
The other side is pallinghust + JP Morgan.
I am wondering are both sides equal in strength?

I think the answer is yes, I will hold and expect TTY to have another bid.
 

And you could add, to the other side (highlighted in bold) current CSM management. They have done little to accommodate the TTY bid and all to accommodate the Pallinghurst bid(s).

I have a small holding and will look forward to seeing how this progresses. Two big egos; one little company...
 
so tempted to open a CFD account and LONG this baby.:

for those who believe the fundamentals of this coy, what is considered a good offer besides price? prospects in overseas perhaps?
 
if the two D***h***s remain in the company, we are still back in square one... a useless bunch of managment. on the brighter side, we can at least see the true colors of baxter & carter.

 
Hi Kerosam,
The pallinghurst offer might keep the same chooks in the henhouse, but don't worry the rooster ( Gilbertson) will be crowing early in the morning, and will be pecking those lazy , good for nothing chooks off their backsides to make him a quid.
Gilbertson, already realises that CSM board are a pack of dimwits. They are so stupid they forgot to phone him and tell him that the meeting on the 19th July was postponed.
I reckon a vote for Gilbertson, is now better than the TTY bid. At least we can choose if we wish to sell our shares at $3.30.
We get to keep the nickel assets and JML, not to be sold off like MK
I reckon that Rod Baxter should show some leadership and excise his 1 million options and give 600,000 to Gilbo for $3.30/share. He'll get to keep 400,000 shares and will have $40,000 change in his pocket and not spend one dollar.
email Baxter and tell him to show us some leadership rbaxter@consminerals.com.au
 
Kiernan won't let up on ConsMin

Andrew Trounson, Takeovers | July 24, 2007

MICHAEL Kiernan's Territory Resources will decide by the end of the week whether to make an alternative all-cash offer for Perth-based manganese miner Consolidated Minerals.

Speaking yesterday to The Australian from India, Mr Kiernan said an all-cash alternative offer to Territory's current cash and scrip bid was possible, as he tries to see off a rival $3.30 a share all-cash bid from Brian Gilbertson's private equity resources fund Pallinghurst.

"We could give a cash alternative. It is certainly being canvassed at the moment," Mr Kiernan said.

Such an offer would be made concurrently with the existing combined scrip and cash offer, he said.

Mr Kiernan is in India on business for listed explorer India Resources, of which he is executive chairman.

But he plans to return to Australia later in the week, when Territory will review its options.

Under pressure from the Territory bid, Pallinghurst was forced last week to make an all-cash offer for ConsMin, dumping its already improved previous offer of $1.68 a share plus two shares in a new ConsMin for every five held.

That offer was was aimed at securing 60 per cent control of the target.

The new all-cash bid, which is conditional on Pallinghurst securing 50.1 per cent of ConsMin, has been backed by the ConsMin board.

The board has supported Pallinghurst throughout the takeover battle, much to the chagrin of Territory and a group of ConsMin shareholders concerned that Pallinghurst's original offer was too cheap.

While Territory's offer of $2 cash plus 1.5 Territory shares currently values ConsMin shares at $3.68, the ConsMin board doubts the value of Territory scrip and is concerned at the debt Territory is taking on to fund its bid.

Pallinghurst is also trying to tempt ConsMin shareholders with Mr Gilbertson's undoubted -- but to date intangible -- deal-making skills.

Pallinghurst is believed to have signed a memorandum of understanding over a South African chrome asset and a coking-coal asset, which it plans to add to ConsMin if it wins control.

Mr Gilbertson is a former CEO of resources giant BHP Billiton, and is credited with building South Africa-based Billiton into a resources major.

ConsMin shares yesterday continued to hold a premium to Pallinghurst's bid, but fell 4c to $3.42, valuing the company at $779 million.

Territory shares fell 2c to $1.125.

Territory is being backed by Hong Kong commodity trading group Noble, Austrian trading house DCM DECOmetal and US bankers Lehman Brothers.

In Pallinghurt's corner is US trading group AMCI, South Korean steel giant Posco and US investment group NGP Midstream & Resources.
 
A MEMO to Territory Resources.

TO: Territory Resources.
From: Daily Assay.
Subject: Press Speculation concerns.
Date: July 24.


Dear Territory,

I note with concern your concern about the press speculating as to whether Territory will change the details of its takeover bid for Consolidated Minerals.

