LGL - Lihir Gold

[Sean K]

Re: LHG - Lihir Gold

Kennas, wouldn't this depend alot on the time frame of the various investors/traders holding this stock? IE - Longer term investors will eventually see some value but for shorter term holders it's not so good?

Yes, anyone with a very short term focus might not be happy. Also might depend on when you bought this. Recent buyers might not be happy if the stock dives on Monday. I've bought it from 60 cents up to $2.80 ish, so I'm comfortable with my position and am looking longer term. I'm still curious at the p/e on this. (e trade have it at 47) There's lots of upside factored in to the sp - possibly a takeover premium.

 

[Sean K]

Re: LHG - Lihir Gold

ABN Amro rates LHG as Hold - The company has moved to eliminate its gold hedging position via a capital raising that will also pay down debt and provide funds for capex, the broker suggesting the move is a positive for core earnings but will be a negative for headline numbers.

Its valuation of the stock has fallen 10% to account for the additional shares to be issued, while it expects the stock to start trading again in line with the rights issue price of $2.30.

Target price is $2.23 Current Price is $3.36 Difference ($1.13) - (brackets indicate current price is over target). If LHG meets the ABN Amro target it will return approximately - 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

JP Morgan rates LHG as Overweight - The company's move to raise funds to close its hedge book and obtain development capital for the Balalrat project is a positive in the broker's view as it will increase the company's leverage to spot prices and make the comany more attractive to potential suitors.

While in the short-term there may be some underperformance as a result of the share issue the broker remains positive on the company's outlook.

Target price is $3.50 Current Price is $3.36 Difference:$0.14 - (brackets indicate current price is over target). If LHG meets the JP Morgan target it will return approximately 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December. JP Morgan forecasts a full year FY06 dividend of 0.00 cents and EPS of 4.20 cents. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 80.00.

SB Citigroup rates LHG as Hold, High Risk - The broker left everything unchanged, even though there seems lots to digest for Lihir shareholders.

Company has announced an equity raising of $1.2bn through a 1 for 3 entitlement offer plus a placement of shares to institutional investors. The entitlement is priced at $2.30, which is a large discount (some 32%) to the closing price.

Approximately 80% of the funds to be raised will be used to close out the hedge book and repay the gold loan and other secured debt facilities of the company.

Citigroup analysts have quickly calculated this will leave management with circa $200m to spend towards the Lihir Island expansion and Ballarat development.

Analysts comment the large discount for the entitlement is likely to ensure the raising will be successful.

Becoming an unhedged producer may make the company a more appealing takeover target, Citigroup believes.

Target price is $3.60 Current Price is $3.36 Difference:$0.24 - (brackets indicate current price is over target). If LHG meets the SB Citigroup target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December. SB Citigroup forecasts a full year FY07 EPS of 11.00 cents. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.55.

UBS rates LHG as Neutral 2 - The capital issue to close out the hedge book is advantageous in turning LHG into a pure-play stock, the broker suggests. However, as the broker sees gold ending below US$690/oz by year end, it considers a close out at this level to be dilutive.

Target price is $3.60 Current Price is $3.36 Difference:$0.24 - (brackets indicate current price is over target). If LHG meets the UBS target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December. UBS forecasts a full year FY07 dividend of 0.00 cents and EPS of 16.00 cents. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.00.

 

[Sean K]

Re: LHG - Lihir Gold

Comes out of the halt today and FP are betting on a 10-15% drop. So, a 33-50 cent drop to $3.00-$2.83 ish. $3.00 is one of important support levels I think, so hopefully it can hold around here. If it's sold off any more than $2.83 ish I'd see it as a knee jerk reaction and maybe an opportunity. On the other hand Mr Market's a crazy beast. Anyhting can and will happen. What a shame, it looked set to be about to test all time highs too.

