CSM - Consolidated Minerals

[Rimtalay]

NEW BIDDER
Have the Ukranians delivered the knock-out punch in Consmin manganese bid battle?
Another day, another chapter in the battle for West Australian based miner Consolidated Minerals (ConsMin) but this time there is a view that the Ukrainian group Privatbank may have written if not the concluding then a very conclusive chapter.

Author: Ross Louthean
Posted: Friday , 31 Aug 2007

PERTH -

Two days ago a clearer path was looking good for Brian Gilbertson's Pallinghurst group to win control of manganese-chromite and nickel miner Consolidated Minerals. However, its elevated bid of $A3.60/share gained virtually no market traction and then Norwegian ferro-alloys producer Tinfos entered the ring by paying $A3.65/share ($US3/share) to secure by yesterday a 4.8% stake, costing $A40 M ($US32.96 M). Today it has been announced that through its Belize-based investment associate Palmary Enterprises, the Ukrainian Privatbank has lodged a bid for ConsMin at $A3.95/share ($US3.25/share).

Media reports today after ConsMin announced Palmary had tossed its hat into the ring, said that Ukrainian group now had more than a 14% stake, making it the biggest single stakeholder in the company.

The other bidder, Northern Territory iron ore miner Territory Resources Ltd, run by former ConsMin chief executive Michael Kiernan, also put out its bidding document out (based on $A2/share and 1.5 Territory shares per ConsMin share) and it was valued at about $A3.45/share ($US2.84/share).

Kiernan said Territory would adopt a "wait and see" approach, having at least the 6% stake of ally Noble Group of Hong Kong in its court.

Alex Passmore, the head of metals and mining for Perth broking house Paterson Securities, told Mineweb he saw the Palmary bid as being the "knock out" punch.

Passmore said it was interesting how ConsMin's value has lifted since its directors first warmed to the first bid by Gilbertson's group a few months ago at $A2.30/share ($US1.89) when the game was now at least $A1.65/share ($US1.35) greater. (Paterson Securities is one of the Australian broking houses that has been buying stock for Palmary).

Privatbank has a major stake in the Nikopol manganese mine in the Ukraine which has been buying ConsMin's higher grade Woodie Woodie manganese ore in WA's Pilbara as a blend.

Passmore said there is a clear synergy for Privatbank/Palmary and that is ConsMin's Woodie Woodie mine and regional reserves and resources. It is not buying Woodie Woodie ore on an established contract, and Passmore said Nikopol has a thirst for more manganese.

At the close of trading today there were sales of ConsMin shares at $A4.07 ($US3.35) and buyers above $A4.

 

[Lert]

Well, I finally bailed yesterday at $4.06.. I'd held for 2 years since shortly before the boss sold 4 mil worth to build the missus a new house I got out with my hide intact but learned a lot about stop losses along the way. Thanks to Rimtalay for the posts which helped me hang on through the low bits. Best of luck to those continuing to hold..

 

[Rimtalay]

Hi Lert, I am so pleased that many shareholders did OK. I can now tell you that there has been a lot of behind the scenes fighting with this takeover saga. I can tell you straight Rod Baxter, D Carter and David Brook have felt the wrath of the Consolidated Minerals Takeover VOTE NO team since the offer came out on the 23rd Feb , we have battled constantly for months.
We have not stopped yet, and we are presently dealing with ASIC with the deliberate withholding of the manganese prices from the market for over 6 weeks. I hope that ASIC 'nail' Baxter and Carter to the wall. I won't give up till this is accomplished.

Palmary makes knockout bid for ConsMin
August 31, 2007 - 11:44AM


Consolidated Minerals Ltd was on Friday considering a third takeover offer after a Ukrainian billionaire launched a potential knock-out bid for the base metals miner, valuing the target at more than $900 million.

Belize-based mining and investment company Palmary Enterprises Ltd is offering $3.95 cash per share for ConsMin, valuing it at $902.28 million.

The ConsMin board is considering the bid and will update its shareholders once its assessment is complete.

"In the meantime, ConsMin shareholders are urged to take no action," it said.

Palmary, which already has a 14.36 per cent stake in ConsMin, is controlled by Ukraine-based Gennadiy Bogolyubov, who is ranked 799 in Forbes's 2007 global list of 946 billionaires.

ConsMin shares soared 9.7 per cent or 36 cents to close at $4.07 on Friday, leaving it with a market value of $929.69 million.

