OMH - OM Holdings

I have been watching this stock since the last resource upgrade and recent sp action leads me to believe it might see a reversal soon. There has been a great deal of x-trade activity as well as on-market sells and buys that are clearly connected. Over the last week millions have been traded at the 60c mark with lots of 60-80k shares appearing in the sell depth and then subsequently being snaffled within 10-20 mins. Over this time, even though these large parcels have appeared in a somewhat illiquid sharethe price has not dropped below 59c. There appears to be some decent accumulation going on here. One for the watchlist.

Yes I agree with you Juddy. I bought a few shortly after they announced the increased resource. I had hoped the market would have reacted more strongly which would have been a strong sign of a turnaround however I have noticed a few big buys and directors buying so I guess it is a case of wait and see.

Hi Absolutely,

have you noticed that today is the first day in a week that the big seller and big buyer have not appeared? Volume very low atm.

cheers

Hi juggy,

No I havn't seen really big buys or sells today but what I do notice about the buy/sell depth today is that it is starting to weigh more heavily on the buy side which I don't think I could confidently have said since the announcement. So I guess I will have to be optomistic. I think the company is definitely undervalued. Hell they even pay a dividend, even if it is miniscule.

This company is trading halt.

Hoping it is good news. SP needs it. SP has continued to faulter.

Don't think it would be a cap raising. Anyone got any ideas ?

omh

What do you think OMH?
It says it can produce 550000 t Mn
But market cap is only 62m


If the production cost is similar to CSM
Then the EBIT this year should be around 20m

What do you think? Does it have better future than CSM?

BROKERS COMMENTS ON OMH Buy up to 0.47c

OMH is recapitalizing with an underwritten non-renounceable 1:2 rights
issue at $0.22/sh raising $16m. The funds will be used to retire debt
$5.5m, fund working capital and capital expenditure.
OMH have completed an independent review on Bootu Ck which has
developed a viable life of mine operating plan. Inclusive of this plan
ore reserves have been upgraded from 5.6mt to 7.2mt grading 25%
Mn. Total resources comprise 15.9mt grading 25% including 3.2mt of
inferred resources. Our forecasts are based on production of ~550ktpa
of 43.5% Mn ore in lump and fi nes products.
Bootu Ck production achieved design rates in December 2006 with
production of 45.7kt grading 43.4% Mn. January and February have
since been rain affected and lower production and shipments occurred.
Several debottlenecking modifi cations have been effected during last
few months. Further enhancements to the plant to minimise future wet
weather interruption are included in the capital budget for 2007.
Paul Thomas will commence as MD of OM Manganese (Bootu Ck)
in March’07. Paul had been with Equigold for 10 yrs, recently as RM
Kirkalocka.
CBA has agreed to a standstill agreement until 31st Dec’07 provided
$5.5m of principal is paid by end April’07 and another $0.5m is set aside
for future interest payments. This commitment has signifi cantly derisked
the outlook for shareholders.
Following the rights issue and principal repayment we estimate the
consolidated balance sheet will comprise $23m of debt (Bootu Ck &
Trading) and cash of $22m (before capex, post sale of TFE trading
rights 1st tranche). In addition OMH retains its investment in Territory
Iron which is currently valued at $13m.
The manganese price has shown modest uptrend of ~10% so far this
year from lows of ~US$2.05/dmtu. Further gains in the order of 5-15%
appear achievable over the medium term. This sentiment is consistent
with messages from Consolidated Minerals. The price uptrend has
resulted from consistent strong demand throughout 2006 with ore
inventories in China now having depleted to tight levels.
Our valuation has been revised to $0.47/sh. OMH is currently priced at
~1.5x EV:EBITDA for 2007, considerably under the fair market multiple
of 3-4x EV:EBITDA. OMH’s valuation sensitivity to Mn price changes
are approximately $0.05/sh per US$0.10/dmtu movement.
We have upgraded our recommendation from Hold to BUY as risk has
reduced following improved Mn prices, the recapitalization plan, key
management change, development of an independent life of mine plan,
achieving design production rates in Dec’06 and the CBA commitment
to a standstill. Perhaps the stronger A$ is the remaining nagging risk but
this will be outweighed by the underlying commodity price strength

It may be time to look at OMH, now that ConsMin is out of the picture RE: shipping manganese ore to China. The price of manganese is at a record high and OMH is already starting to benefit.