 

[chops_a_must]

Re: LHG - Lihir Gold

Comes out of the halt today and FP are betting on a 10-15% drop. So, a 33-50 cent drop to $3.00-$2.83 ish. $3.00 is one of important support levels I think, so hopefully it can hold around here. If it's sold off any more than $2.83 ish I'd see it as a knee jerk reaction and maybe an opportunity. On the other hand Mr Market's a crazy beast. Anyhting can and will happen. What a shame, it looked set to be about to test all time highs too.

I'd be very surprised if it went through 2.80:

A Bookbuild was carried out for the sale of approximately 43 million Placement shares, plus shares
equivalent to the number of Entitlements not taken up in the Institutional Entitlement Offer. The
Bookbuild was significantly oversubscribed, with strong interest shown from both Australian and offshore
institutional investors. The Bookbuild resulted in a final clearing price of $2.80 per share, which was
$0.50 above the Offer Price.

 

[muddywaters]

Re: LHG - Lihir Gold

LHG - LIHIR GOLD LIMITED
Deutsche Bank rates LHG as Buy - The broker suggests the entitlement and placement offer is "overwhelmingly positive" for LHG. With no debt and no hedge, LHG becomes a pure play gold stock. The broker assumes a 10% discount for the placement, putting that at $3.02.
Target rises from $3.41 to $3.88.

Target price is $3.88 Current Price is $3.36 Difference:$0.52 - (brackets indicate current price is over target). If LHG meets the Deutsche Bank target it will return approximately 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December. Deutsche Bank forecasts a full year FY07 dividend of 2.00 cents and EPS of 9.00 cents . At the last closing share price the estimated dividend yield is 0.60%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.33.

 

[Sean K]

Re: LHG - Lihir Gold

$3.00 is one of important support levels I think, so hopefully it can hold around here.

Seems to be a support area. I've picked some more up here. Too early to really tell if it'll hold, but I like LHG mid-long term gold exposure, and will become a juicier T/O target once it's cleared the hedge decks.

 

[Sean K]

Re: LHG - Lihir Gold

Deutsche Bank rates LHG as Buy - The broker suggests the entitlement and placement offer is "overwhelmingly positive" for LHG. With no debt and no hedge, LHG becomes a pure play gold stock. The broker assumes a 10% discount for the placement, putting that at $3.02.
Target rises from $3.41 to $3.88.

Target price is $3.88 Current Price is $3.36 Difference:$0.52 - (brackets indicate current price is over target). If LHG meets the Deutsche Bank target it will return approximately 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December. Deutsche Bank forecasts a full year FY07 dividend of 2.00 cents and EPS of 9.00 cents. At the last closing share price the estimated dividend yield is 0.60%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.33.

 

[Tye]

Re: LHG - Lihir Gold

LHG came up as a buy yesterday arvo according to my trading plan. with a 65% probability of hitting $3.19 within 2/weeks. Just thought you might be interested?

 

[drillinto]

Re: LHG - Lihir Gold

April 23, 2007

The Economist Spouts More Rubbish About Gold

Last week the mighty US dollar fell below US$2:£1 and gold pushed up towards the US$670/oz mark. Nothing very unexpected about these two statistics to most people, but to the Economist they must have come as a mighty shock. In the April 8th edition of that august magazine it carried an article entitled “A Fine And Fickle Friend” and the sub-title was “ Gold is a useful friend, but only for a fortnight.” The fortnight is now up and the writer is clearly hoist by the Economist’s traditional contempt for gold. A look back through the files shows that the Economist published a very similar article on April 17th 2006 to which we responded with one entitled “The Economist Seems to be Stuck In The Dark Ages with Its Views On Gold.” What is so difficult to understand is why the Economist attacks gold and does not treat it simply as another form of investment. The masses of investors who have become involved in the gold exchange traded funds cannot all be wrong.
Mention is made by the Economist of the fact that the biggest holders of bullion have been central banks and this is described as a relic of gold-standard days. By and large, says the Economist, central banks have not been enthusiastic holders, and have had, on occasion, to agree not to sell their stockpiles. This is a rather tendentious reference to the Washington Agreement of 1999 when a number of central banks agreed not to sell more than 400 tonnes of gold a year between them. In fact they have sold well less than 400 tonnes per year and any potential overhang is limited by the fact that these banks now own only 20 per cent of the gold in the world. The question also has to be asked as to which central bank wants to risk the condemnation now being heaped on Prudence Brown for selling a large slug of the UK’s gold reserves at the turn of the century.