Palmary's bid, which does not have a minimum acceptance level, follows a recommended bid by Pallinghurst Resources Ltd, led by former BHP Billiton Ltd chief Brian Gilbertson, and a bid by Territory Resources Ltd.

Pallinghurst on Thursday increased its offer for ConsMin by 30 cents a share to $3.60, valuing ConsMin at $822 million.

ConsMin's board recommended Pallinghurst's offer in the absence of a superior bid.

Territory's offer of $2 cash and 1.5 of its shares for every ConsMin share values ConsMin at about $782 million, based on Territory's closing price on Friday of 95 cents.

Pallinghurst's Johannesburg-based partner Arne Frandsen told AAP the group had not yet had the opportunity to review Palmary's offer.

"This arrived in the middle of the night, I read it before I went to bed a few hours ago and haven't yet discussed it with my colleagues," Mr Frandsen said.

"We will read the bidder's statement with great interest when it gets out and will formulate a strategy accordingly."

He would not be drawn on whether Pallinghurst would launch an improved offer in response to the Palmary bid.

Meanwhile, Territory on Friday released its bidder's statement, underlining its "wait and see" approach to the activity around ConsMin and saying that it reserved its right to vary its bid.

"We are dealing with a constantly changing landscape, which is yet to settle," Territory chairman Michael Kiernan said.

Mr Kiernan told AAP that the Palmary offer was no surprise.

"Palmary's bid was totally expected and that's why we put out our bidder's statement ... saying that the landscape had changed so much and was continuing to change, and we confirmed our offer, we didn't raise our offer," he said.

Mr Kiernan said Territory had proposed to Ukrainian company Privat Group that ConsMin be taken private.

"A total cash offer (from Palmary) is not unexpected, firstly, and secondly, it's in line with a proposal I put to the Ukrains a couple of weeks ago, that (ConsMin) should be privatised and then Territory and Privat may enter into a joint venture to operate the manganese operation," 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 has expertise in manganese, with a 90 per cent interest in Ghana Manganese Co Ltd.

Territory shares fell two cents to close at 95 cents.

 

[Rimtalay]

Dryblower sniffs around the latest ConsMin deal


Monday, 3 September 2007


SOME weeks ago Dryblower pleaded for someone, anyone, to put a pile of cash on the table and bring the sorry Consolidated Minerals takeover saga to an end. Well, now we have it in the form of a fistful of cold, Ukrainian hryvnia – and that should be the end of it.


Should be, but will it be?

Perhaps not. As Dryblower sees it, there are too many people with too much ego riding on ConsMin for the $902 million being offered in the all-cash bid from Ukraine's Privat Group to be the final word.

Some speculators agree because when trading stopped last Friday ConsMin was commanding a price of $4.07, having briefly touched $4.09, which was enticingly higher than Privat's $3.95.

Anyone paying more than a full cash bid for a stock must believe there's more to come. The question is who might that be - and who has already played their last card?

To help understand what might be going on, Dryblower thought it would be helpful to introduce a missing factor in everything written about ConsMin over the past few days – time.

In particular, there is a curiously logical sequence to the way in which announcements regarding ConsMin were made last week.

Consider the steps, using stock exchange release times – the time we officially knew something:



Tuesday, August 28, 6.27pm, Pallinghurst Resources says it has placed an order at $3.60 a share, making that the new price for ConsMin after almost a year of dithering with share swap alternatives.


Friday, August 28, 9.16am, Territory Resources lodges its bidder's statement with a statement that it's not increasing its offer, preferring "a wait and see approach".


Friday, August 28, 10.11am, Privat, via a subsidiary, Palmary Enterprises, lobs its offer of $3.95.


Friday, August 28, 5.10pm, ConsMin says it is seeking further clarification from Palmary, and will advise shareholders shortly.

Three points fascinate Dryblower.

First, there is the 55 minutes between Territory saying it is not increasing its offer, a sort of "running dead" statement as its $2 cash, plus 1.5 Territory shares per ConsMin share, as at Friday's closing Territory price of 95c a share, is valued at roughly $3.42 – which is less than Pallinghurst's $3.60, and much less than Palmary's $3.95.

Second, is this comment from Territory boss, Michael Kiernan, in his "wait and see" statement: "we are dealing with a constantly changing landscape which is yet to settle".

Third, was Kiernan's comments in the media after the Privat-Palmary offer was announced (55 minutes after Kiernan's "wait and see") that he would be happy to run the Woodie Woodie manganese mine for Privat, if asked.

