GBG - Gindalbie Metals

[onebytwo]

Does anybody else feel the market undervalues this stock?

I bought in at $0.75 a few weeks back, purely on the basis of what the numbers were saying.

GBG's share of the Karara Project stands at about 50%, that is, 50% of a project with an NPV of $2.25bn using a very conservative (imo) 9% discount rate. So from a technical perspective, the PV of this project should be providing $1.13bn of shareholder wealth - RIGHT NOW. That's $2.20 a share. For Karara alone!

Then we have the Mundaga project - which should be adding $80m of shareholder value.

And let's not forget that we need to add some sort of speculative value on top for GBG's other explorations and ventures.

I mean, is the market really applying such a large risk factor for the projects because of environmental approval?

$0.70?

Now, I'm fairly new to all this, so if anyone sees any dangerous misunderstandings in the above, feel free to criticise.

For those who haven't seen it, a GBG presentation:
http://www.gindalbie.com.au/Investor+Relations/Presentations/Downloads_GetFile.aspx?id=181

 

[oldblue]

My take on GBG is that its struggling to get much investor attention at a time when there's a lot of other beaten-down stocks out there.
Although they have a strong Chinese partner, there are other iron ore stocks which are either producing, or nearer to producing than GBG.
Ore prices are high now but there is no guarantee that they will be once production starts.
Although GBG have some hematite, my understanding is that a lot of their resource is the less-favoured magnetite.

I have them on my watchlist - another uptrend could get me interested!

 

[oldblue]

One other point.
I read a comment recently which referred to the "Gindalbie model." This, apparently, was to buy up "old tenements in which there were known resources and to shop them to Asian buyers."
Nothing wrong with that if that's the case but I had never heard/ thought of GBG in those terms before.

 

[onebytwo]

What do people make of the late run-up just prior to close today?

Also did anyone notice the massive sell orders that appeared at 80-82c, and then taken down a little while later? Cappers at work perhaps?

 

[Bullion]

GBG in a trading halt, or so it seems on Comsec? Anyone know the reason? I can't see the ann yet..........

 

[hookon]

Announcement - Halt related to Opes - Who are a major shareholder & have part of their stock in GBG Financed.

Opes are in voluntary liquidation & all activities & accounts including customers frozen.

 

[bigdog]

Announcement - Halt related to Opes - Who are a major shareholder & have part of their stock in GBG Financed.

Opes are in voluntary liquidation & all activities & accounts including customers frozen.

This article would have been written prior to this mornings trading halt!

http://www.theaustralian.news.com.au/story/0,25197,23456730-20142,00.html

Opes Prime founders in whirlpoolBrought to you by
Font Size: Decrease Increase Print Page: Print Adele Ferguson | March 31, 2008
THE collapse of Opes Prime will wreak havoc on the small to mid-cap sector over the next couple of weeks as its main creditors, ANZ Bank and Merrill Lynch, retrieve their money by liquidating a $1.5 billion portfolio of Australian shares filled with stocks, including ABC Learning Centres, Allco, Clive Peeters, Hedley Group and Just Group.

Administrators were appointed to Opes Prime on Thursday night and, before the market opened on Friday, ANZ and Merrill Lynch had wasted no time dumping stocks at massive discounts.

The result: at least four companies were placed in a trading halt as a result of the collapse.

These include Admirality Resources, Hedley Leisure, manufacturer Austin Group and Reco Financial Services.

Not surprisingly, Reco went into a trading halt. The Australian reported three weeks ago that Opes Prime was using Reco for a backdoor listing on to the ASX, which would have valued the company at $100 million.

Others will follow. The reason is simple: Opes Prime specialised in small to mid-cap stocks so most of the securities lending it did was in the less liquid end of the sector, where most damage can be caused when hedge funds short the stock.

Brokers who spoke to Opes Prime dealers on Friday were told there would be a lot of "bargains" in the small-cap sector in the next two weeks as ANZ and Merrill Lynch cut and run.

This will add to the volatility in the stock market and no doubt trigger more margin calls on these types of stocks.

There is also expected to be a lot of favouritism given to ANZ's clients, who will be given opportunities to buy shares at a discount in off-market transactions.

For instance, on Friday more than 10 million Hedley Group shares were put through the market in a special sale at a 50 per cent discount to the trading price.

