LST - Lion Selection

[tommymac]

One of the objectives of LST is to become a gold producer rather than an investment company.

I have my doubts that LST will accept a bid from IRN (or another) unless it is substantially more. With a rising Gold price the benefits of Cracow for LST may outweigh a takeover of $1.77, especially considering it could liquidate and have a value of $1.82 (as of 29 Feb as per the NTA)

56gsa, I haven't looked at your numbers, though have you considered if the current bid for Cracow of $200m is an accurate value? With LST owning 30% and a pre-emptive right, do you think this may have kept potential bidders away and hence a lower bid?

Just a thought.

Tommymac

 

[56gsa]

56gsa, I haven't looked at your numbers, though have you considered if the current bid for Cracow of $200m is an accurate value? With LST owning 30% and a pre-emptive right, do you think this may have kept potential bidders away and hence a lower bid?

heh tommymac - you could be right, LST's pre-emptive right could have scared others away meaning this is priced at bottom end. difficult to know
i've been away a few weeks and notice the bidders statement has been released - LST saying don't sell to IRN... interestingly LST also bought $100k of HAV on-market - not sure if this is somehow related to IRN?

Not across my companies law but could LST sell its IRN holding to another party - this would then defeat the purpose of IRN's takeover???

Interesting just readin through the bidders statements see that Laxey Partners (LPL) appear to have 10% interest in LST... appears to be a hedge fund - this is their speel...

LPL conducts investments in companies which it feels are undervalued. Having researched these companies in great detail, LPL encourages and supports these companies to fulfill their potential and hence enhance shareholder value. LPL has a strong track record in this respect and its associates have substantial international expertise in focusing on the delivery of shareholder value.

Not sure how this will play out but I have a feeling there will be a few twists and turns - can't see IRN getting the 50% at their current offer and if other players see LST going cheap with all that cash and liquidity I think they will want a slice too...

 

[tommymac]

56gsa,
I tend to agree with you, there will be twist and turns. Probably best just to sit back and wait.

 

[56gsa]

56gsa,
I tend to agree with you, there will be twist and turns. Probably best just to sit back and wait.

I'm definitely sitting on my holding in this TM - no rush here... U hold?

As my numbers above indicate there appears little downside with this if the takeover happens given the large liquid assets IRN is acquiring

Based on my numbers above, if you acquire LST now ($1.54 today), and IRN achieves 100% through takeover the break even point of your investment will be 57 cents based on the new number of shares for combined IRN_LST. This implies a $455m mkt cap - but net liquid assets (cash + shares - liablities) will be $432m... that would be valuing Tampakan at $23m!!! Similar scenario for IRN acquiring 50%.

Downside you could say is takeover falling through but then you're stuck with LST at a 20% discount to its NTA - only bad if commodities fall

SO plenty of upside possibilities - new bidder, IRN increases bid (theres plenty of reasons for them to) etc etc

 

[tommymac]

I'm definitely sitting on my holding in this TM - no rush here... U hold?

I'm holding.

LST just gone into trading halt until Friday. Have no option now but to wait and see. Hopefully it will provide some answers.

 

[tommymac]

Wow! Two big announcements in one day.

LST agrees with Xstrata to sell holding in IRN
LST agrees to sell Cracow for $80m to BDR.

The first is obviously unexpected. IRN now trading at $1.08, 8c above the offer price of $1.00 set by Xstrata. Not unexpected however is that IRN rejects offer. Good news for LST? IRN doesn't believe so with the comments in its announcement saying LST only way to make money is to sell investments.

Personally I thought investment companies such as LST made money by buying and selling investments for a profit. Based on the price history of IRN , $1 looks like a reasonable price as it has struggled to stay about that in the past. But they do make a good (but obvious) point that it could be a way to frustrate the attempt by IRN to takeover LST.

LST to sell Cracow. I thought LST would try to buy Cracow. It seems to be in line with its objective of becoming a Gold Miner. However, LST has requested to remain in a trading halt. Is there more news to come?

 

[56gsa]

Not across my companies law but could LST sell its IRN holding to another party - this would then defeat the purpose of IRN's takeover???

TM ... the twist !! Well I did have this as one of my scenarios but then didn't buy IRN directly so have missed out on its 40% gain... only have the 15% gain on LST since IRN bid started but when trading commences again we should see LST up around the 1.70 mark? NTA has gone up 20 cps based on potential proceeds of IRN and Cracow sales.

What's your thoughts on LST now they are all cashed up? I expect a hefty dividend from LST which is what they have done in the past... but you're right about the fact they wanted to become a miner and not just a LIC so they may take a controlling position in a company - maybe gold given their history...

Due to start trading tomorrow morn so announcement this afternoon I presume.

 

[Squawkbox]

As a holder of View Resources (VRE), I hope LST will want to use its cash to salvage its holding in VRE by baling them out - Bronzwing Gold Mine is up for grabs plus a 30% share in a profitable nickle mine.

 

[56gsa]

As a holder of View Resources (VRE), I hope LST will want to use its cash to salvage its holding in VRE by baling them out - Bronzwing Gold Mine is up for grabs plus a 30% share in a profitable nickle mine.

more likely that one rather then the LAF debacle... LST has also demonstrated a lot of support for HAV which now has 3 fairly well developed project s- they may want to overload 1 or 2 and concentrate on getting one operational...

don't think this will have much impact on share price though unless they score a real bargain

 

[tommymac]

What's your thoughts on LST now they are all cashed up?

