CSM - Consolidated Minerals

With a forecast EPS of 50cents for at least the next two years who ever end up with CSM as around the $4 mark is buying an extrememly cheap comapny with a P/E of only around 8 at this point. In my mind when I first looked at this stock at around the $2 mark I certainly saw a fallen angel and I am sure that those bidding can see the other upsides. It might also be interesting if you look into the other highlights that this company has such as Jabiru and also a joint venture with YML which may a remind has gone from 13cents to 90 cents in a matter of weeks due to its sucess. To my way of thinking this company certainly has a hell of a lot more to offer and through no favours from our directors though as the only thing they seem focussed on is keeping their jobs. All I can say to everyone is hold on who knows if Tinfos comes into the picture $5 isn't unreasonable.

I did some calculations a while back and came up with even higher eps figures, but nickel has dropped below my estimated price. Certainly I think that 50cps earnings is a possibility, but it does rely on costs staying constant and metals also staying constant (or going up).

One thing that I am wondering about is the fact that the original palinghurst bid had a break fee of $5,000,000 and the directors did break when they recommended Palmary... did that 5 Mill go to palinghurst, or have they waved that and that is the reason that the new recommendation has a break fee of $10,000,000!!!!!

if this keeps up the break fee will make palinghurst the only viable alternative I'm rather appaled that there is a break fee in the first place, that has been decided without any shareholder say so.... it's not like the directors couldn't just say NO... you buy it if you can, but that's it!!!

Tony.

Consmin worth significantly more than 4.10 AU$ IMO

First : my thanks to Glenn for his work to substantiate the real value of Consmin by informing about all the important informations

For the moment I have seen no explanation of how the bidders value CSM
end also estimations in this thread are already old with respect to manganese price

We now have come to a point were cash bidders really confront shareholders and want to take Consmin.
We therefore must make an update of the estimated valuation of Consmin.
As I do not feel as best qualified to do that, I recollect qualitatively the most significant areas:

* nickel production increase in coming semesters (a result of a long investment process about to be fruitful)
* nickel price increase in past year
* end of nickel price hedging
* very significant price rise in manganese
* strong increase in valuation of participations
each of these items are in the range of one or several 100 MAu$ potential increase of valuation with respect to the situation of last year.
Maybe less significant but positive : the increase in chromite price


I still do not agree that a 4.10 Au$ is a fair value. even considereing that a fair value must leave value for the buyer.

Just another fact :since 24th july Au$ went down from 0.88 US$ to 0.82 US$. Which results in two things:
1/ the cash cost in AU$ is a lower fraction of FOB US$ price (EBITDA increase)
2/ the price for the buyer is down 6% wrt future US$ value of metal reserves

I also mention that consmin traded at 4 Au$ just 2 years ago with much less upside than now on all the items I mentioned above.

I keep my shares and let the 4.10 offer pass.
We need an updated valuation of consmin.

Hubisan

Why no announcement yet? The news was posted as an announcement in the UK but not in Australia. WHY?
ConsMin management are hoping that shareholders will accept the Pallinghurst bid before making the announcement. ConsMin management still trying to rip off shareholders.

12-09-07 Consolidated Mineral - Increased Offer by Palmary RNS
RNS Number:7475D Consolidated Minerals Limited 12 September 2007

Consolidated Minerals Limited - Revised Offer from Palmary

Consolidated Minerals Limited (ASX: CSM, AIM: CNM, FSE: CMN) advises that it has today received from Palmary Enterprises Limited (Palmary) the attached announcement relating to a proposed increase to $4.50 per CSM share of its cash takeover offer for all of the issued shares in CSM.

The Board of Consolidated Minerals will consider the terms of the proposed offer by Palmary and will provide guidance to shareholders as soon as it has completed its assessment of the offer. In the meantime, CSM shareholders are urged to take no action.