Others who have accounts with ANZ will try and do deals to try and get their money back.

A few Opes Prime clients with substantial sums of money are planning to see if they can pay ANZ money and get their securities lending accounts back. It will be interesting to see how the ANZ handles these calls.

The ticking bomb for banks in all of this is that some of the loans they lend out are linked to a company's share price and so as shares fall more than 40 per cent loan covenants will be breached, leaving the banks exposed.

It also heightens the need for regulators and superannuation funds to clamp down on share lending by improving transparency and pricing it properly.

Right now share lending is adding to volatility in the market. It is quite an irony that one of the founders of Opes Prime, Julian Smith, put out a press release two weeks ago espousing the benefits of share lending. "The fact Australia has one of the deepest and most liquid stock lending markets in the world is one of the main reasons why the Australian share market is also one of the world's least volatile: there is a straight correlation between the two. Securities lending is like the oil in the engine. It does not make the market go, but without it the market seizes up," Smith said.

What he failed to say was that the reason Australia had one of the deepest lending markets was that stock lending was so cheap. For a few basis points super funds lend their shares out to the likes of Opes Prime who then on-lend to the hedge funds, who use the borrowed stock to short it, and decimate the very funds that super funds are meant to manage for Australians.

One broker said he recently borrowed 10,000 AMP shares on behalf of a client for four days.

The cost? All up, $33.

But this is no way properly recognises the risks involved in the exercise. Stock lenders usually don't even know the identity of the borrowers, let alone know what their credit rating might be -- if they had one, which they don't.

In normal times counterparty risk in securities lending is not a big issue, but these are not normal times.

Given the cheapness of borrowing stock, the fact that more than $200 billion of stock in Australia is available for lending at any one time, and hedge funds have never been more actively pursuing short selling strategies, it is no surprise that super funds are set to sink into the red for the fifth consecutive month in March, bringing total losses this financial year to 6.6 per cent.

While it is well and good for super fund associations to stress that super funds are long-term propositions, it doesn't help when you are ready to retire and find your super fund worth a lot less than it was a few months ago.

The collapse of Opes Prime and the huge amount of stock dumping expected to occur in the next few weeks, puts the spotlight on the lack of transparency in stock trading and throws into question whether a decision by the ASX in 2005 to remove broker identification numbers from trading screens has added to the mess. One of the ASX's central roles is to ensure the share market operates in a "fair, open and transparent" manner.

But the ASX, which is run by Rob Elstone, continues to prove that transparency and fairness are two diametrically opposed concepts. Since November 28, 2005, when the ASX removed from trading screen broker numbers, it took away what many traders and investors considered an important piece of information in trying to predict where share prices might go.

Put simply, each of the 92 market participants that make the "market" each and every day are assigned an identification number that tracks its trading in all listed companies.

Until late 2005, that number allowed every trader with a so-called SEATS (Stock Exchange Automated Trading System) screen to tell which of their peer firms was trading which stock.

This has been replaced by the release of market share information at the end of every trading day, and the full trading history with broker identifiers three days after the trade.

But with the rise of hedge funds, which specialise in making short-term investments, and principal trading, where broking firms themselves trade in stocks, the factors that push shares up and down on a daily basis have become more subtle. There is growing concern that there is a privileged flow of information to the professionals at the expense of retail brokers and individual investors.

Let's hope that out of the recent carnage sanity will prevail and regulators and the government will give investors back some transparency.

 

[bigdog]

Trading halt request
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00827460

Gindalbie Metals Ltd., an Australian iron ore company, halted its shares from trading pending clarification of an equity finance contract that its largest shareholder Melewar Steel Ventures Ltd. has with Opes Prime Stockbroking Ltd.

``A portion of its shareholding is subject to an equity finance contract with Opes Prime,'' Perth-based Gindalbie said today in a statement to the Australian Stock Exchange. ``Gindalbie is seeking clarification of Melewar's position.''

Melewar holds a 14.5 percent stake in Gindalbie, which today requested a trading halt until April 2.

 

[agro]

o thats excellent

does that mean this stock will get dumped now or just change of hands?

 

[prawn_86]

o thats excellent

does that mean this stock will get dumped now or just change of hands?

I would say that if a cross trade is organised at a similar price (to current price) the stock will stay steady.

