OXR - Oxiana Limited

crayfish · 5 July 2007

From MiningNews.net:

Comments from Oxiana's managing director Owen Hegarty published in today's Australian Financial Review of synergies in a marriage with Zinifex boosted both stocks to new all-time highs.

Oxiana reached $3.93 before cooling to $3.89 – a gain of 15c or 4% – while Zinifex recorded $20.18 before falling to $20, a climb of 86c or 4.5%.

A spokeswoman from Oxiana told Dow Jones she could not confirm or deny any merger talks however the company continued to assess acquisition opportunities in Australia and Zinifex may be among the potential targets.

"We're looking at things all the time and Zinifex happens to be one of those. We've got a very strong organic growth pipeline, but certainly mergers and acquisitions are part of our strategy as well," she said.

Sprinter79 · 5 July 2007

There were two trades that went through at 4.38pm, both at 3.86. One was for 714,000 and the other was for 2, 403, 630.

What's the deal with that?

waz · 5 July 2007

Does anyone have the article published in todays AFR?

I struggle to see any specific synergies between the two.
Can anyone think of any? (besides the usual management/head office costs).

I dont know the exact locations of their activities, but even geographically there is not much to gain.

Ken · 5 July 2007

Hows about the tip we all got off the CEO....

There are very few more valuable things than an OXIANNA share. Now that was 50% ago...

And the AGC play...... to buy them by the bucket load at $1.60

I sold out at $3.10

Only if we all knew...

I guess its a saying that let profits run, and cut your losses...

Whos to know... there would be people out there.... who just tuck these OXR shares away.

They are verging on the big time.. I am out of them, but lets think of the people who sold PDN at 20 cents for 100% profit... ouch!!!

Not to know..

Damuzzdu · 5 July 2007

waz said:
Does anyone have the article published in todays AFR?

I struggle to see any specific synergies between the two.
Can anyone think of any? (besides the usual management/head office costs).

I dont know the exact locations of their activities, but even geographically there is not much to gain.

Here's a brief summary of the article.

1. OH believes there would syngeries between the companies.
2. ZFX less complicated once Smelters are sold-off.
3. OH says combination between 2 would have many pluses
4. OH says ZFX have good assets, and so do we (OXR)
5. OH wants to build OXR into $10B company in 3 -5 year window
6. Couple of analysts says Oxiana would be interested in acquiring ZFX, but that ZFX might not be so willing. ZFX might be more interested in looking for strong growth assets (ie like Wolfden)
6. Goes on to say that while OXR was a great story until a year ago, share price has only risen 15% and has underperformed ASX200 benchmark.
7. With no new production coming online in next 12 months, this might put OXR under pressure to buy a current producer within the 12 months
8. OXR might look at at CSM 27% stake in Jabiru if it came up for sale.

That's it.

Cheers
Muzz

Joe Blow · 5 July 2007

Rafa said:
most analysts have put price targets of between 4.50 and 5.00 on OXR...

Rafa, which analysts are you referring to? Your statement as it stands is a little vague. Can you clarify it a little for us?

Thanks!

Sean K · 6 July 2007

kennas said:
This has still broken up and out of the sideways range IMO. Everything consolidates. I wouldn't mind it touching $3.50 ish and bouncing off to confirm the break actually. There was always probably going to be resistance around the all time high and linked to some consolidation on the XAO and you have a slight pull back. Not fretting over it yet. I'll re-evaluate on a clear break down through $3.50. It's a possibility, but hey, it's the stockmarket!

I was concerned when it broke back down through 3.50 but held to make sure it was confirmed. The follwing days dragon fly off 3.40 led me to believe significant support was still there. Lucky in retrospect. I probably should have sold with market toppy.

Joe and Rafa, As far as broker calls go, here is the latest summary I have with 12 month targets:

Deutsche Bank.... 02-Jul-07 .. Downgrade to Hold from Buy . $3.50
UBS ...................21-Jun-07 . Neutral 2 .......................... $3.45
Credit Suisse ....... 21-Jun-07 . Underperform .................... $3.50
ABN Amro .......... 21-Jun-07 .. Hold ................................. $2.99
Macquarie .......... 21-Jun-07 . Outperform ........................ $4.00
Merrill Lynch....... 21-Jun-07 ..Neutral, High Risk ................. - -
Aspect Huntley ... 25-May-07 . Reduce .............................. - -
JP Morgan .......... 20-Apr-07 ..Underweight ..................... $2.40
Citi .................... 20-Apr-07 .Downgrade to Hold from Buy, High Risk.... $3.29

Source: FN Arena (don't tell them it's here)

Looks overdone perhaps? Or, maybe they are all saying sell so they can accumulate it? LOL Or, perhaps a 30% takeover premium can be factored in. Or, have the 'analysts' stuffed up their forecasts for zn, au, cu and it should be worth more. Need to establish what those targets are set with I think. However, 4.50 - 5.00 is a bit above these......