General Review Of Manganese Ore In 2007 And Its Outlook For New Year (1)
=China's Intention To Purchase Ore Stimulates Its Price, Manganese Mines Are Restricted To Increase Output=
The aggressive purchases of energy, minerals and metals by China have caused to have risen steeply prices of these commodities. It is also no doubt that a strong intention to purchase more manganese ore by China has stimulated price of manganese ore. However, even if China made every effort to purchase manganese ore as required, the total quantity of manganese ore purchased by China in the calendar year ( January - December ) of 2007 came to 6.00 million tons as a similar scale to that in the preceding year of 2006. In view of the expanded production of crude steel in China, the demand for manganese ore from China in 2007 was estimated at 7.00 million tons but the actual quantity of manganese ore purchased by China in the year had a shortage of 1.00 million tons. Consequently, the price of manganese ore purchased by China on the end of 2007 has risen by 3 times compared with that on the beginning of 2007.

The same case as that, price of manganese ore rose by 3 times, had emerged in the past years. Namely, during 3 years of 1988 to 1990, the price of manganese ore contracted by Japan to import had risen by 3 times. This affair is so-called " 3 times risen price of manganese ore ". This phenomenon was due to the fact that, although the world production of crude steel suddenly increased to a considerable extent, manganese mines in the western world decreased their production to cope with the depressed price of manganese ore and, accordingly, a gap between supply and demand of manganese ore had at once come up to the surface. However, a swell to rise price of manganese ore continued for 3 years, having resulted in a rise of 3 times.

However, in this time, price of manganese ore had risen by 3 times just for about one year. A causal sequence in 2007 was similar to that in the last case but the definite factor for 2007 was a strong growth of steel production in China. Also, the matter to consolidate capitals of major manganese mines as endeavored from 20 years ago has at last exhibited a power and this aspect has become a favorable wind for price of manganese ore. Furthermore, a storm of M&A in fashion howled frightfully. An Ukrainian Capital ( Privat ) has taken over in March of 2007 Ghana Manganese Company in Ghana and, following this takeover, an Eastern Capital has acquired on the end of 2007 Consolidated Minerals Ltd. of Western Australia. These acquisitions of manganese mines have come to the fact to give an tension not only to China but also to buyers of manganese ore in the western world.

The quarterly movements of price ( per Mn 1% on CIF base ) for medium grade manganese ore ( lumpy ore with Mn 44% ) contracted with Chinese importers for shipments in the calendar year of 2007 were as per the table attached hereto.

The world price of manganese ore had once risen steeply during a period of the end of 2003 to spring of 2004 but this case continued only for 6 to 10 months. After that, this sharp rise of price for manganese ore calmed down and the world price of manganese ore had been depressed during 2005 to 2006, because the overproduction of manganese ore caused to weaken its price. An evidence of this weakened market is that the price of high grade manganese ore ( lumpy ore with Mn 48% ) contracted with Japanese customers had fallen for shipments in the successive 2 fiscal years of 2006 and 2007. The movements of benchmark price ( on FOB base ) for high grade manganese ore ( Australian ore supplied by BHP Billiton to Japan) were <> for fiscal year of 2006 : US$3.00 per Mn 1% and <> for fiscal year of 2007 : US$2.70 per Mn 1%. The settlement of price for manganese ore in Japan follows that settled in the world and, therefore, particularly in view of a time-lag compared with the situation in China, a trend of price for manganese ore is understandable.