You're concerned, we're concerned - everybody's concerned. And now it looks like the Australian Securities Exchange is concerned.

Firstly, Daily Assay hasn't seen what all the other journos around the nation have written in regards to a possible improved offer from Territory, but the stuff we have seen is pretty much in line with what The Weekend Australian reported on Saturday.

That being Territory is going to review its bid in the wake of a Pallinghurst improved offer for ConsMin which lobbed on Friday.

As part that review, Territory is possibly looking at throwing more cash into the mix of its cash/scrip offer which values ConsMin at $966 million.

"We're going to review our offer. We could go all-cash if we wanted to and it's definitely an alternative," is what The Weekend Australian reported Kiernan as saying.

That came from a conversation with Kiernan himself. On Friday.

It's not wrong. The notes speak for themselves.

Other reports noting that alternative have also surfaced.

So why did Territory managing director Doug Stewart tell the ASX on Monday, after presumably the ASX raised the issue, that it was the just the press being speculative that Territory was thinking of changing its offer?

"Territory Resources Limited notes today's press commentary on its takeover bid for Consolidated Minerals Limited and confirms it is merely press speculation," is what Stewart told the ASX.

Me and my press buddies get blamed for a lot of things. Some of which is right (and which makes us duly embarrassed), while some of the accusations are just dead wrong.

Also, didn't Territory pay a representative of the company to ring around and touch base with the hacks on Sunday to spruik the line that the company was seriously considering lifting the cash component of its offer?

Think very carefully about that one.

The Territory spruiker even went to great lengths to point out that the information was coming from an :industry source" and should be reported as such.

That's how the Sydney Morning Herald played it on Monday.

"Industry sources said Territory was 'seriously considering' a sweetened cash component," is what the Herald's resources expert Jamie Freed penned.

So why is the press being accused of mis-reporting? Did we make it up?

Or is there something written elsewhere that has led you guys to finger the press for the "speculation"? If so, shouldn't Stewart have made that very clear in the ASX announcement.

As we have said before, Kiernan is somewhat of a straight-shooter in the resources game and a breath of fresh air for the members of the fourth estate.

He tells it like it is - or how he perceives it. There can be no doubt about that.

And it might just be HIS speculation that Territory will increase the cash component of its bid. But he is the chairman after all.

As noted before, it may be an entirely off-the-mark media report which has got Territory's back up. But that point should have been made clear in the ASX announcement.

But dumping on the press for reporting Kiernan's - or the spruiker's - comments accurately is not fair. And it is likely to win you few friends either.

Yours sincerely
Daily Assay

email: andrusiakk@theaustralian.com.au
 
Ok I did some (literally) back of the envelope calculations tonight. These should be taken with a large grain of salt (and be checked for accuracy. I often make mistakes), but give an idea of what the potential profit of CSM for 2007/2008 fin year could be.

figures based on increased margins only. Assumptions… 0.88 us $ / aus dollar (CSM was hedged at .73 but not sure if it still is). US $30,000/tonne nickel price which is IMO reasonably conservative.

Nickel. Extra $6822 AU per tonne. 4000 tonnes, additional ~$27 million before tax

Manganese. Extra $4.72 AU per dmtu FOB (assuming CIF of $1.00/dmtu which is higher than current 86c) 47% on ore purity. 900,000 tonnes…. = additional ~$200 million before tax

Chromite not enough info will assume flat price (though suspect it will be higher).

So just considering same production costs, and levels, and flat prices for manganese and nikel, CSM should make approx 227 Million additional profit before tax or 158.9 million additional NPAT. For a total of around 190 million NPAT if you add in the 30 million base profit from this year. Or an eps of around 83cps

These calcs are crude, but I used the same method to estimate (though with a little more care) MRE's full year profits, and pretty much nailed it. The idea is simple... any increase in the commodity price results in pure profit, as the underlying costs have not changed.

say you produce 1 million tonnes of a commodity that breaks even at $200 / tonne. if the price increases to $400 / tonne, you suddenly make $200 million profit before tax.. this is basically what is happening with CSM and manganese prices!

since csm pays out roughly 50% in dividends, that is roughly 40 cps in dividends alone! at a sp of $3.30 the forward p/e would be 3.9....

again, these calcs make assumptions on commodity prices and production costs, and production volumes remaining constant, which are BIG assumptions, but it gives an idea of where CSM is potentially headed... if you then factor in upside potential in the nickel operation it only gets better IMO

Tony.
 
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