56, A big dividend would be nice.

A lot of scenarios to consider now and I guess we just need to wait. But I too wish I had some holding in IRN. Assuming a good announcement tomorrow and we should see good gains in LST.

 

[56gsa]

board meeting over the weekend - how much will the divvie be?? C'mon Lion, reward the faithful!

Total proceeds from IRN and Cracow (assuming $1 per IRN share and including shares on Cracow sale)
= $177m
=> 93cps

Profit on these transactions (based on costs of $23m for IRN and $56m Cracow)
= $97m
=> 51 cps

Now Xstata are getting a bargain paying $1 a share for IRN - I mean IRN have $100m in cash so really they're only paying $320m for 35% of one of the biggest copper/gold undeveloped projects in the world

For every 20 cents Xstrata raises its bid, LST's profit per share from these two deals goes up 10 cps

I think we may see two divvies:
1) based on Cracow sale which can go through soon - around 10cps
2) the bigger bonanza on IRN sale when it happens (maybe 30cps ++)

having staged divvies gives current LST holders something immediately and keeps them hanging on for the big one so highly UNlikely they'll sell into IRN takeover ... (which - based on current IRN share price - in theory should see LST valued at $2.26++ but don't think that will happen)

Indophil and Lion Selection sit out hostilities
Email Print Normal font Large font AdvertisementBarry FitzGerald
May 17, 2008

HOSTILITIES between the Melbourne pair of Indophil and Lion Selection have been put on hold pending Lion's announcement to the market ”” expected on Monday ”” on its plans after its proposed sale of its Indophil stake and its 30% share of the Cracow goldmine.

The planned sales would take Lion's net tangible asset backing to more than $2 a share, most of which would be cash.

Monday's announcement is expected to deal with the best way to deliver most of the cash back to shareholders.

Lion remained in voluntary suspension yesterday ahead of Monday's announcement. It last traded at $1.655 a share.

Lion angered Indophil on Thursday when it revealed its plan to sell the bulk of its 25.7% stake in Indophil to a $1-a-share or $426 million bid for the group announced the same day by Zug-based Xstrata.

Xstrata and Indophil are partners in the world-scale Tampakan copper/gold mine in the Philippines.

Indophil had long feared that Lion could sell its stake in Indophil since Lion abandoned plans to take full ownership of the Cracow goldmine for $200 million.

Lion's agreement to sell the bulk of its Indophil stake for what Indophil sees as a knock-down price has infuriated Indophil, particularly as Lion's deal with Xstrata came just days after Indophil's scrip bid for Lion went live.

Indophil's bid for Lion was designed to take out the Lion stake and combine the cash resources of the two group into a single entity able to pay its way in the planned development of Tampakan.

Indophil shares closed 4.5 ¢ higher at $1.135 yesterday as investors weighed up the potential for Xstrata to cough up more for its Tampakan partner.

The market is by now well aware that Tampakan could be a 400,000 tonne-a-year rather than the 200,000 tonne-a-year producer Xstrata has talked about.

Xstrata's offer is conditional on Indophil's offer for Lion not proceeding.

Meanwhile, Lion's ability to complete its pre-bid deal with Xstrata is conditional on approval from Lion shareholders, or Indophil granting a waiver from its Indophil bid condition covering asset disposals of more than $10 million.

 

[56gsa]

actually much bigger than I was thinking - and I'd forgotten about the Albion stake - see below - nice position to be in giving away your millions...

The Herald understands the strategy includes the planned sale of a 20.5 per cent stake in the Zambian nickel miner Albidon, held by Lion and two of its African funds, although no deal over the stake will be announced today. It is thought Zinifex and Xstrata have expressed interest in the Albidon stake.

The sale of Lion's stakes in Cracow, Indophil and Albidon could fill its coffers with more than $200 million in cash, in addition to the $75 million it had on hand on March 31.

 

[56gsa]

No announcement first thing this morning - will try and check in between meetings today but happy if someone posts on this when the ann. comes out...

 

[56gsa]

and there it is....

$1.35 possible return to shareholders - large chunk of which may be tax-free

leaving an investment vehicle with NTA of $0.69 - which if trading at current typical discount would mean shares trade around $0.50

Currently $1.80 after trading commenced which suggest people don't see much upside or not confident this will go through

Hard to analyse but a tax-free div of $1.35 is comparable to about $1.90 fully taxed ??

 

[tommymac]

board meeting over the weekend - how much will the divvie be?? C'mon Lion, reward the faithful!

56, Spot on

Gotta love these moments when all your word selecting shares seems to have paid off. Obviously we've still got to wait to see it happen but a good moment none the less.

 

[arco]

Anyone have any thoughts on LST at the moment?

Or what other gold shares are worth looking at presently?

thanks - arco

 

[Joe Blow]

On 10/12/09, Lion Selection Group (LST) merged with Catalpa Resources (CAH) and is now trading as CAH.

Please see the CAH thread for future discussion of this company: https://www.aussiestockforums.com/forums/showthread.php?t=16955

This thread has now been closed.