The price of manganese ore purchased by Chinese importers has risen to a considerable extent from shipments in the second half ( July - December ) of 2007, being multiplied by a feeling of crisis for purchase of raw material. The acquisitions of Ghana Manganese in Ghana and Consolidated Minerals in Western Australia by Ukrainian Capital as mentioned above have caused to soar price of manganese ore, as the sales of manganese ore by these two sources were destined mainly to China. According to the customs-statistics released in China, in the calendar year of 2006, 580,000 tons of Ghanaian manganese ore and 800,000 tons of Western Australian manganese ore were imported into China. These two manganese ores are important sources for China, having shared 20% of the whole import. However, as far as Ghanaian manganese ore is concerned, the outstanding contracts to be shipped in the end of 2006 and the beginning of 2007 to China had remained and, consequently, a certain quantity of Ghanaian manganese ore was able to keep as the imports into China in the first half of 2007. However, the import of manganese ore from Ghana into China in the second half of 2007 was nil and, since the purchase of manganese ore from Western Australia by China was settled in December of 2007, the matter in question has been carried over to 2008 but regular buyers of China have strongly felt a crisis of this problem. The reason is that Ukraine is the second largest country in the world to produce manganese ferro-alloys, following China as the world largest producer. A feeling of crisis is that it is unlikely for Ukraine to sell manganese ore at discounted prices to China as a rival to Ukraine.
last modified : Fri 25 Jan, 2008 [10:27]

PART 2
General Review Of Manganese Ore In 2007 And Its Outlook For New Year (2)
= Price Of Mn-Ore For Shipments To Japan In FY 2008 Is Inevitable To Rise To Considerable Extent
( Continued from our No.9409 dated January 22, 2008 )

Vale of Brazil, formerly known as CVRD, exported 410,000 tons of manganese ore to China in 2006 but stopped from July of 2007 their inland transportation of manganese ore from Azul Mine. This stoppage of inland transportation has put a substantial impact on the world market of manganese ore and reacted to that in China. This affair is that Vale has adopted the strategy to give a priority to the transportation of iron ore. The output of manganese ore by Vale in 2007 is anticipated to decrease to 1.50 million tons per annum as half of that in 2006. Vale is thought to supply a majority of manganese ore produced by themselves to their plants in Brazil to produce manganese ferro-alloys and, accordingly, the quantity of manganese ore to be shared for outside sales will be restricted.

Main producers of manganese ore in the world are so far six companies of <> BHP Billiton ( Australia and South Africa ), <>Eramet ( Gabon ), <> Assmang ( South Africa ), <>Vale ( Brazil ), <> Ghana Manganese ( Ghana ) and <> Consolidated Minerals ( Western Australia ), and BHP Billiton, as the largest producer, has held a leadership to control price of manganese ore in the western world.

However, South Africa has preserved substantial quantities of natural resources but, owing to the bottleneck of inland transportation which comes to 3 million tons per annum as the maximum at present, it is hard for South Africa to increase sales of manganese ore. Under the present situation which manganese ore produced in Ghana and Western Australia has been confined by a power from Ukraine to their own use, only the 3 companies of BHP Billiton, Eramet and Assmang are the sources to expect supply of manganese ore. Therefore, there is a possibility that China will concentrate their reliance on supplies of manganese ore from Australia ( BHP Billiton ), Gabon ( Eramet ) and South Africa ( Assmang ). Even these 3 sources have already had a very limited margin to increase their production of manganese ore.

Eramet is scheduled to increase their production of manganese ore at the Moanda Mine of Gabon to 3.50 million tons per annum as the final target and already produced 3.20 million tons in 2007. The quantity of manganese ore to be produced by BHP Billiton at the Groote Eylandt Mine of Australia ( producing 3.50 million tons per annum at present ) is planned to increase by 1.00 million tons per annum from the second half of 2009. New source to supply manganese ore is that Leboa has been developing the project in Mamatwan area of South Africa to produce medium grade manganese ore on a scale of 2.00 million tons per annum and is scheduled to start the production in 2008. However, in case that this new production of manganese ore is shipped from Port Elizabeth port, the tightened capacity of inland transportation for mine to shipping port has stood in the route. The reason is that, in order to transport manganese ore produced in Hotazil Mamatwan area ( Samancor Manganese and Assmang ) to shipping port. the capacity for this inland transportation has been already filled up.