There's a pattern here, and while Dryblower can't make out the whole picture it seems a range of interests have ganged up against Pallinghurst, and the ConsMin board, to deliver an outcome which goes something like this.


Privat, which is apparently a steel maker of substance with lots of cash, wins control of ConsMin.


Territory's offer of management services, if only for a short time, is accepted.


Noble Group, now there's a name we've all forgotten, retains its exclusive "life of mine" marketing arrangement for Woodie Woodie manganese.

It's that "life of mine" deal that Noble has on Woodie Woodie which fascinates Dryblower because it now dovetails so neatly into a future potential structure of Privat and Territory working together.

For Privat, a newcomer to Australia, a friendly arrangement with Territory and Noble represents a gentle introduction to Australian resources. No need to learn all the ropes, Kiernan and Noble boss, Richard Elman, can do it for them – the mining, the marketing and perhaps a few deals on other assets as well.

And, what nicer way for Kiernan to show his good intentions than to "run dead" in the final leg of a takeover, to not increase the terms of his bid, leaving the way clear for Privat to do battle with Pallinghurst, something which it has enjoyed in the past.

Is Dryblower seeing things in all this? Perhaps not!

 

[Sultan of Swing]

Thanks Rimtaly

Your posts have encoraged me to hold on. I'm still waiting to see what happens before I sell, if I sell.

The Dryblower post makes some interesting observations.

Cheers

 

[weird]

From a VSA (volume spread analysis) perspective, there is possible indication of selling pressure with high volume on the previous upbar. This could mean that it will drift sideways or down according to T/G. I don't recall seeing this signal, until today, so may be influenced by todays price action.

Be very interesting to see how things unfold.

I don't hold any position in CSM.

 

[porkpie324]

Looking at the currant quotes on the buy side there's 600k @4.05, 300k @ 4.04, 300k@4.03, not so many on the sell side, average vol 3.5 mil daily with average vol for last 3 days 6 mil, so I'm holding on for now. BTW thanks Rimtalay for your excellant posts on CSM. porkpie

 

[Rimtalay]

Territory Resources has given up on it's bid for CSM. MK can now get back to TTY.

Territory concedes loss over ConsMin
September 4, 2007 - 10:19AM


Territory Resources Ltd has conceded that its fight for Consolidated Minerals Ltd is over and is banking on a potential joint venture with Ukrainian raider Palmary Enterprises.
Nickel and manganese miner ConsMin on Monday backed a $902 million takeover bid from Palmary, which is controlled by Ukrainian billionaire Gennadiy Bogolyubov.

Palmary is offering $3.95 for each ConsMin share.

Territory chairman Michael Keirnan conceded its battle to take over ConsMin was more than likely over.

"ConsMin was one of several initiatives that we are looking at. Certainly it would have been a significant initiative, but it appears to have passed us by," Mr Kiernan told AAP.

Territory, which mines iron ore in the Northern Territory, was offering $2 cash and 1.5 shares for every ConsMin share, valuing the company at about $782 million.

The iron ore miner is now banking on a potential joint venture with Palmary - if that company's takeover succeeds - to manage and run ConsMin's lucrative manganese business in Western Australia.

Mr Kiernan said he had discussed the joint venture idea at a meeting with Palmary in Vienna last month.

"They said it was a good concept and to confirm it in writing, which I have now done," Mr Keirnan said.

"They have engaged UBS to look at it. UBS are advising them on the ConsMin exercise and we plan to touch base next week.

"At the end of the day, they are not interested in managing and running a manganese operation. They need groups or people to do that and that's what I put on the table."

Palmary's boss, Mr Bogolyubov, also is a backer of Ukrainian conglomerate Privat Group, which partly owns the world's second largest ferro-alloy producer, Nikopol.

ConsMin supplies manganese to Nikopol and Mr Kiernan said the motive behind Palmary's takeover move was to secure that supply.

"Without the ConsMin manganese, it affects their profitability significantly for the alloy smelter," Mr Kiernan said.

"Whether they pay 50 cents a share more is not a relevant factor. What is a relevant factor is they must have that manganese. They cannot allow anything to put that at threat."

There are two more players active in the takeover battle, a consortium led by Pallinghurst Resources and Norwegian ferro-alloys producer Tinfos, which is rumoured to be conducting due diligence on the target.

ConsMin originally had backed an $822 million or $3.60 per share bid from Pallinghurst before withdrawing its recommendation after the superior Palmary offer.

"I suspect the world has passed us by, both Pallinghurst and Territory," Mr Kiernan quipped.

ConsMin shares added one cent to $4.06 by 1257 AEST, while Territory put on one cent to 95 cents.

 

[weird]

Watching the order quantities within the Market Depth is pretty amazing with this stock ...

 

[Rimtalay]

Solid assembly of suitors for ConsMin
Malcolm Maiden
September 5, 2007

THE takeover feeding frenzy over Consolidated Minerals is an example of the pervasive impact of Australia's commodity price boom. ConsMin is a fairly ordinary company with a variable profit history, but it controls one resource that in its own small way is making the boom possible, and there's a long line of people who want to own it.
The Woodie Woodie manganese mine inland from Port Hedland is no Olympic Dam or Escondida. It is producing just under 1 million tonnes of high-grade manganese ore a year, and in the year to June 30, it boosted revenue by 12.2 per cent to $134.5 million, about half ConsMin's total revenue, which includes nickel and chromite. Annual global manganese production runs to about 30 million tonnes and high-grade production, including production from Woodie Woodie, is about 12 million tonnes, giving ConsMin about 8 per cent of the quality end of the market, which supplies high-grade blending stock to smelters.
Woodie Woodie is no 100-year asset, either. The resource is put at 15.4 million tonnes, and some of it is deep, and relatively high cost. But manganese is critical for the production of stainless steel and ferro alloys which, among other things, are used to make dry-cell batteries. As China's boom continues, the price of manganese is soaring, and transforming the economics of ConsMin's little mine.
The group barely covered its mining cash costs at Woodie Woodie in 2005-06 and 2006-07 after receiving average prices of $2.25 and $2.34 per dry metric tonne unit (DMTU) for manganese, down from $3.46 a year earlier when China was buying the metal and hoarding it. But continuing demand, the drawdown of Chinese stockpiles and bottlenecks in supply from other groups enabled it to strike prices around $6.60 per DMTU for last month, this month and next month.
Prices probably won't stay that high long term, but as Asia's industrialisation continues, they probably won't come back to $2 and change again, either.
Brian Gilbertson's Pallinghurst group started the ball rolling with a scheme of arrangement offer in February that valued ConsMin at $2.28 a share, but was overbid in July by Michael Kiernan's Territory Resources. Gilberston stayed in the hunt with a $3.30 cash offer, but after building up a stake of about 15 per cent in ConsMin, billionaire Ukrainian Gennadiy Bogolyubov's Palmary Enterprises swooped last week, with a $3.95-a-share cash bid. In all, ConsMin's share price has more than doubled since the action began, and it may not be over: Norway's Tinfos ferro-alloy group has built up a 5 per cent stake, and has been granted due diligence, and Kiernan, his bid overrun, is pursuing a tie-in with Bogolyubov.
It's fabulously clubby and convoluted: Bogolyubov's Privat group controls ferro-alloy smelters in Ukraine, Tinfos is in the same business, and Territory's bid was backed by Noble Group and DCMDecometal, commodities trading houses that sell ConsMin manganese in China and Europe respectively.
And nobody will get all of ConsMin unless the others bow out: Gilbertson controls 10 per cent of the group's shares and convertible bonds, Palmary has 15 per cent, Tinfos has 5 per cent and may go higher, and another 12 per cent is controlled by Noble and DCMDecometal.
mmaiden@theage.com.au
The Woodie Woodie manganese mine inland from Port Hedland is no Olympic Dam or Escondida. It is producing just under 1 million tonnes of high-grade manganese ore a year, and in the year to June 30, it boosted revenue by 12.2 per cent to $134.5 million, about half ConsMin's total revenue, which includes nickel and chromite. Annual global manganese production runs to about 30 million tonnes and high-grade production, including production from Woodie Woodie, is about 12 million tonnes, giving ConsMin about 8 per cent of the quality end of the market, which supplies high-grade blending stock to smelters.
Woodie Woodie is no 100-year asset, either. The resource is put at 15.4 million tonnes, and some of it is deep, and relatively high cost. But manganese is critical for the production of stainless steel and ferro alloys which, among other things, are used to make dry-cell batteries. As China's boom continues, the price of manganese is soaring, and transforming the economics of ConsMin's little mine.
The group barely covered its mining cash costs at Woodie Woodie in 2005-06 and 2006-07 after receiving average prices of $2.25 and $2.34 per dry metric tonne unit (DMTU) for manganese, down from $3.46 a year earlier when China was buying the metal and hoarding it. But continuing demand, the drawdown of Chinese stockpiles and bottlenecks in supply from other groups enabled it to strike prices around $6.60 per DMTU for last month, this month and next month.
Prices probably won't stay that high long term, but as Asia's industrialisation continues, they probably won't come back to $2 and change again, either.
Brian Gilbertson's Pallinghurst group started the ball rolling with a scheme of arrangement offer in February that valued ConsMin at $2.28 a share, but was overbid in July by Michael Kiernan's Territory Resources. Gilberston stayed in the hunt with a $3.30 cash offer, but after building up a stake of about 15 per cent in ConsMin, billionaire Ukrainian Gennadiy Bogolyubov's Palmary Enterprises swooped last week, with a $3.95-a-share cash bid. In all, ConsMin's share price has more than doubled since the action began, and it may not be over: Norway's Tinfos ferro-alloy group has built up a 5 per cent stake, and has been granted due diligence, and Kiernan, his bid overrun, is pursuing a tie-in with Bogolyubov.
It's fabulously clubby and convoluted: Bogolyubov's Privat group controls ferro-alloy smelters in Ukraine, Tinfos is in the same business, and Territory's bid was backed by Noble Group and DCMDecometal, commodities trading houses that sell ConsMin manganese in China and Europe respectively.
And nobody will get all of ConsMin unless the others bow out: Gilbertson controls 10 per cent of the group's shares and convertible bonds, Palmary has 15 per cent, Tinfos has 5 per cent and may go higher, and another 12 per cent is controlled by Noble and DCMDecometal.

 

[Rimtalay]

· the directors of CSM welcome the announcement by the Pallinghurst Consortium (Pallinghurst) that Pallinghurst has increased its all-cash off-market offer for CSM to $4.10 per CSM share (Revised Pallinghurst Offer) and unanimously recommend the Revised Pallinghurst Offer as being in the interests of CSM and its shareholders in the absence of a superior proposal;

· the directors of CSM withdraw their recommendation for the all-cash off-market takeover offer from Palmary Enterprises Limited (Palmary) of $3.95 for each CSM share (as described in Palmary's announcement dated 31 August 2007) (Palmary Offer); and

· the directors of CSM continue to recommend that CSM shareholders take no action in relation to the off-market takeover offer from Territory Resources Limited (Territory) of $2.00 cash plus 1.5 ordinary shares of Territory for every one CSM share (as described in Territory's Bidder's Statement dated 30 August 2007) (Territory Offer).

 

[Rimtalay]

Pallinghurst Raises Bid for Consolidated, Tops Rivals (Update2)

By Tan Hwee Ann and Madelene Pearson

Sept. 6 (Bloomberg) -- Pallinghurst Resources Australia Ltd., chaired by Brian Gilbertson, raised its offer to acquire Australian manganese producer Consolidated Minerals Ltd. to A$937 million ($771 million), topping two rival offers.

Pallinghurst will offer A$4.10 a share in cash for Perth- based Consolidated, the company said in a statement today. Palmary Enterprises Ltd. is offering A$3.95 in cash and Territory Resources Ltd. A$3.33 a share in cash and stock.

Consolidated produces 10 percent of the world's high-grade manganese and prices for the material used in steelmaking more than doubled this year on demand from China. A five-year rally in commodities prices has led to a surge in takeovers in the mining industry.

``They have got good assets, the sector has become very competitive and good assets are being snapped up,'' said Gavin Wendt, a resources analyst at Fat Prophets in Sydney. ``I don't think you'd rule out more bidding.''

Consolidated fell 2 cents, or 0.5 percent, to A$4.06 on the Australian Stock Exchange at the 4:10 p.m. trading close Sydney time. The statement came after the market closed. Territory shares, which have more than doubled this year, fell 2.8 percent to 88.5 Australian cents.

The price of manganese delivered to China will reach a record in August to October, more than double average prices in the first half, Consolidated said Aug. 24. The board of Consolidated today recommended the Pallinghurst offer.

Ukrainian Billionaire

Pallinghurst, backed by closely held investor AMCI, also said it may match any rival cash offers made within the next three weeks, or pay shareholders the difference between the offers. Gilbertson was the former chief executive officer of BHP Billiton Ltd., the world's largest mining company.

Its previous offer was A$3.60 a share in cash, and it was the first into the takeover fray announcing a cash and stock bid on Feb. 23.

Palmary Enterprises is controlled by Ukrainian billionaire Gennadiy Bogolyubov. Bogolyubov has a net worth of $1.2 billion according to Forbes magazine's August 2007 list of world billionaires.

Territory, led by former Consolidated Managing Director Michael Kiernan, is backed by trading companies Noble Group Ltd. and DCM Decometal International Trading GmbH.

UBS AG is advising Palmary, Deutsche Bank AG is advising Pallinghurst. Lehman Brothers Holdings Inc. and Argonaut Ltd. are the advisers for Territory, and JPMorgan Chase & Co. is advising Consolidated.

To contact the reporter on this story: Tan Hwee Ann in Melbourne at hatan@bloomberg.net ; Madelene Pearson in Melbourne on mpearson1@bloomberg.net

 

[Sultan of Swing]

Ok, there'll be a good explanation for this but I don't know what it is.

There's now an offer on the table of $4.10, it's 10:30 am but no shares have been traded and I don't know why there'd be a trading halt.

Why no trades yet?

Cheers

 

[Sultan of Swing]

Ok, it's now $4.27 off a high of $4.30. I still don't understand why no trades before 11am.

Can someone enlighten me?

 

[Rimtalay]

ConsMin shares higher as suitors battle
September 7, 2007 - 6:54PM

Shares in Consolidated Minerals rose by more than six per cent as investors anticipated a further chapter in a two-way tussle between Pallinghurst Resources Ltd and Palmary Enterprise Ltd to take over the manganese miner.

Suitor Palmary was considering its next move after its recommended offer for the manganese miner was trumped by Pallinghurst on Thursday.

Pallinghurst raised its bid for ConsMin to $4.10 a share, from $3.60, valuing the target at $936.7 million.

The offer was unanimously recommended by ConsMin's board after it bettered the Belize-based Palmary's bid of $3.95 per share, or $902.4 million.

But sources close to Palmary suggested Pallinghurst's latest offer may not be the last competitive bid for ConsMin.

"Shareholders should not accept Pallinghurst's offer if they want to keep the prospect of an auction alive," the source said.

"Sophisticated shareholders understand this and are unlikely to accept Pallinghurst's offer.

"Shareholders should wait for Palmary to indicate its position.

"Palmary is considering its position."

Palmary is controlled by Ukrainian billionaire Gennadiy Bogolyubov, a backer of conglomerate Privat Group, which partly owns the world's second largest ferro-alloy producer, Nikopol.

ConsMin shares rose 6.16 per cent, or 25 cents to $4.31, valuing the target at $984.69 million, which is above Pallinghurst's proposal.

A third potential suitor, Territory Resources Ltd, conceded defeat this week.

But Territory hopes that if Palmary is successful it could enter into a joint venture to operate the manganese operation.

Meanwhile, a fourth party, Norwegian ferro-alloys producer Tinfos, is rumoured to be conducting due diligence on ConsMin.

ConsMin's cash cow is the Woodie Woodie manganese operation in WA's Pilbara region.

Shares in Territory closed up three cents at 91.5 cents.

 

[gs07]

Pallinghurst takes the 'Aussie Axe' to rival bid
Kevin Andrusiak | September 08, 2007

PALLINGHURST Resources has dubbed its innovative new offer for control of Perth-based carbon steels miner Consolidated Minerals the "Aussie Axe".

It is seeking to put an end to the race for the company that is likely to be the last high-grade manganese asset to be put up for sale anywhere in the world. The bidders all have lower grade manganese assets elsewhere that need to be upgraded to be well suited for carbon steel.

It is believed that Ukrainian counter-bidder for ConsMin, Palmary, is fuming at Pallinghurst's new offer, which, in what could be a world first, is devised to match cent-for-cent any revised bid by Palmary on an ongoing basis every time Pallinghurst extends its offer.

Pallinghurst has also determined that shareholders would receive top-up payments if another, all-cash bid, emerges before December.

The offer, which has again won the favour of the ConsMin board, is pitched at $4.10 a share and is a near 50 per cent improvement in total terms than Pallinghurst's first scheme-of-arrangement terms which kicked off the

ConsMin auction process in February.

The innovative scheme, designed locally by Deutsche Bank corporate financiers Alex Cartel and Tim Elliot, is also a boon for hedge funds which poured into ConsMin stock yesterday pushing the ConsMin share price 6.2 per cent higher to $4.31 by the close of trade.

However, Palmary is believed to be chasing regulatory intervention with claims that the scheme kills the auction process.

It is just another strange twist to the battle for ConsMin, which has been both bitter and controversial, caused significant corporate credibility damage to Australian under-bidder Territory Resources, and has come to highlight the determination of international resources heavyweights to win control of key Australian assets to take advantage of the global resources boom.

ConsMin's prime asset is the Woodie Woodie manganese mine in northwest Western Australia, which supplies about 10 per cent of the seaborne manganese trade.

The rest is controlled by BHP Billiton, Brazilian giant CVRD, French outfit Aeromet and Palmary.

Palmary -- which is addressed in Belize, based in Ukraine and falls under the broader Privatbank -- beat Pallinghurst to win the Ghana Manganese asset earlier this year and secure its own high-grade manganese supply.

The Aussie Axe scheme virtually ensures shareholders have to choose whether Pallinghurst boss Brian Gilbertson or Palmary founders, the reclusive Gennadiy Bogolyubov and Igor Kolomoysky, have the better deal-making skills to grow the ConsMin business.

Palmary seemingly has the upper hand with its control of Ghana Manganese, but Mr Gilbertson has promised to use ConsMin as the base to build a new business into a $10 billion miner of note.

There is strong speculation that Pallinghurst has now secured control of a South African manganese mine with an expected 80-year mine life.

Details of the asset are sketchy with Pallinghurst director Arne Frandsen declining to reveal further details, but all would be revealed should his company win the race for ConsMin.

It is a good bet that Pallinghurst will also use its links with backer AMCI to feed in some of its coal assets in Australia into the new business.

Yet mystery surrounds the intention of Palmary and its media-shy owners -- it has been hard to get any information on them since it launched its bid the previous Friday.

Sources close to the company yesterday claimed sophisticated investors would see through the Aussie Axe.

"Palmary is considering its position," the source said.

 

[Rimtalay]

The Bidding For Consolidated Minerals Descends Into Farce


By Our Man In Oz



Seven months ago the directors of Consolidated Minerals were convinced that the company they run was worth roughly A$2.30 a share, and they recommended a partial takeover bid pitched at that price. Today, the same people believe the company is worth A$4.10 a share and they now recommend that price. Tomorrow, who knows, because on the market ConsMin is trading at A$4.30, 4.8 per cent more than what the directors currently recommend and 87 per cent more than the original deal proposed in February by Pallinghurst Resources, a business run by South African deal-maker, Brian Gilbertson.
There are many questions to be asked of everyone involved in the ConsMin saga. So far, no-one seems to have asked the directors what they really (truly, cross-your-heart) reckon their business is worth, or why Gilbertson conceived a merger so complex that it required a 400-page explanatory memorandum, mailed to thousands of shareholders, and now used to press flowers.

To be fair, ConsMin is at the centre of a bidding war with large egos, armed with larger cheque books, tossing cash around as if it were confetti, leading to a corollary question on value: has the price of ConsMin now entered cloud cuckoo land, or is this simply the sharp end of the boom as cash-rich buyers battle for scarce assets?

The answer to the first question about whether the directors know what their company is worth has to be that the poor darlings haven’t a clue. The answer to the second question is that the battle for ConsMin has undoubtedly taken on all the finesse of a rugby scrum, on a sticky pitch, during a thunderstorm. It really is a case of the winner being the biggest and ugliest brute left standing, and not really caring about the prize, or that the prize might well be a wooden spoon.

To understand the ConsMin fiasco it’s best not to call it that. Patient shareholders of the small Australian manganese, chromite and nickel miner are doing very nicely as they enjoy a ride as wild as anything since the days of the Poseidon nickel boom when everyone left their brains at the door of the now defunct Perth Stock Exchange. With ConsMin the game started on the day Michael Kiernan saved it from oblivion after - and remember this- after the Woodie Woodie manganese mine effectively failed, sending its then owner, Valiant Consolidated, almost to the knackers yard.

The historic troubles of Woodie Woodie, a mine worked intermittently for more than 50 years, depending on the price of manganese, have been as conveniently forgotten today as the popped Poseidon bubble. Perhaps this really is a boom forever (note to editor: that was typed with fingers crossed!). On a more serious note what is happening with ConsMin does no-one any credit. Yes, it’s making money for the players involved, but there is an unmistakable odour of boom-time excess wafting off the stock.

Consider the facts. Talk of a takeover/merger between ConsMin and Pallinghurst first surfaced in October last year. A formal merger proposal was delivered on February 23. The four month gap between the referee blowing the whistle and ball actually being kicked should have rung a warning bell. There should also have been warning bells ringing about Kiernan’s desire to get back on the field and repay a few courtesies dished out by some ConsMin directors as he was departing. And, there should have been a warning about the background role of Richard Elman, chief executive of the commodities trading business, Noble Group, a supporter of Kiernan, and the man holding a “life of mine” marketing contract over Woodie Woodie.

In any event, Kiernan counter bid via one of his new companies. Gilbertson countered. Kiernan countered the counter. Then a heavy duty Ukrainian steel maker, Gennadiy Bogulyubov, entered the game, and finally a Norwegian alloy specialist, Tinfos, weighed in. At the last count, Tinfos had 5 per cent of ConsMin, Bogulyubov 14.36 per cent (through a company called Palmary), and Pallinghurst 10 per cent. Kiernan had very little, and appears to have backed away from the bidding.

This final point about Kiernan appearing to “run dead” by not increasing his cash and share swap offer is critical to what’s afoot because no-one, and that includes the board and management of ConsMin, knows Woodie Woodie as well as he does. Unlike the chaps in slick suits, he once lived in a converted bus at the mine gate acting as truck tally man. It was his intimate knowledge, and extreme annoyance at not being paid by Valiant, which led him into his first deal with Elman. The nature of that deal was that Elman finished up with ownership of the mine, hence today’s life of mine contract, but he needed someone to run it. Between them, Elman and Kiernan make an excellent pair of blunt instruments – but they are far from being stupid blunt instruments, and they also know exactly what an asset is worth.

Which takes us back to the top, and the critical questions - what’s ConsMin worth? The market, which is always right, says A$4.30. Gilbertson says A$4.10 , but with a clever rider on his offer that he will match any rival bid, and he’s ready to pay now, effectively a “top up” facility to encourage quick acceptances. That puts the ball on Bogulyubov’s side of the pitch, and it needs to act quickly, or Gilbertson steals the day.

But, even if Gilbertson wins what is it that he’s actually won? For a price, presumably north of A$4.10 once the mud settles, he gets a pre-loved manganese mine which is suddenly being praised as one of the best in the world. Well, 10 years ago, and even 50 years ago, it certainly wasn’t one of the best. Yes, the manganese price has risen, but it has been known to fall just as often, and this is a company which, seven months ago, was valued at A$2.30 by the people who run it, and a company which was once run by a man who is now not interested.

Poseidon time? Jolly close!

 

[wintermute]

Hi Rimtalay, what do you make of that last article you posted?? I think it is a Little over-simplistic (basically saying that because keirnan appears to have pulled out of the race that the manganese side of the company is now overvalued). Sure Keirnan may know it better than others, but knowing the value of something, and being able to afford it are two different things, and I think the author is making a pretty big leap to come to the conclusion he has. It is not just the manganese but also the nickel and chromite, and let's not forget the iron ore as well.

I don't think that this is anything like poseidon, and for the author to even mention it to me rings alarm bells, and makes me question the motives... time will tell I guess

Still holding here, but must admit it is tempting to sell some! Will be interesting to see what happens Monday after the selloff on friday in the states... CSM is my best performing share of late, everything else is in the dog house!!

Tony.

 

[Rimtalay]

ConsMin at $4.30 is at full value, whilst it may go higher with the bidding, I would be looking to exit. Too many other good cheap stocks at present with more upside. Now is the time to move on, before other good stocks increase, and an opportunity lost. The easy pickings with ConsMin is now over, I'd take the money and run.
The story on the minesite.com http://www.minesite.com/nc/minews/s...solidated-minerals-descends-into-farce/1.html

is close to the mark. I doubt whether there is much upside now. I'll be following MK into TTY, it's taken a battering over this, lots of CSM shareholders have also jumped ship into Territory Resources, it also has the backing of Noble Group, and they are no fools. Sell on market, let the hedge funds have their fun.

 

[wintermute]

Thanks Rimtalay. I'm tempted to sell some, but I'm going to hold out for now. I guess taking profits now does give a certainty, as CSM continuing at this price level is largely dependent on prevailing metals prices... if they come down again so will the sp, but if they continue on at current levels for a few years to come, then I would say there would be potential further upside.

if we hit $4.50 I might reconsider

Tony.