Prudence is now digging himself into another hole by pushing for the International Monetary Fund to sell part of its gold reserves to meet its future financing requirements. He is quoted as saying that there was "no doubt" that gold sales were potentially part of the I.M.F.'s likely future financing. He then went on to claim that an independent report into future IMF financing had recommended that any gold sales should take place in a "measured way." Presumably he was referring to something similar to the crass way in which the Treasury sold the UK gold in a series of auctions. All traders had to do was sell gold as it fell prior to each auction and buy it back at a higher price once the auction was over. The result was that the UK inevitably got bottom dollar as anybody of a commercial bent would understand.

So much for politicians and economist, few of whom have held a real job in their lives. What about the men at the forefront of the gold industry? At the leading Australian gold producer Lihir Gold a decision has been made to close out its hedge book, neutralise debt and raise funds for expanding and developing its existing assets. This has to be a massive bet by the company, which is focused on gold in Papua New Guinea. The company is going to raise A$1.07 billion through a share issue at a 32 per cent discount to the price ruling this time last week. This will be supplemented by a further A$120 million at a price to be determined by the institutional bookbuilding process which makes A$1.2 billion in all – quite a sum.

The share issue is split between A$856 million which will go to institutions and is fully underwritten by Goldman Sachs JBWere and Maquarie Equity Markets as is the placement. The balance of A$214 million is reserved for retail investors and will not be underwritten. The hedge book contains 934,500 ozs gold and there is a 480,000 oz gold loan which will be repaid early. On the basis that the expansion of production at the Lihir mine will cost around A$660 million, the company is going to spend a similar sum on its hedge book thought it should be borne in mind that money may have to be spent on its recent acquisition of Ballarat Goldfields.

It is the company’s shareholders who pressurised for this move as they want more exposure to the gold price in future as Lihir is forecasting production of 800 to 830,000 ozs this year and will be pressing on towards the magic million ounce mark thereafter. The view that the gold price will go up is certainly supported by some influential commentators such as Peter Grandich, editor of the Grandich Letter, who said at the end of last week that “a near-perfect storm has aligned both technically and fundamentally for gold. A test of the 2006 highs around US$735/oz is not a question of if, but when.” He was supported by James Moore, metals analyst at TheBullionDesk.com, "strong physical buying has been seen on dips, while the current bearish sentiment toward the U.S. dollar may encourage diversification away from the greenback.”

Looks like the Economist is marching out of time with the rest of the financial world. At least it knows that Prudence Brown and Little Balls are in the same predicament, but it would be wise to remember Lord Chesterfield’ maxim that everyone is known by the company they keep. Anyway the Chinese would probably be delighted if the IMF sold off some gold as it would enable them to switch some of their massive reserves out of dollars that much more easily.

Source: www.minesite.com

 

[Out Too Soon]

Re: LHG - Lihir Gold

LHG came up as a buy yesterday arvo according to my trading plan. with a 65% probability of hitting $3.19 within 2/weeks. Just thought you might be interested?

Would you like to expand on that Tye? I look at LHG & I'm both tempted & nervous. It seems no one can come to a reasonable sp for LHG, I've been following for a long while but never taken the plunge.

 

[Tye]

Re: LHG - Lihir Gold

Would you like to expand on that Tye? I look at LHG & I'm both tempted & nervous. It seems no one can come to a reasonable sp for LHG, I've been following for a long while but never taken the plunge.

Well to be honest i do not follow fundementals at all. I believe fundementals are great if you know what you are looking for but for me i really can not find a reason to purchase a share just because the ceo says they are going great (Thats a 50/50 gamble for me.) I used 3.19 for a initial target for the plain reason, its the low of the most resent signifigant low (13th april). Also gaps have been filled on this share 100% of the time so if thats the case $3.19 should be filled. I do not trade long term and only hold shares for around 2 weeks depending on how they are going. So i do not have a clue what will happen with this one over the long term and honestly i dont care. I trade my plan technicaly not fundamntaly. so all i can say is it has a 65% chance to go up in the next 10 days.

 

[Pommiegranite]

Re: LHG - Lihir Gold

Any of you shareholders received your retail investment offer yet? If not...when do you think it should arrive by?

 

[Out Too Soon]

Re: LHG - Lihir Gold

Well to be honest i do not follow fundementals at all. I believe fundementals are great if you know what you are looking for but for me i really can not find a reason to purchase a share just because the ceo says they are going great (Thats a 50/50 gamble for me.) I used 3.19 for a initial target for the plain reason, its the low of the most resent signifigant low (13th april). Also gaps have been filled on this share 100% of the time so if thats the case $3.19 should be filled. I do not trade long term and only hold shares for around 2 weeks depending on how they are going. So i do not have a clue what will happen with this one over the long term and honestly i dont care. I trade my plan technicaly not fundamntaly. so all i can say is it has a 65% chance to go up in the next 10 days.

Thanks Tye, I'll hold a share between 1 day & 4 months but I always like to know the fundamentals even if the sp action or T/A makes me go against them (short term).
I noticed large change of directors notices (positive, they're buying), so that's a good sign of healthy sp movement to come.

 

[robots]

Re: LHG - Lihir Gold

hello,

are people here taking up the share offer from Lihir?

one new share for every three held at a price of 2.30

thankyou

robots

 

[Sean K]

Re: LHG - Lihir Gold

hello,

are people here taking up the share offer from Lihir?

one new share for every three held at a price of 2.30

thankyou

robots

Yes, I am robots. Would be silly not to really with the offer price. What was it - $2.30? Great discount. I think some people might flog them off when they start trading, but not too many perhaps. Capital gains will probably eat quite a bit of the profit and I have the general impression that LHG was set to keep climbing from where it was. I'll be happy to hold, unless it becomes clear that POG is NOT going to continue it's bull run. Not sure if it's possible to know that 100% but anyway...FWIW.

 

[Holdon]

Re: LHG - Lihir Gold

I have been buying parcels on CFD trades all the way from $3.03 last week to yesterdays low...in profit now and am expecting a few more upward plays to $3.15....then I'm out......but LHG is a nice takeover target IMO. Well hanging in there for someone to pluck it off the tree anyway....GL all longs.

 

[Pommiegranite]

Re: LHG - Lihir Gold

Basic question...but how do I get the 1 for 3 offer shares to show up in my Etrade account?

 

[PhoenixXx]

Re: LHG - Lihir Gold

Without any anns SP steeped to $2.90 last week and today back to $3.09.
I don't know whether today is just a one-day support and back to $2.9x or $3.00 as gold price didn't go up that much on the weekend.

 

[Aedo]

Re: LHG - Lihir Gold

Basic question...but how do I get the 1 for 3 offer shares to show up in my Etrade account?

There is a timetable in the company announcement which indicates that the new rights issue shares will be issued to commence trading on the 25th May (this information is also in the prospectus which you naturally read prior to taking up the offer ) - they won't therefore be in your account now.

 

[disarray]

Re: LHG - Lihir Gold

Basic question...but how do I get the 1 for 3 offer shares to show up in my Etrade account?

when it happens CHESS will inform your sponsor who will update your details on their database afaik.