Originally, among manganese mines, only Groote Eylandt Mine of Australia and Nsuta Mine of Ghana have had favorable locations to shipping ports and other mines have been located in the places to be far from shipping ports with a distance of several hundred kilometers for inland transportation. Also, China, Japan, South Korea, European countries and the USA are main consumers of manganese ore but marine transportation to these countries takes a long distance.

An outlook for manganese ore in 2008 is just said to continue a rise of the price and it is no wonder that any thing is allowed to occur on the supply situation of manganese ore. China produced 490 million tons of crude steel in 2007 and is scheduled to increase their output of crude steel in 2008 to 520 million tons. Therefore, China is estimated to need 7.50 - 8.00 million tons per annum of manganese ore. China will face a big probability, which is very hard to procure this quantity of manganese ore. On the contrary, China may have a danger to be unable to secure even 6.00 million tons of manganese ore as imported into China in 2007. It is anticipated that, in comparison with the quantities of manganese ore imported from main sources into China in 2007, <> Ghanaian ore : to decrease by 200,000 tons. <> Indian ore : to decrease by 100,000 tons, <>Brazilian ore : to decrease by 300,000 tons, <> Western Australian ore : to decrease by 400,000 tons and <> total : to decrease by 1,000,000 tons. There was no precedent that, owing to a short supply of manganese ore, the production of crude steel was obstructed, and there is a possibility that China will desperately hunt for manganese ore. Accordingly, the price will come down to a secondary importance. It is thought to be a natural course in the market that the prices of manganese ore settled in China for shipments in January - March quarter of 2008 are US$9.90 - 10.0 per Mn 1% CIF for regular customers and US$11.50 - 12.00 CIF for spot transactions respectively and these prices will be risen again for shipments in April - June quarter.

The price of high grade manganese ore to be settled with Japanese customers for shipments in the fiscal year of 2008 ( April 2008 - March 2009 ) is anticipated to be inevitable to rise and it is marked to see how extent does the price for 2008 rise ? It seems to be unavoidable that the price of manganese ore settled with Chinese importers for shipments in January - March quarter of 2008 is referred to the negotiations with Japanese customers on price of manganese ore for shipments in the fiscal year of 2008.
( Completed )
last modified : Mon 28 Jan, 2008 [10:44]

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European manganese market jumps on China
European manganese spot prices have increased again in the past couple of weeks in line with offers from China, the world’s key supplier and where production costs and shutdowns have increased amid severe wintry weather ahead of Chinese New Year

Tue 05 Feb, 2008 [11:51]
Issue Of Mn-Ore Price For Shipments To Japan In FY 2008 Is US$10 Per Mn 1% FOB

2008-2-15 Manganese ore suppliers raise the offer for the material
Some manganese ore suppliers raise the offer for manganese ore this week, and think the market is warming up slightly now.
A Shandong-based manganese ore trader raised the offer of Philippine manganese ore 40% from RMB70/dmtu ex ports to RMB75/dmtu (USD9.16/dmtu) ex ports on Wednesday. The source received some enquiries for the material this week and concluded a deal of 35% grade at RMB68/dmtu (USD8.31/dmtu) ex ports with a long-term ferromanganese smelter early this week.
"Because of the snowstorm in South China and power restriction policy, Chinese manganese alloy smelters are reluctant to purchase manganese ore in large quantity," said the source. "I believe the price of manganese ore will creep up in the coming days this month because of the strong demand from the market and higher cost for us to get the material.
A Tianjin-based manganese ore trader raised the offer of Australian manganese ore 45% from RMB87/dmtu (USD10.70/dmtu) ex ports to RMB91/dmtu (USD11.2/dmtu) ex ports early this week. The source reveals that he has received more enquiries these days and some deals are still under negotiation now. He thinks manganese ore market will boom late February because more smelters will return to the market by then.
"We raised the offer for the material on Wednesday in view of the high cost and some buyers still intend to get the material at RMB85/dmtu ex ports now. However, we will not sell the material below RMB88/dmtu ex ports for the time being."