Freeballinginawetsuit · 6 July 2007

kennas said:
Joe and Rafa, As far as broker calls go, here is the latest summary I have with 12 month targets:

Deutsche Bank.... 02-Jul-07 .. Downgrade to Hold from Buy . $3.50
UBS ...................21-Jun-07 . Neutral 2 .......................... $3.45
Credit Suisse ....... 21-Jun-07 . Underperform .................... $3.50
ABN Amro .......... 21-Jun-07 .. Hold ................................. $2.99
Macquarie .......... 21-Jun-07 . Outperform ........................ $4.00
Merrill Lynch....... 21-Jun-07 ..Neutral, High Risk ................. - -
Aspect Huntley ... 25-May-07 . Reduce .............................. - -
JP Morgan .......... 20-Apr-07 ..Underweight ..................... $2.40
Citi .................... 20-Apr-07 .Downgrade to Hold from Buy, High Risk.... $3.29

Source: FN Arena (don't tell them it's here)

Looks overdone perhaps? Or, maybe they are all saying sell so they can accumulate it? LOL Or, perhaps a 30% takeover premium can be factored in. Or, have the 'analysts' stuffed up their forecasts for zn, au, cu and it should be worth more. Need to establish what those targets are set with I think. However, 4.50 - 5.00 is a bit above these......

Analysts usually upgrade there forecasts once the SP has risen formed a new support and run a bit more.........LOL

rederob · 6 July 2007

kennas
Your post clearly shows that mainstream market analysts do not have a clue when it comes to resources.
There are now about 5 years of similar forecasts.
Readers that stray into industry-based forecasts for this industry will get a different outcome.
The only base metal that is not in tighter demand than a year ago is aluminium. You will notice that the Ox has no aluminium exposure.

While I understand that Joe is concerned that readers are not led astray by stock rampers that can't substantiate their claims, it is equally as dangerous to suppress an optimistic view simply because "respectable" forecasters have an alternative reality.
In simple market terms there is nothing preventing OXR doubling in price next year. It has done it many times in the past 5 years (traded at 34cents exactly 5 years ago).
Let's face it, OXR is unhedged, has minimal debt (funding Prominent Hill largely from cash flow), has low geopolitical risk, and has world class projects given its mid-tier status.

I do recall nizar asking why I hadn't sold my OXR shareholding earlier this year, given its chart at the time. It's because I hold the view that we are in a commodity supercycle that is still in its infancy. Plus, my average entry price is only $1.39 so I can afford a bit of downward retrace from time to time without getting too worried. I also expect that within 5-6 years the dividend stream from OXR will repay my capital outlay.

Rafa · 6 July 2007

hi joe,
like all things, no one can predict the future, and apologies if this post that follows or any other previous posts sounded like ramps... I did assume we all on this thread knew our stuff, but i should have known better.

Firstly, OXR is a mid tier producer. Its not explorer, or one of those stock with a JORC and hoping to mine... It actually pays dividends!!!

Secondly, It has just approached / broken its all time high, tho it looks like today its coming back a bit...

Thirdly, this was was in the Dow Jones news wire over three weeks ago...

1528 [Dow Jones] Australian resource sector on cusp of aggressive re-rating says Southern Cross Equities. "Finally, we are starting to see broader recognition of the 'clear and present value' that lies right across the Australian resource sector. We are seeing heavy consensus upgrades to earnings and valuations, heavy global M&A, private equity, and we are on the cusp of a bumper earnings and capital management season. Yet, the lowest P/E sector remains resources." Targets over next 3-6 months include BHP (BHP.AU) A$37.00, RIO (RIO.AU) A$105, Fortescue (FMG.AU) A$50.00, Woodside (WPL.AU) A$50, Santos (STO.AU) A$15.00, Oxiana (OXR.AU) A$4.00, Minara (MRE.AU) A$11.00, Alumina (AWC.AU) A$9.00, Zinifex (ZFX.AU) A$20.00, Kagara (KZL.AU) 8.00, Wesfarmers (WES.AU) A$42.00. (DWR)

There was also this posted by kennas in the bhp thread a few weeks back

1110 [Dow Jones] Strength in iron ore juniors shows iron ore majors cheap, says Southern Cross Equities director Angus Aitken. Notes massive rise in iron ore juniors relative to BHP (BHP.AU) and Rio (RIO.AU) in recent weeks. "They still look cheap given they are the only guys with any real scale and leverage to current prices and within 9 months we can throw Fortescue Metals (FMG.AU) into that mix." Says RIO may be a little ahead of itself on takeover speculation, but BHP headed to A$40 near term. Expects BHP rise to trigger panic buying from locals and further spike to A$50.00. BHP last A$34.47, down 0.6%. RIO down 0.6% at A$99.43. (DWR)

Finally, as redrob said...

OXR is unhedged, has minimal debt (funding Prominent Hill largely from cash flow), has low geopolitical risk, and has world class projects given its mid-tier status.
...
We are in a commodity supercycle that is still in its infancy

it has also done nothing in the last year (like BHP) and given everyone the chance to either top up, or get out! so far, i have noticed the the price of BHP and OXR seems to follow a similar pattern. My graphing software is limited, but i would be interested to see if someone can do a comparison of the two in the last 2-3 years.

if BHP is heading to $40 or $50, the OXR will head towards $4 to $5 dollars.

And I haven't even mentioned the M&A word above...

PS: i am a holder since the $1 days...

Sean K · 6 July 2007

Rafa said:
hi joe,
like all things, no one can predict the future......

Hello from Peru Rafa! 8.45pm here, darn it. I'm going to miss Essendon whip Geelong tomorrow.

Thank you for your response (and rederob), I'm sure Joe appreciates it. It's interesting to see how people respond to simple questions like, 'where did you get that info from?' Or, 'how did you get to that conclusion.' The 'rampers' tear you to bits while the people who provide value here tend to actually provide a decent response. Cheers!

Hopefully the lurkers out there know that this is not HC.

Go the mighty Ox. $10 by Christmas!!!! LOL

Rafa · 6 July 2007

yeah, ramping is a big issue, so i understand where joe is coming from

I did notice on another thread that you've said you've headed off the Peru... thats amazing. What a move...

hope everything goes well there for you... Atleast with the internet know, mobility is so easy.

GO THE MIGHTY OX!!!

theasxgorilla · 7 July 2007

kennas said:
Go the mighty Ox. $10 by Christmas!!!! LOL

I hope so, I'm fully committed to this one now...however, just one thing...where did you get the information from? (joking!).

Sean K · 7 July 2007

theasxgorilla said:
... just one thing...where did you get the information from? (joking!).

It's a research report from Maxwell Capital. It's a private investment company of some dude named Sean. I'm a subscriber, but I can't pass on the details due to copywrite laws. He has a 6 month target of $10, and a 1 year target of $21.45. All supported by some of the most awesome research I have seen. Ever. This guy is a legend. Even better than YT! He also reckons MAK is going to $2.00 by Christmas. Get on it! he he.

reece55 · 7 July 2007

kennas said:
It's a research report from Maxwell Capital. It's a private investment company of some dude named Sean. I'm a subscriber, but I can't pass on the details due to copywrite laws. He has a 6 month target of $10, and a 1 year target of $21.45. All supported by some of the most awesome research I have seen. Ever. This guy is a legend. Even better than YT! He also reckons MAK is going to $2.00 by Christmas. Get on it! he he.

Jeez Kennas, you will have to PM me the link.......

I would pay 200 a month for such a service.......... LOL.....

Seriously, the Ox, as with most commodity stocks, is having a terrific run. See where it takes us, but now that Hegarty has been unleashed in the US, watch the Yanks buy in, ADR on market now as well........ Not sure as to the validity of M&A opportunities, but clearly a stock to have...... Clear skies from here T/A wise....

Cheers

legs · 9 July 2007

AAP News

Merger rumours lifts Oxiana, Zinifex

Monday July 9, 2007, 4:52 pm

Shares in Oxiana Ltd and Zinifex Ltd soared amid speculation that the pair could be planning a merger as part of a defensive move to fend off predators, such as Xstrata and Teck Cominco.
The market has been awash with talk that copper-gold miner Oxiana and zinc play Zinifex could be eyeing a friendly merger.
Man Financial broker Anthony Anderson said it was unlikely Oxiana would make a bid for Zinifex, but a friendly merger could ward off likely predators.
"I don't really think Oxiana could make a bid for it (Zinifex)," Mr Anderson said.
"I think a friendly merger might be just a defensive move, then it stops them both from getting taken over.
"Zinifex is just a straight zinc play and Oxiana is into copper and gold, having a blend (of assets) always help's, and that's what makes the big companies."
Zinifex shares surged to a record high of $21.60 on Monday before pulling back to close $1.10 or 5.44 per cent higher at $21.32, while Oxiana added 11 cents or 2.94 per cent to $3.85.Citigroup said a merger would create a group with a combined enterprise value of about $11 billion and fill the void left in the market by MIM Holdings and WMC Resources.Xstrata swallowed MIM in 2003, while BHP Billiton acquired WMC Resources in 2005."From a comparative perspective, a combined entity would have a similar profile to WMC Resources prior to the BHP takeover, and with the addition of a bulk commodity business would have a similar profile to Teck Cominco," Citigroup said.
"With Zinifex still to appoint a new CEO, this could be the opportunity for Oxiana to show their wares.
"A beauty parade potentially awaits."
Citigroup said a merged entity would have a cash position of $4.4 billion by the end of fiscal year 2008, with minimal debt, following the spin-out of Zinifex's smelter business.

bigdog · 10 July 2007

http://www.theaustralian.news.com.au/story/0,20867,22046292-643,00.html

Zinifex surges on merger rumours
Andrew Trounson
July 10, 2007

SHARES in zinc major Zinifex hit a new record high yesterday amid continued speculation about a possible merger with fellow Melbourne-based miner Oxiana.

Zinifex is also being buoyed by the prospect of an injection of $3-5 billion in cash once it spins off its smelting assets in October.

Last weeks comments by Oxiana chief executive Owen Hegarty - that he sees synergies in a possible tie-up with Zinifex - have reignited longstanding speculation that the two companies could eventually merge.

However, market watchers point out that it would be a strange tactic for Oxiana to flag a play for Zinifex.

It is believed that the two companies have discussed a merger in the past, but both yesterday said they had nothing to report.

Amid expectations of further consolidation in the global mining industry, investors are proving quick to buy on any takeover or merger rumour.

Zinifex shares jumped $1.10, or 5.4 per cent, to $21.32, sending the company through the $10 billion mark. The shares traded as high as $21.60.

Oxiana gained 11c, or nearly 3 per cent, to $3.85. Brokerage Citigroup helped to stoke the speculation yesterday with a research report estimating that a merger would create a group with a combined enterprise value of about $11 billion, filling the void left by MIM and WMC.

"From a comparative perspective, a combined entity would have a similar profile to WMC Resources prior to the BHP takeover, and with the addition of a bulk commodity business would have a similar profile to Teck Cominco," Citigroup said.

"With Zinifex still to appoint a new CEO, this could be the opportunity for Oxiana to show their wares."

Zinifex boss Greig Gailey retired at the end of June and the board is now assessing external candidates. Zinifex would have liked to name a successor in time for the July 26 shareholder vote to approve the spin-off of the smelter assets of Nyrstar, but that is now looking unlikely.

Citigroup said a merged entity would have a cash position of $4.4 billion by the end of fiscal year 2008, with minimal debt, following the spin-off.

legs · 14 July 2007

What are peoples theories on what will happen with this merger/takeover talks??? I am extremely happy that all Owen Hegarty's chatter about it is driving our stock up, along with broker calls, but will it come to anything big???

greenfs · 16 July 2007

I was tempted to sell today, but my advisor has indicated that company management believes that the current share price should be $4.50 and that with a little time that this will be achieved. As such, I will wait a little longer and sell above $4.30 if that is achieved.

legs · 16 July 2007

greenfs said:
I was tempted to sell today, but my advisor has indicated that company management believes that the current share price should be $4.50 and that with a little time that this will be achieved. As such, I will wait a little longer and sell above $4.30 if that is achieved.

I suppose it depends what price you got in at and what profits you are happy with. I got in about 0.90 so I am happy to ride the profits a bit longer and risk a small drop. If it went below 3.75 again I will be out as I am sick and tired of it yo-yoing like it has the last 2 years.

OXR - Oxiana Limited

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