However, if it has to be dumped at market I dare say a significant fall would occur

 

[powerkoala]

I would say that if a cross trade is organised at a similar price (to current price) the stock will stay steady.

However, if it has to be dumped at market I dare say a significant fall would occur

well, if it happens just like ADY, this will surely go down a lot.
ADY was down from 24c to the lowest of 17c today due to this matters.
dunno how many shares will be sold though.
surely last friday, someone must know beforehand.
a trade of 3M shares sold at market close.

 

[bigdog]

http://www.wabusinessnews.com.au/en-story.php?/1/61860/Opes-crash-hits-six-WA-miners

Opes crash hits seven WA miners
31-March-08 by Mark Pownall and Rebecca Lawson
Latest News

The collapse of stockbroker Opes Prime has ensnared shareholders in at least seven WA resources companies, including high profile mining identity Nathan MacMahon and the biggest stakeholder in Gindalbie Metals Ltd.

Gindalbie, Blackham Resources Ltd, Conquest Mining Ltd, Bannerman Resources Ltd, Catalyst Metals Ltd Red Fork Energy Ltd and Hodges Resources Ltd all called trading halts in relation to shareholders who had equity finance contracts with Opes Prime.

Gindalbie told the market it was attempting to clarify a situation where its biggest shareholder Malewar had a portion of its 14.5 per cent stake subject to an equity finance contract with Opens Prime Stockbroking Ltd.

It was understood that almost half of Malewar's 74 million share stake could be subject to the contract.

Gindalbie shares were steady at 71 cents before the trading halt was called. It was understood the company was seeking a buyer or buyers for the parcel of shares, thought to be around 35 million, rather than seeing the stock dumped on the market.

Melewar is part of the Melawar industrial group, a Malaysian steel tubing business.

Bannerman called a trading halt today, advising the market that director Nathan MacMahon and other shareholders had advised the company that a portion of their shareholdings are subject to an equity finance contract with Opes Prime Stockbroking Ltd.

Bannerman shares dropped 10 per cent to a $1.80 each before the half was called.

Blackham Resources Ltd also advised a director of company other shareholders had advised the company that a portion of their shareholdings are subject to an equity finance contract with Opes Prime Stockbroking Ltd.

Conquest Mining made a similar announcement.

Red Fork said one of its substantial shareholders holds its shares through an account with Opes.

Opes Prime went into receivership and administration on Thursday after trading "irregularities" were uncovered.

On Friday the Australian Securities and Investments Commission obtained orders placing travel restrictions on Opes chief Lirim Emini.

 

[agro]

there's speculation that seeing though SinoSteel did not get approval from Midwest takeover that they may take the 7% stake in GBG that the maylasian steel company want to sell.

see today's AFR theres about 3 articles alteast

 

[agro]

Merryil Lynch bought a 5.35% stake in GBG today becoming a substantial holder

 

[oldblue]

Merryil Lynch bought a 5.35% stake in GBG today becoming a substantial holder

ie, warehousing the shares until the market's in a mood to pay them a better price ? Same situation applies at AOE ( and possibly others).

 

[agro]

ie, warehousing the shares until the market's in a mood to pay them a better price ? Same situation applies at AOE ( and possibly others).

can you explain what you mean? i don't understand?

thanks - this 100 word thing gives me the ......................................

 

[Bullion]

Merryil Lynch bought a 5.35% stake in GBG today becoming a substantial holder

Is this a 5.3% stake from nothing? Or did they have a smaller piece of the pie to begin with? ....................

 

[agro]

Is this a 5.3% stake from nothing? Or did they have a smaller piece of the pie to begin with? ....................

oh i see they became a holder on the 28th / 2 / 2008

beats me why the offer that kind of outdated info now

lets hope sinosteel buys up the opes stake or the Malaysians don't sell

i am positive !

 

[BigJohnny]

oh i see they became a holder on the 28th / 2 / 2008

beats me why the offer that kind of outdated info now

lets hope sinosteel buys up the opes stake or the Malaysians don't sell

i am positive !

Hi Agro,

I believe the last "collateral receive" +15.346 million shs was reposessed from Opes prime clients on 28Mar08. This has sent their ADY holdings over 5% substantial reporting requirement.

 

[agro]

announcment out today: Gindalbie Targets Major Expansion of Karara Project

can't access it from the computer i am at though