Manganese was up 23% last week, according to Kitco.com and others.

OM Holdings not only mines it in NT but is vertically integrating via a smelter in China and marketing Mn alloys/products elsewhere in SE Asia.

Despite last week's fluctuations in the market, OMH was reasonably steady.

Anyone else on this?
Pretty quiet thread considering the run its had lately, new highs again today.

nomore4s said:

Anyone else on this?
Pretty quiet thread considering the run its had lately, new highs again today.

Click to expand...

Don't want to talk about 'em. Bought in at 65c, watched them crash to 19c a bit over a year ago, when I dumped them. And now look !

I put it down to the fact that I was just starting out. But right there with a measly $5,000 at 19c I made a very very costly mistake!

Absolutely said:

Don't want to talk about 'em. Bought in at 65c, watched them crash to 19c a bit over a year ago, when I dumped them. And now look !

I put it down to the fact that I was just starting out. But right there with a measly $5,000 at 19c I made a very very costly mistake!

Click to expand...

Ouch I feel your pain - have done the same sort of thing numerous times, hence the signiture.

My biggest mistakes are not buying back in though - cutting the losses is okay it's the not buying back in that hurts.

Still going strongly atm, bit surprised by the lack of interest in this stock to be honest.

Up another 8% or so today, after being up about 6% yesterday. Has moved strongly since the share split, closing at $4.70 before the split, now currently at the equivalent price of $5.40!

Considering the sp was at under 20c in Jan 07 and $1.50 at the end of Jan this year, has had a very impressive rise.

I Hold

Hi all,

whats the story with this stock code?

OMH, cant be found on Commsec

still showing on ASX as OMH, but some details missing.

I believe they have done a share split recently.

have watched this stock go up for over 12 months.

what code is now applicable if I am still intesrested in buying

thanks tony

awg said:

Hi all,

whats the story with this stock code?

OMH, cant be found on Commsec

still showing on ASX as OMH, but some details missing.

I believe they have done a share split recently.

have watched this stock go up for over 12 months.

what code is now applicable if I am still intesrested in buying

thanks tony

Click to expand...

Tony,

They are trading under OMHDA till the 16th or 17th of June because of the split.

Have certainly had a stellar run over the last 12 months, hope it continues

Hi Guyz

Just been looking for recent buying oppotunities, and this company got into my radar. The Company has a Market Capitalization of around $930 million with a P/E of 6.3. They manly deal with manganese, which I think is involved with Iron Ore and Alluminium. The just made a half year net profit of around $97.5 million (56 Million for whole 2007). And looking forward with the following figures from comsec everything is looking up, and just recently they have been doing on the market buy-backs.

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 13.0 39.5 48.4 63.1
DPS 3.0 8.4 10.4 14.5

One thing I am just unsure about is the fact the share price has been hammered badly (picture below). Am I missing something, I haven't done much research on the company as yet, but has the price of manganese been slaughtered or the demand for it come off. There isn't much coverage on the stock, Merryl Lynch are the only analysists covering the stock and they have a strong recommendation on it,



Just wanting too see what guyz think of the prospects of the company.

cheers

Spartn

:viking:

Hi Guyz

Just found that they did a 2 for 1 Share Split back in June which answers the reason for the drop in June. They made an announcement back in June that they plan to buyback 5% of the issued capital in the company over the next year.

cheers

Spartn

:viking: