CSM - Consolidated Minerals

[Rimtalay]

Aedo, this has now been clarified by ConsMin, the Pallinghurst bidders statement is incorrect, Consmin will be issuing their target statement in a few days time and they will then correct the mistake. They did not realise this until I pointed it out to them.
Mr Baxter will only get the 1 million shares as per the original vote. That is OK.
But it does say one thing, this mistake by Pallinghurst Resources is very poor, and not the sign of clever people.
Lets wait and see what is said in the target statement, should be out next week.

 

[ta2693]

Can Mr.Baxter give financial advice?
Baxter recommend shareholder to vote for and accept the bid from palinghurst. I think it is financial advice.
does he have AFSL? or Director of company does not need AFSL to give advice on his own company?

 

[noirua]

The TTY bid looks dead in the water as TTY shares suffer badly and plunge to just 89 cents. I thought from the beginning that the Keirnan exercise had no chance of succeeding and whether mean't to be or not, is only a spoiling exercise.

I still think the present bear market in the mining sector, be it just a short term decline or not, may end up the deciding factor. All the talk about shares to be awarded etc., is little more than a mirage. The game goes on.

 

[Rimtalay]

There are Questions on Pallinghurst's Bidder's Statement

• (Credibility of claims made on Pallinghurst management team/track record) - The credibility of Pallinghurst executives' track record is questionable. There are uncertainties in the management team successfully implementing their plans/proposals on CSM. Query uncertainty in successfully converting a track record to Pallinghurst and CSM. Query veracity of Gilbertson's track record.
• (Minimal CSM Director shareholdings) - Note the minimal securities holdings of CSM Directors (as follows), who have had the decision-making power in making recommendations on Pallinghurst's bid:
• Richard Carter - holds 135,000 shares (0.0592% of issued ordinary shares) ;
• Bruce Brook - holds 20,000 shares (0.0088% of issued ordinary shares) ;
• Michael Etheridge - holds 50,000 shares (0.0219% of issued ordinary shares); and
• Rodney Baxter - holds No shares / 1 m options (0.4384% of expanded issued ordinary shares).
• (CSM Board has discretion to issue 1 m shares to Baxter) - Reference to the CSM Executive Long Term Incentive Plan, under which the CSM shareholders have authorised the issue of 1 m shares to Baxter. CSM Board now has discretion, and therefore the possibility, of issuing 1 m shares (value $3.3 m) to Baxter. Unclear from Bidder's Statement whether this is 1 m shares per year over 3 years (i.e. 3 m shares - value $9.9 m).
• (CSM Board's propensity in recommending Pallinghurst's proposals) - CSM has demonstrated a propensity to promptly and readily respond by recommending Pallinghurst's offers/proposals. To date, CSM has promptly and readily agreed to Pallinghurst's proposal on the now terminated scheme of arrangement (announced on 23 February), recommended the increased offer by Pallinghurst of 25 June on the same day as Pallinghurst's increased offer and recommended the subsequent takeover bid by Pallinghurst on 20 July on the same day as Pallinghurst's announced takeover bid.

The CSM Board appears to have agreed to the Bidder's Statement being despatched to CSM shareholders within 2 business days rather than the prescribed 14-28 day period after the Bidder's Statement is lodged. There is a reason why the Corporations Act prescribes a 14-28 day period which is to provide the shareholders of a target company reasonable time to consider an offer.
• (Questions regarding apparent inadequate information) - In the opinion of Territory's Board, CSM shareholders would require further information in order to consider Pallinghurst's offer. For instance, one would expect Pallinghurst to have elaborated on the following points:


• Pallinghurst' s vision for transforming CSM into a global mid-tier mining company by offering participation in investment opportunities, information on which is not adequately provided. The basis for Pallinghurst making a claim that the various opportunities for rationalisation and consolidation will be "delivered in the coming months" is not detailed in the Bidder's Statement.
• A number of statements on Pallinghurst's intentions with CSM's operations and business opportunities, the basis for which appears to be insufficiently provided in the Bidder's Statement.
• Details on the "in-principle memorandum of understanding" with an unidentified third party, which is likely to be material given significant impact potential.
• Information on the projects referred to (but not discussed) in page 24, including a potential transaction relating to a coal deposit in Australia. Query the basis on which Pallinghurst has not given any further information at this time.
• Details of the in principle contributions for US$250 million by the Pallinghurst Investor, which is referred to without details of the arrangements (including whether there are any conditions).
• The basis for the various subjective comments made on Territory's proposal. For instance, Pallinghurst raised the issue that there may be a potential conflict of interest between Territory's financial backers but Pallinghurst may also face the same conflicts given the potential arrangements and transactions with consortium members.
• (Funding Arrangements) - Query as to what basis Pallinghurst has for stating it has reasonable grounds to expect that it will have sufficient funding arrangements in place to satisfy full acceptance of its offers when the bid becomes unconditional, which is required under a bid.
• (Funding Deed - Apparent inconsistency with claim that it is "100% equity funded") - Reference is made to a "Funding Deed" pursuant to which the "Funders" may, at their discretion, provide the funds through, inter alia, a loan arrangement. This appears inconsistent with the description of the arrangements being "100% equity funded".
• (Uncertainties with Pallinghurst Investor Group Structure and Board composition) - The structure of the "Pallinghurst Investor Group" and Pallinghurst's board composition have not been finalised.
• (POSCO - arrangement with potential new investor should be clarified) - Reference to POSCO as a potential investor in the Pallinghurst investor vehicle but POSCO's involvement and its arrangement with Pallinghurst is unclear.
• (Management Fee for Pallinghurst Resources Fund executives should be clarified) - In page 8, reference is made to CSM's access to the expertise of key Pallinghurst Resources Fund executives should the offer succeed. Have management fees been offered to these executives under the arrangements?
• (Break fee) - Query why CSM agreed to the $5 million break fee?

 

[noirua]

Breaking away, for a moment, from the complexities of share offerings etc., which although interesting, do nothing less than attempt to strangle the basics here. For that reason I will avoid them now.

The Pallinghurst Consortium have made it known that a majority 50.1% interest is all they are looking for in CSM. $3.30 is good enough for the present, that is, until others show their colours and prove theirs are not only blocking share holdings.
There is the matter of debt, that is indicated at around $450 million, which would be put on the books of CSM, reference the TTY offer. Any other counterbid would need to show no debt as well as a bid over $3.30.
On the debt front there are thoughts that a fresh bid from another party, at around $4.00, may prove to be quite complex.

 

[Rimtalay]

Privat increases its stake in ConsMin
The board of takeover target Consolidated Minerals Ltd is seeking a meeting with Privat Group after the Ukrainian conglomerate upped its stake in the nickel and manganese miner.

ConsMin managing director Rod Baxter said the company had received a notice from Palmary Enterprises, the investment vehicle which has been amassing a stake in the company.

"They sent us a substantial shareholder notice, Palmary is the entity ... they've actually bought another three million shares over the last couple of days so they now own 13.5 per cent," Mr Baxter told AAP.

Mr Baxter said the notice carried the name of Henadiy Boholyubov, a major shareholder in Privat, and that ConsMin would seek a meeting with the group to discuss their motives.

"There has been no contact so we still do not know what their intentions are ... but we've sent a letter out to them asking for an opportunity to chat," he said.

Privat owns steel, energy, chemical, banking and media assets in Russia, Ukraine, Romania and the United States, and partly owns the world's second largest ferro-alloy producer, Nikopol.

Palmary, a company registered in the Central American nation of Belize, acquired a 12 per cent stake in ConsMin last week, effectively blocking its compulsory acquisition.

The 11th hour share raid has cast a shadow over the takeover battle for ConsMin involving iron ore miner Territory Resources Ltd and a consortium led by Pallinghurst Resources, a company backed by former BHP Billiton Ltd CEO Brian Gilbertson.

Territory said today an independent report backed up the company's claims its takeover bid for ConMin was superior to the Pallinghurst offer.

An independent evaluation report commissioned by Territory and conducted by BDO Consultants has estimated the iron ore miner's share price to have a range of 98 cents to $1.08.

This values Territory's cash and scrip takeover offer at between $3.47 and $3.62 per ConsMin share, or between $791 million and $825 million.

This compares to an all-cash $752 million takeover offer from a consortium led by Pallinghurst Resources, a company backed by former BHP Billiton Ltd chief executive Brian Gilbertson.

Pallinghurst is offering $3.30 cash for each ConsMin share, well below ConsMin's current share price which closed 14 cents higher at $3.79.

Territory chairman Michael Keirnan said the independent expert's report confirmed the company's market valuation.

"Territory's fully funded offer is superior to that of Pallinghurst," Mr Kiernan said.

The iron ore miner said a number of milestones achieved by the company had increased the value of its bid, including the progression from explorer to producer, the increase in iron ore prices and an off-take agreement with commodities trader Noble Group.

ConsMin, which mines manganese and nickel in Western Australia, has recommended the Pallinghurst bid.

 

[noirua]

Starting to move with all the talk about iron ore. Scrambled on board this morning just after the train left, slightly late.

I bought into Consolidated Minerals in November 2006, quite near the floor, and decided on Friday that it was time to take profits. Often I'm too greedy and pay the penalty. In markets that are looking, at best, a bit soft, cash may well be the better option.

Some brilliant posting by Rimtalay that helped us all out. I sincerely hope CSM go on up and you all do a good bit better than me. Goodbye and Good luck my friends

 

[Rimtalay]

Diggers and Dealers Mining Forum blog
Day two – Tuesday August 7

The dirty digger?

Michelle Wiese Bockmann, Mining Journal Editor


So as the ubiquitous Powerpoint-supported presentations droned on downstairs, Australian mining identity and Territory Resources chief Michael Kiernan secured a half-hour slot in one of these meeting rooms to hold a remarkable media conference. Kiernan is the former Consolidated Minerals chief, and is described in Australian parlance as a “colourful character”. Both he and ex-BHP chief Brian Gilbertson are locked in an acrimonious battle to take control of ConsMin, a key Australian manganese miner.

With all the Australian mining media under the one roof, but nothing to tell them now he had cancelled a revised offer, Kiernan clearly decided that attack was the best form of defence. Accompanied by a lawyer to stop him getting sued for defamation, Kiernan began a carefully-staged character assassination of Brian Gilbertson at his 10.30am conference.

Kiernan had trawled the global mining media archives for the last five years. The results of this research formed a three-page `dirt file’ with sections helpfully highlighted, and from which he read for the first 12 minutes or so of the media conference.

The resulting attack on Gilbertson and the ConsMin board (who have recommended Gilbertson’s offer over his) contrasted sharply with the dry, fact-filled company presentations underway in the main auditorium. Kiernan drew on the unflattering media commentary to construct doubts about Gilbertson’s corporate governance standards, personal agenda and competency, and the board members’ motives in endorsing the Pallinghurst bid.

The better of these series of one-liners from his research (that won’t get Mining Journal sued) included: “Like Mohammed Ali, Gilbertson was great once”; Gilbertson had the “Midas touch for his own bank account” and an “ego the size of a planet”.

He even invoked good old-fashioned Australian parochialism, revealing a private conversation with Gilbertson in which he allegedly told of Pallinghurst plans to take ConsMin offshore, list it on the London Stock Exchange and run it from there.

Nevertheless, Kiernan’s openness and colour was a welcome relief from media-trained executives who are giving very little away. As usual, it was like pulling teeth to get anything from Barrick Gold. The president of the Australia Pacific operations declined to give even a hint of a gold forecast, nor provide individual production figures for its mines.

Strip away the sales patter, and even Oxiana’s showman, Owen Hegarty, gave a presentation and media conference yesterday that said very little.

Those seeking respite in the exhibitors’ marquee found junior miners in puddles of conversation about share options, the share market and who has made how much. As the afternoon wore on, the bar opened and alcohol began flowing, talk shifted to dinner this evening and who’s eating with who.

One thing is certain: we know who Kiernan’s dinner companions won’t be.

 

[Rimtalay]

PRIVAT MEETING THE NEXT STEP
Verbal battle continues over manganese and nickel miner Consmin
A letter has been sent by Territory Resources Ltd to shareholders of Western Australian miner Consolidated Minerals Ltd (ConsMin) urging them not to accept the offer from rival Pallinghurst group before getting "all the facts."

Author: Ross Louthean
Posted: Wednesday , 08 Aug 2007

KALGOORLIE -

Territory Resources chief executive and original founder of ConsMin, Michael Kiernan, threw several counter punches at a briefing given to mining analysts and fund managers at the Diggers & Dealers convention in Kalgoorlie immediately after presenting late yesterday for his Monarch Gold Mining Co Ltd which had just poured its first gold.

This also followed circulation of the letter at Diggers that Territory sent to ConsMin shareholders asking them to hold fire, given that they should await the full facts of Bidder and Target statements from both Territory and Brian Gilbertson's Pallinghurst.

Kiernan's shareholder letter also said that the fact Territory had joined the quest for ConsMin and that this produced a revised bid from Pallinghurst which had seen the WA manganese, chromite and nickel miner's share price lift. He claimed that on trading close on August 3, the share price was at a premium of 15% to Pallinghurst's revised offer.

"This is consistent with the Territory board's view that its offer is a superior alternative" further reinforced by the $A225 million ($US311 M) equity commitments from (bidding allies) Noble Group, DCM DECOmetal and Lehman Brothers at $A1 ($US0.86) per Territory share.

Territory's team circulated at the Diggers analysts meeting, attended by Mineweb, a share valuation report by accounting group BDO Consultants that placed Territory's share value to be in the range of $A0.98-1.08 ($US0.83-0.94) and that, according to Kiernan, Territory was well above the claims going around that Territory was only worth "two and sixpence"

He told this meeting that he would be meeting with Privat which controlled major manganese and other mining operations in Europe out of the Ukraine on the basis of seeing a joint accord. Kiernan claimed that Privat's principals had not "got on" with Brian Gilbertson and that when he was running ConsMin he had introduced the Privat group to the high grade Woodie Woodie manganese ore it was mining in WA's Pilbara as an impotant blend to its own manganese ore. There was, he said, the chance of a strong rapport with Privat.

More should be heard after Kiernan has a meeting in Europe next week with Privat the surprise third party, now holding the biggest block in ConsMin, after a surprise raid on the Australian market late last month.

Other points made by Kiernan at this meeting:

· Territory would still sell the 27.6% stake in new WA zinc-lead-copper miner Jabiru Metals Ltd, and also the Consolidated Nickel division that operates one mine and is developing another in the Kambalda region. The intent was to transform ConsMin into a bulk mining, open cut operator.

· Territory would introduce a high grade manganese deposit in Burkina Faso that would have some logistical challenges but involved strong government support from West African nations involved in the mining and transshipping.

· He claimed a reason why the current Consmin board (Noble Group chief executive and Monarch director Allan Quadrio had departed) recommended the Pallinghurst bid was that a Pallinghurst Bid document showed ConsMin's managing director, Rod Baxter, would, on Pallinghurst's success, be offered a staged package of shares that could be added to 3 M that, on today's value, would be worth about $A10 M ($US8.6 M).

· Baxter had a brief encounter with Kiernan at Diggers & Dealers at which he "conceded" that there was more than just the Pallinghurst bid on the table, contrary to the the comment in Baxter's conference presentation.

The speeches and conversations at Diggers & Dealers clearly showed the media and other observers the depth of enmity on corporate issues between ConsMin and Territory (particularly Baxter and Kiernan) - a factor not helped by Kiernan's quoted media criticism of management performance and the fact he would have Allan Quadrio installed as the new ConsMin managing director.

At the ConsMin media dinner on the eve of Diggers, Rod Baxter entertained with a tongue-in-cheek claim of a television network planning a tele-movie on the saga, in which chairman Dick Carter would be played by Arnold Schwarzenegger, that either Tom Cruise or Mel Gibson would play Baxter (Cruise would need big platform heels) and that Marlon Brando would play Kiernan. But Brando is dead! That is correct, was the retort.

He also cited an email from Brian Gilbertson apologising for not attending because he was busy with discussions with Chip Goodyear and the heads of other global majors. The so-called email said Don Argus had agreed to become the new chairman of ConsMin under Pallinghurst - a point providing great mirth to veteran journalists, as Argus was reportedly the prime mover in getting Gilbertson ouisted as CEO of BHP Billiton.

In his Diggers presentation Baxter made several points - including the financial turnaround (A $A6.5 M [$US5.59 M] loss in FY2006 to a $A30-31M [$US35.8-36.6 M] profit in FY2007) as a result of improved metal prices, notably manganese. He said the Kambalda nickel division was in growth mode after costly new mine development and a new mine would commission on the neighbouring Widgiemooltha Dome, one of the assets acquired in the takeover of Titan Resources. There were positive results from exploration for expanded manganese and chromite developments in the Pilbara.

There was no immediate intent to divest Jabiru and the market value of ConsMin's holding at June 30 was $A169 M ($US145.3 M) - an unrealised profit of $A138.2 M ($US118.8 M).

 

[Rimtalay]

Territory boss launches Gilbertson broadside
Brendan Ryan
Posted: Tue, 07 Aug 2007
[miningmx.com] -- TERRITORY Resources CEO, Michael Kiernan, has delayed revising his bid for Consolidated Mining (Consmin) so that he can first consult with Ukranian group Privat.


Privat bought 13% of Consmin last week and Kiernan acknowledged the group now held the position of potential “kingmaker” because Territory needs a 90% acceptance from shareholders for its offer to succeed. “We had hoped to launch a revised bid today but the move by the Ukrainians puts a different dimension on that. I need to talk to the new major shareholder in Consmin and I have set up meetings to do that next week,” Kiernan said.

He then launched an all-out and frequently personal attack on opponents Brian Gilbertson and Consmin MD Rod Baxter as well as Gilbertson’s partner Arne Frandsen whom he dismissed as a “Norwegian nobody.”

Speaking with an Australian flag displayed on the desk in front of him Kiernan stressed his Australian roots and background. “We are Australians building an Australian group to be run by Australians unlike Brian Gilbertson who wants to run Consmin from London,” Kiernan said.

Kiernan described the Consmin board of directors as “degraders” stating that, if Territory won, the present directors; “would not be invited to the Xmas party.”

Kiernan was previously MD of Consmin but stepped down in June 2006 under pressure from certain influential shareholders. He remained a director until forced to resign from the board by Baxter and chairman Dick Carter.

Said Kiernan: “There are a number of myths about Brian Gilbertson that need to be dispelled although my lawyers always get very nervous when I start to talk about him.

That’s why they are here today to make sure I don’t get out of hand. Gilbertson is like Mohammed Ali, he was great once. He’s no superstar.”

Kiernan lambasted the Consmin board saying it had;”jumped to accept a series of underwhelming offers from Pallinghurst.” He added that comments by Baxter in his presentation to the Diggers and Dealers Mining Forum that the present board had added A$500m to Consmin’s market cap were; “rubbish and BS.”

Kiernan claimed the board tried to sell Consmin “for 30c in the dollar” accepting an initial bid of $2.25 a share from Pallinghurst - which was subsequently raised to $2.55 - while stating these bids were in the best interests of shareholders.

“When we put in our bid at $3.50 they dismissed it as worthless but then Gilbertson bid again at $3.30 in cash. This idiot board consists of people who don’t seem to know the real value of the company,” he said.

Kiernan also accused Baxter of being “the $10m dollar man” because of the value of the share option awards he would receive in the event of a successful takeover of Consmin.

He said this information was not disclosed in documentation put out by Consmin but was included in the Pallinghurst bidders statement.

Kiernan has this one only partly correct because he seems to be assuming Baxter would get 3 million shares whereas it looks like he stands to get only one million.

The Pallinghurst document reports Pallinghurst’s “understanding” that the board is authorised to award Baxter one million Consmin shares in terms of the executive incentive scheme.


Click Here to subscribe to our daily newsletterAny awarded shares would only vest with Baxter at the end of an initial three year period. However the board, at its discretion, can issue the shares earlier depending on certain circumstances one of which is a takeover of Consmin.

Territory’s bid for CSM consists of A$2 cash and 1.5 Territory shares for every CSM share held. Kiernan said a valuation by independent consultants put a value of between A$0,98 and A$1,08 on a Territory share.

Said Tiernan: “Our bid is fully funded and locked and loaded. Our backers are the Noble group, DCM DecoMetals and Lehman Brothers. Our management team is the one that built up Consmin in the first place into a A$1bn company over a ten year period.”

Kiernan said that DCM and Noble between them hold 12% of Consmin’s equity and trade 75% to 80% of Consmin’s manganese and 100% of its chromite. He added that DCM trades extensively with Privat.

€œWhen I meet Privat they will be assured of their manganese supply from Consmin ,” Kiernan said.

 

[bigtbigt]

I'm impressed by and grateful to the well-informed posters on this bb. ...and to them I have a question: since this saga is yet to run its full course, what do you anticipate is the best option for shareholders like me that want to keep as big a slice of CSM as I can for the next few years (since its massively undervalued). Might it be best to just sell up now, and reinvest in NewCSM once its formed, rather than be diluted by new share issuances etc?

 

[Sainter]

If you believe, hold and do nothing at this stage-if Pallinghurst gains 50.1%, they will take you along with them for the ride. If TTY puts in a bid, the shareprice will go up from here. I sold 30% of my shares last week for $3.76, but continue to hold the rest.
Cheers!

 

[Rimtalay]

www.metal-pages.com/subscr/story.php?id=28571"><strong>Read more&#8230

Manganese prices have started to rise futher, good news for ConsMin. Already receiving record prices.

"Chinese manganese prices jump on tight supply
Chinese manganese flake prices have surged by one fifth in the past week on tight availability caused by widespread smelter shutdowns seen last month, according to market sources. Domestic prices for 99.7% grade electrolyte metal are around Rmb22,000-22,500/tonne "

 

[ta2693]

CSM is not risky at all. 3.30 is the bottom line. Does anyone disagree?
even in the worst case, you only lose 11c. Besides Mn price in China is rising. China have new regulation on Mn producer. basically their cost will go up, because they need to put more money into waste water processing and environment protection. a lot of small Mn producer will be shut down for environment reason. There will be less Mn supply in short term (1 year), but the demand is still there. I am pretty bullish on CSM.

 

[doctorj]

CSM is not risky at all. 3.30 is the bottom line. Does anyone disagree?

I do and in fact, you do as well. You disagreed with yourself in the very next breath

even in the worst case, you only lose 11c.

Nothing is riskless. It can be low risk...

 

[ta2693]

I do and in fact, you do as well. You disagreed with yourself in the very next breath

Nothing is riskless. It can be low risk...

I do not think the offer below 3.30 will appear on market before 1st sept.
If anyone want to sell below 3.30 he had better fill the blue slip and send to PRAL.

The market is volatile, but arbitrage opportunity should not exist on company like CSM.

 

[Rimtalay]

ConsMin produces 2 commodities which are now entering the bull arena.
1) Manganese - already up 150% in the last few months and now heading higher
2) Chrome ore - ConsMin is the only producer in Australia, Baxter now says in hime Digger and Dealers presentation that next deliveries are at US$200/ton FOB up 25%.
This is just the start for chome ore, Baxter missed the boat earlier in the year, but hopefully he is now more aware of the chrome ore market. You will see further gains in the chrome ore price in thge near future.

Global production of ferrochrome currently is approximately 6 million tpa. South Africa, through the massive extent of its Bushveld chromite ore reserves which constitute about 73% of global chromite ore reserves, is destined to continue to play the dominant role in the supply of ferrochrome and even expand its participation in the global market.



The principal use of ferrochrome is in the stainless steel industry, which consumes around 90% of the approximately 6 million tpa of ferrochrome currently produced. Ferrochrome is added to stainless steel for its corrosion and oxidation resistance properties. Stainless steel typically contains up to 18% chrome units and, unlike nickel and molybdenum which can also be added to further enhance particular properties of stainless steel, there are no direct substitutes for ferrochrome.



Ferrochrome is also used in the production of alloy steels to provide anti-corrosion and heat resistance properties. As the stainless steel sector consumes approximately 90% of total ferrochrome production, it is this sector which is of primary relevance to the Project and the Group’s access to the ferrochrome market.



A distinction should be drawn between the two types of ferrochrome produced. South African ferrochrome, known as Charge Chrome, in comparison to High Carbon Chrome produced in Kazakhstan and certain other countries, benefits from having a large proportion of ‘free’ high priority iron units as well as high silicon content. This chemical composition reduces the stainless steel manufacturers’ need for charging the furnace with ferro-silicon, thereby reducing their costs. As a result South African Charge Chrome is the preferred alloying element amongst stainless steel producers and comprises 85% of ferrochrome used in the stainless steel industry.



The remaining 15% of the market is predominantly made up of High Carbon Chrome which tends to be utilised in developing countries, such as China and India which have tended to deploy induction furnaces to manufacture stainless steel. Historically furnaces used High Carbon ferrochrome but all new furnaces, including those being built by Jisco, are designed to use Charge Chrome.



The stainless steel industry is characterised by buoyant long term growth rates, well above those of most other metals. The long term stainless steel consumption growth rates of approximately 5% over the past 20 years are far in excess of growth rates for copper or aluminium over the equivalent period, at 2.3% and 2.1% respectively. China’s demand for stainless steel has grown at 21% per annum over the last 10 years, this is 4 times the global average.





South Africa has consistently been one of the industry’s most competitive suppliers of ferrochrome. This exceptional competitiveness is a culmination of several factors:

• extensive ore resources;

• large smelters and state-of-the-art technology;

• skilled work force and management;

• low electricity cost; and

• a traditionally weak Rand/US$ exchange rate.



South African producers are the accepted price setters in the market and their pricing policy is generally followed worldwide. As the South African producers’ costs are incurred in Rand it is only natural for them, as market price setters, to set the US$ price they receive on the basis of an acceptable profit margin over their Rand based production costs.





The information above has been accurately reproduced from such reports and as far as the Company is aware and is able to ascertain from information published by MBR and Heinz Pariser, no facts have been omitted which would render the reproduced information inaccurate or misleading.

 

[Rimtalay]

Watch the prices of Chrome ore. ConsMin the only producer in Australia.
(RML in the Phillipines another would be producer to look at)

Chrome ore and ferro-chrome the next bull market.

Merafe ramps up production to cash in on record ferrochrome demand
With the international ferrochrome market likely to remain in a supply deficit until 2010, and prices expected to remain at record levels, local producer Merafe Resources said it planned to beef up production and have all 20 furnaces operational by the year-end.

The company, which shares ferrochrome operations with Xstrata, has already brought five out of seven furnaces that had been closed in 2006 to push prices up, back into production this year.

Two furnaces would be brought into production before the end of the year, which would increase the volumes of ferrochrome available for sale by 195 000 t/y. Merafe Resources’ attributable sales volumes from Project Lion, which would ramp up to full production by the last quarter of the year, would also increase.

The company’s nameplate capacity was 1,96-million tons a year and, by the end of 2007, it planned to produce 1,76-million tons.

Merafe FD Stuart Elliot said that the international ferrochrome market would be in a supply deficit for at least another three years, as limited additional capacity was coming on stream.

And, should companies start entering the ferrochrome business in an attempt to cash in on high prices, it would take at least three years to get a new operation up-and-running, as a result of long lead times associated with the world-wide engineering skills shortage.

The international market for ferrochrome, an ingredient used in the manufacture of stainless steel, would have to increase supply faster than the growth in the stainless steel industry in order for supply to catch up with demand, but CEO Steve Phiri said that this was not currently the case.

He explained that stainless steel production was anticipated to increase by 5% year-on-year in 2007, to almost 30-million tons a year, which would mean that ferrochrome production had to realise at least the same percentage growth.

The supply deficit was further driven by strong demand from China, where stainless steel production growth of around 38% year-on-year was anticipated to an estimated production of 6,8-million.

“China is our number one priority,” Phiri said, adding that by the end of 2007, the company would have increased its sales into that country to 20%.

Merafe had struggled for some time to enter the Chinese market, and in 2006, its sales into that market was 0%. But he said that an improved marketing effort and continued effort to build relationships had seen the company making inroads into China.

The strong demand for ferrochrome had resulted in prices increasing to $1/lb this year and the company was expecting prices to remain strong.

Phiri cautioned that, over the medium term, prices could soften, but that increased demand for the metal would result in high prices over the long term.

He was confident that the market had matured and that the cyclical nature of ferrochrome was “something of the past”.

 

[Rimtalay]

Territory boss to meet ConsMin investors
August 12, 2007 - 5:24PM


Territory Resources Ltd Chief Executive Michael Kiernan is flying to Ukraine to meet with investors he hopes will join his consortium to buy Consolidated Minerals Ltd (ConsMin).

Ukrainian conglomerate Privat Group secured a 13.5 per cent stake in ConsMin, casting a shadow over the takeover tussle being played out by Territory and a consortium led by ex-BHP boss Brian Gilbertson.

"The territory offer which is currently on the table and fully funded, does have a condition of a 90 per cent acceptance so that we can then compulsorily acquire the company," Mr Kiernan told AAP from the airport on Sunday.

"With the Privat, Ukraine people stepping into the frame, one would have to ascertain what is in their minds.

"I am certainly travelling on the way to Europe to meet with the Privat people who are well aware of our group."

Mr Kiernan, who aims to meet with Privat on Monday or Tuesday, claims that it was him who introduced Privat to the high grade manganese from ConsMin's Woodie Woodie mine, which it now uses at its Nikopol smelter, the world's largest manganese alloy producer.

Privat owns steel, energy, chemical, banking and media assets in Russia, Ukraine, Romania and the United States.

"The Nikopol people are very keen to maintain their continued supply of Woodie Woodie manganese ore," Mr Kiernan explained.

Mr Kiernan said investment company Pallinghurst had expressed the desire to become an integrated supplier of manganese, which would include running its own smelters.

"I'm meeting with the Privat people, who are the major owners of Nikopol, just to ascertain if we can come to some accommodation with each other where they are guaranteed their supply and how territory can still acquire the assets of Consolidated Minerals," Mr Kiernan said.

He is hoping the Privat Group will become part of the Territory-led consortium trying to gain control of ConsMin, which also includes Austrian commodity trader DECOmetal and investment bank Lehman Brothers.

The ConsMin board has recommended a Pallinghurst offer of $3.30 cash per share, which is valued at $752 million.

This is despite a rival bid from Territory for $2 cash and 1.5 Territory shares for each ConsMin share, which it says values ConsMin at $966 million, but Michael Kiernan has flagged its intention to launch another bid.

 

[Rimtalay]

When miners go for the vein, it's the jugular
Mark Hawthorne
August 14, 2007

FULL DISCLOSURE

THE dust has finally settled over Kalgoorlie after this year's Diggers & Dealers mining industry drinkathon, but the words of Territory Resources chief Michael Kiernan continue to ruffle a few feathers.
The former Subiaco truck driver is battling a Pallinghurst Resources-led consortium for control of Australia's Consolidated Minerals.
Pallinghurst is run by former BHP Billiton boss Brian Gilbertson.
Kiernan was managing director of ConsMin until June last year. He was forced to resign by new MD Rod Baxter and chairman Dick Carter.
Should Kiernan win control at ConsMin, there's little doubt that Baxter and Carter's days would be numbered.
Few saw the spat coming on the opening Sunday of Diggers, when Kiernan hosted a function at Kalgoorlie Race Course.
Kiernan reportedly played his cards close to his chest. Not so Baxter, who later that same day hosted a ConsMin function at The Hannan's Club in Kalgoorlie, and fired a few salvos in Kiernan's direction.
ConsMin's board has backed the Pallinghurst offer, and Baxter suggested that shareholders shouldn't worry about Kiernan, as there were "South Africans offering you a better deal".
He also joked that, should a movie be made of the ConsMin saga, Marlon Brando could play Kiernan. "Brando is of course dead, but that's fine by us," he said.
It was enough to fire Kiernan into action. He booked a meeting room at Kalgoorlie's art centre, draped the desk in an Australian flag and brought in a solicitor to vet his words.
Reading from a three-page document, Kiernan let fly.
"We are Australians building an Australian group to be run by Australians, unlike Brian Gilbertson, who wants to run ConsMin from London," he said.
He added: "There are a number of myths about Brian Gilbertson that need to be dispelled, although my lawyers always get very nervous when I start to talk about him. That's why they're here today ”” to make sure I don't get out of hand. Gilbertson is like Mohammed Ali, he was great once. He's no superstar."
He also added that the South African had a "Midas touch for his own bank account" and an "ego the size of a planet".
Kiernan described Consmin's directors as "degraders" and said that, if Territory won, the board "would not be invited to the Christmas party".
Kiernan then called Baxter "the $10 million man", a reference to his share options in the event of a successful takeover of ConsMin.
After the remarkable outburst, Kiernan headed out for the Ukraine for some crucial meetings with directors of Privat Group.
After the remarkable outburst, Kiernan headed out for the Ukraine for some crucial meetings with directors of Privat Group.
Privat ”” controlled by the Ukrainian businessmen Henadiy Boholyubov, Oleksiy Martynov, and Ihor Kolomoysky ”” bought 13 per cent of ConsMin last week, in order to secure its manganese supply, and will play king-maker in the ConsMin deal.
Over the next few days Kiernan will try to convince Privat to join his consortium to win ConsMin.
They will at least like Kiernan's pull-no-punches style. One of Privat's directors, Kolomoysky, is famous for saying: "Life is a supermarket. You can take whatever you like, but the cash desk is at the end."
Privat is embroiled in a fierce business and political rivalry with Ukrainian billionaire Viktor Pinchuk and his Interpipe Group.
Both want control of the co-owned Nikopol Ferroalloys Plant ”” the final destination of much of ConsMin's manganese.
Such is the ferocity of business dealings in the Ukraine that Henadiy Korban, a Privat manager and Pinchuk critic, survived an assassination attempt last year. Korban's bodyguard was badly hurt.
Kiernan's potential new business chums hardly sound like the types you'd want at the office Christmas party, either.
Pallinghurst, meanwhile, is demanding that Territory makes a formal statement of intention, after media speculation that Kiernan would increase his offer for ConsMin following his trip to the Ukraine.