Paste the following link into your web browser to download the PDF document related to this announcement:

http://www.rns-pdf.londonstockexchange.com/rns/7475d_1-2007-9-12.pdf

John Abbott Company Secretary Consolidated Minerals Limited

The Company's nominated adviser is RFC Corporate Finance Ltd

contact Stephen Allen +61 8 9480 2507.

This information is provided by RNS
The company news service from the London Stock Exchange

Palmary Raises Consolidated Bid, Trumps Pallinghurst (Update3)

By Brett Foley

Sept. 12 (Bloomberg) -- Palmary Enterprises Ltd., controlled by Ukraine's Gennadiy Bogolyubov, will raise its cash bid for Australian manganese producer Consolidated Minerals Ltd. to A$1.03 billion ($859 million), trumping a rival offer.

Palmary's offer of A$4.50 a share would be 14 percent higher than its bid on Aug. 31 and above Pallinghurst Resources Australia Ltd.'s revised bid of A$4.10 made Sept. 6. The offer will go ahead if Perth-based Consolidated recommends it by noon Melbourne time tomorrow, Palmary said today in an e-mailed statement.

Pallinghurst's offer ``is uncompetitive, unfair and gives an unfair value proposition'' to investors, Palmary President Bogolyubov said in the statement. Consolidated, in a separate statement, urged shareholders to take no action for now.

The bidders are seeking control of Consolidated to get access to a 10th of the world's high-grade manganese, used in steelmaking. A construction boom in China is fueling demand.

On Sept. 10, Consolidated recommended investors accept a A$937 million offer from Pallinghurst, a fund led by former BHP Billiton Ltd. Chief Executive Officer Brian Gilbertson. Pallinghurst said it may match any rival cash bids made in the next three weeks, or pay shareholders the difference between the offers. Palmary is Consolidated's largest holder with 14 percent.

Consolidated gained 10.5 pence, or 6.2 percent, to 179 pence in London. The shares, which have more than doubled this year, closed up 2.5 percent at A$4.50 in Australia before Palmary's announcement.

Three Increases

Pallinghurst, which has increased its bid three times, denied the offer was unfair and said it had been supported by investors, company director Arne Frandsen said today in a telephone interview from Johannesburg.

``Our offer remains unconditional and the top-up mechanism ensures investors will get the best price,'' Frandsen said.

Perth-based Territory Resources Ltd., backed by trading companies Noble Group Ltd. and DCM Decometal International Trading GmbH., has also made a cash and stock offer. Consolidated said Sept. 10 it hadn't received any indication on the intentions of a potential fourth bidder that made an incomplete approach on Aug. 20.

The value of Palmary's increased offer is based on the 228.3 million common shares of Consolidated that according to the company's Web site were issued as of Aug. 15.

To contact the reporter on this story

Do not forget to add capital gain tax as part of price structure

A shareholder of consmin is partner of a business with very positive future.

By forcing me to exit now, this takeover creates for me a French investor, a massive capital gain, taxed at 27%. Considering a capital gain of 60% of sell price my tax will be 16% of price.

If I could hold Consmin for several years this tax would not exist on long term capital gain and I would in addition benefit from future growth and dividends.

It is possible that many investors also have to pay a penalty tax on gains if they agree to sell.

I definitely believe that consmin is a good investment and that the bider must compensate me for the tax cost that it creates when he forces me to exit.

Everybody should think about the tax consequence of the takeover and really account for all aspects of his selling.

Now what should be the price of consmin

Again valuation of a mine is a difficult task.

I simply notice that 2 years ago consmin was already valued at 4 Au$ but since that the price of metals have exploded.
I want to get a part of that value above 4 Au$.
Let's say for the sake of discussion that I want a very small and unfair 10%
And I don't want to losoe because of tax.

Then the sell price must be about 4.0 * 1.1 / (1-0.16) = 5.24 Au$
This is the lowest unfair price I should consider in order to ge a small part of the future value of recent upward trend in metal prices.

Again the price is not high enough.
And this is not based on assessment of consmin potential that is still to be done.

For the moment IMO the price has to go up again.
The bid process of Palmary will take a few weeks so... I just wait

Hubisan

fellows, has pallinghurst withdraw the bid? they are demanding the break fee! by the way, is it a common practice for a company to compensate an unsuccessful take over?

http://www.asx.com.au/asx/research/...panyName=&principalActivity=&industryGroup=NO

Break fees are not new. Pallinghurts(!) has maybe set themselves up for 2 bites of the cherry-they might take this $ and then demand another break fee if they were to put in another offer. Wouldn't surprise me. Asking for the break fee also sent the market briefly back to $4.55 or so-maybe they were hoping it would be more permanent, and they'd be able to then lob a bid for $4.80 or so??
Let's see how the it goes overnight.
Cheers!

I'd love to know what the thinking behind these break fees is. And is there a break fee involved with the new bid?

Break fees, what 's the rationale ?

What is the rationale?
To what extend or in which case is that in favor of shareholders?
If not, what legacy has the board to agree to repeated break fees?
Seems strange to me.

Somebody to decode that ?

Hubisan

My view is that if the board is acting in the interests of shareholders they should simply say "if you want to buy the company then do so on market" stick the break fees where they fit but then I'm probably not a savvy business man

I'm holding on for now as I bought a bit over half of my shares about 11 months ago, so holding out for the cgt discount to kick in, then I'll sell about 1/2 to be in a free carried (not taking the remaining tax into account) position.

The thing that still amazes me is that CSM felt that selling out at $2.28 per share was in the best interest of shareholders!!

To answer someone elses question, yes the palmary offer has a break fee too, I think from memory it is 1% of the market cap of the company. So depending on how high the bidding gets there break fee gets bigger too! I'm hoping that CSM management is not so stupid as to keep tooing and frowing between different bidders and paying escalating break fees each time they do!

Tony.

I've sold half my shares at $5. I notice Palmary's 'change of substantial holding' notice. They've sold some too. Now it's down to $4.91.
CSM says there's another bidder out there (apart from Territory) who hasn't shown their hand yet.
Maybe Pallinghurst will still win this game, what do you think?

Pallinghurst is ridiculous

I am fedup with Pallinghurst
I clearly dislike them

Their original sin, trying to rob shareholders at 2.28 a share should not be forgotten nor forgiven. Let me remind that they wanted to pay 2.28 dollars for the controlling block of 60% and they did not offer 2.28 for 100% of the shares. We were left with 40%of our shares as minority holders. Everyone knows that a controlling share is worth more than a minority share so that in effect the initial proposal was worth less than 2.28.
THe discount on value of a minority share is big when the majority holder is unfair. With Pallinghurst, from what I have seen I consider them as unfair. their first offer wanted to take control to do whatever they want with assets. A discount of 33% for minority shares would have been adequate. In effect their proposal was something like
(2.28*3+2.28*0.67*2)/5= 1.98 Au$
The share was recently quoted at 5 Au$ and above. You see the difference.

What Pallinghurst also did :
Bribing of Consmin management
Paying PriceWaterhouseCooper to value consmin at 2.28
TRying to Get paid Breaks fees with our money
Paying brokers to talk us into approval to sell.
They are pure manipulators from beginning to the end.
They try to pay anybody before trying to pay a fair price to the shareholders.

ONe thing I can tell is that Pallinghurst will clearly have to pay a clear premium with respect to others if they want my shares.
And I will wait until the last minute.

And I will also consider keeping my shares until next year.

I do not see any winner ( in my view a winner is somebody with more than 50%) coming out of that game.

If nobody gets close to 50% I will very well keep my shares at least until next year. It would be so much tax to sell this year that I can wait.

I like consmin business and I like the trend and upsides of consmin.
nickel upside in increased production, dehedging, and exploration
iron upside in price
manganese upside in price and exploration
chromite upside in price and exploration

And I don't mind if consmin gets back to 4 if the takeover fails.

I am ready to bet that within one year from now it will be worth more than 5
And for the moment I see no urgency in paying taxes to please Mr Pallinghurst of Mr Palmary.

At least from what I have seen with Pallinghurst if they offer 4.5 it means it is worth much more.
And you know what : the good thing is, I do not see any reason why an independant Consmin would not be able to unlock that value taht Pallinghurst sees. My position is that the benefits of being with bigger interest is close to bull****.

Consmin would do very well simply by implementing its business plan in nickel with a growth of 50% of the production

Hubisan

Now the truth is starting to come out about the cosy deal done by our dear chairman D Carter and Gilbo.
http://www.moneyweb.co.za/mw/view/mw/en/page55?oid=165760&sn=Detail

BRIAN GILBERTSON: Well, it's clearly the end-game of a fairly long, drawn-out process. You know, I met with the chairman of the company, Dick Carter, pretty much on a year ago. We met in Dubai and we agreed what we wanted to do. Now since then, quite a lot of water has flowed under the bridge. We've had Australians bidding for it, we've had a Norwegian company getting involved in it, then we had the Ukrainian group coming in. The Ukrainian bid is, as you know, at $4.50, and we've been wondering the best way to bring this to a sound, the right outcome. And you correctly pointed out that today, this morning South African time, we tabled a bid which matched their offer. But the important part of this is that we've used a mechanism called a "top-up" offer, the internal phrase we use is the "Aussie axe", because it forces people to come to a conclusion on it, and we have undertaken that if Palmary comes back with a higher offer, we will match it.

UKRAINIAN billionaire Gennadiy Bogolyubov plans to keep the same chooks in the henhouse. Pity, I thought he'd be smart enough to give Carter and Baxter the boot.

http://www.theaustralian.news.com.au/story/0,25197,22604282-5005200,00.html

"Palmary says if it wins control of ConsMin it plans to implement the miner's strategy to diversify and expand the business, and it plans to retain the current management team, including managing director Rodney Baxter."

TOU violation

While not necessarily impressed with DC, RB and Co - a share price of $5 from $2 earlier in the year looks better than most!:








Despite the route taken

Aedo.
I would like to point out, if it was left to the ConsMin management then all you would get is $2.28/share as originally offered by "I'm the premium Gilbertson".
You can thank the Consolidated Minerals takeover Vote No team and Michael Kiernan for the increase in the share price.
I can assure you Baxter and Carter had nothing to do with it.
I have many emails from Baxter who says that he doesn't want to excite the market with exploration successes and manganese price rises.
In fact the Vote NO team had to contact the ASX and ASIC to get these price rises out into the market place ( 6 weeks after the Mn increases and more than 140% did our dear CEO Baxter decide that it was necessary to inform the market, I can assure you there was a lot of pressure applied).
One day it will all come out!!!


Everyone has very short memories.

Rimtalay said:

Aedo.
I would like to point out, if it was left to the ConsMin management then all you would get is $2.28/share as originally offered by "I'm the premium Gilbertson".
You can thank the Consolidated Minerals takeover Vote No team and Michael Kiernan for the increase in the share price.
I can assure you Baxter and Carter had nothing to do with it.
I have many emails from Baxter who says that he doesn't want to excite the market with exploration successes and manganese price rises.
In fact the Vote NO team had to contact the ASX and ASIC to get these price rises out into the market place ( 6 weeks after the Mn increases and more than 140% did our dear CEO Baxter decide that it was necessary to inform the market, I can assure you there was a lot of pressure applied).
One day it will all come out!!!


Everyone has very short memories.

Click to expand...

Rimtalay,

Thanks for your response to my light hearted post. That was an excellent summary - particularly the comment "I can assure you Baxter and Carter had nothing to do with it"!

And no short memory here - I am well aware of both the "vote no" group and MK and have watched the saga very closely (including reading that stupid 400+ page document) over the last 8 months or so. I am extremely impressed that the share price has hit $5 (and a little amazed it has to be said).

Again, your work is appreciated!

Looks like another buyer of ConsMin more than 40 million shares or 17.7% of CSM , held in a bank in Prague.
Buying on market, looks like some smart operator who is building a stake. Maybe the next offer is $5 or more.

HOLD, another bid is coming.

Mystery buyer has huge slice of ConsMin
October 24, 2007 - 7:39PM


The one billion dollar plus battle for control of Consolidated Minerals Ltd (ConsMin or CSM) has taken a new twist.

A mystery buyer emerged on Wednesday with almost 18 per cent of the target, making the investor the emerging miner's biggest shareholder and able to block existing takeover bids by rival suitors Palmary Enterprise Ltd or Pallingurst Resources Australia Ltd.
ConsMin told the Australian stock exchange after the end of trading that it had "become aware of a holding of 40.6 million ordinary shares in CSM (constituting 17.7 per cent interest in the total issued capital of CSM) registered in the mane of ANZ Nominees Ltd".

"Despite repeated attempts, through the issue of tracing notices pursuant to the Corporations Act, CSM has to date been unable to ascertain the identity (or identities) of the ultimate beneficial owner (or owners of this interest," ConsMin said in a statement to the exchange.

"What has been ascertained is that the ultimate beneficial owner (or owners) have used at least four different custodians in Australia and continental Europe. The response to the most recent trading notice issued by CSM indicated that the shareholding is held by Euroclear Bank for ING Bank in Prague."

The one billion dollar plus battle for control of Consolidated Minerals Ltd (ConsMin or CSM) has taken a new twist.

A mystery buyer emerged on Wednesday with almost 18 per cent of the target, making the investor the emerging miner's biggest shareholder and able to block existing takeover bids by rival suitors Palmary Enterprise Ltd or Pallingurst Resources Australia Ltd.

ConsMin told the Australian stock exchange after the end of trading that it had "become aware of a holding of 40.6 million ordinary shares in CSM (constituting 17.7 per cent interest in the total issued capital of CSM) registered in the mane of ANZ Nominees Ltd".

"Despite repeated attempts, through the issue of tracing notices pursuant to the Corporations Act, CSM has to date been unable to ascertain the identity (or identities) of the ultimate beneficial owner (or owners of this interest," ConsMin said in a statement to the exchange.

"What has been ascertained is that the ultimate beneficial owner (or owners) have used at least four different custodians in Australia and continental Europe. The response to the most recent trading notice issued by CSM indicated that the shareholding is held by Euroclear Bank for ING Bank in Prague."

CSM said that it had not received any substantial shareholder notice from any party or parties in relation to the holding.

"In light of the size of this shareholding and the fact that CSM is already the subject of competing takeover proposals from Pallinghurst and Palmary Enterprises (each of which has been the subject of previous announcements to the market), CSM wishes to identify the beneficial holder (or holders) of this shareholding as a matter of urgency.

"To this end, and in light of the fact that CSM's efforts to identify the ultimate holder through tracing notices has not yet been successful, CSM has referred the matter to ASIC (Australian Companies and Securities Commission) for further investigation and action."

CSM said that it reserved the right to pursue action through the Takeovers Panel and would keep the market informed of further developments.

Until Wednesday, Palmary was ConsMin's largest shareholder with a 14 per cent stake, and is seeking a shareholding in ConsMin of more than 50 per cent, but less than 90 per cent.

The ConsMin board has spent much of last week reviewing the competing offers and said in a statement on October 19 that it would retain its recommendation for Palmary's bid in the absence of a superior offer.

The board said Pallinghurst was unable to increase the cash component of its offer in the absence of Palmary or any third party making a higher offer prior to the close of Pallinghurst's offer on November 2.

Palmary has made an unconditional cash offer, the key difference between rival Pallinghurst as both have offered $4.50 per share, valuing the target at $1.03 billion.

Palmary applied to the Takeovers Panel last week regarding a statement made by Pallinghurst earlier in the month.

The Takeovers Panel has decided to commence proceedings and on Tuesday issued interim orders requiring Pallinghurst to extend its offer to November 2.

© 2007 AAP