OXR - Oxiana Limited

[MRC & Co]

Yep, OXR is one of the few I was thinking of adding to my long-term portfolio, loved the little gem.

Then it merged and....................the rest is history................!

I still didn't mind it, but zinc has become an absolute DOG!

 

[dan-o]

anyone got any thoughts as whether this will break through $2 mark? can it get much cheaper?
(dont understand why i have to use 100 characters in a message. im just typing now to fill out the limit)

 

[profithunter]

I must say its easy to get disheartened when you bought in at 2.50 thinking its a bargain like other analysts.

It makes no fundamental sense for it to be this low. 6.5B Cap, 1.5B cash, so prominent hill and all the mines of oxiana and zinifex are valued at 5B. That means the other mining stocks still have a lot further to fall on that valuation.

Of course the market doesn't care about fundamentals in the short term. Yes it could be the speculators pulling out because they no longer see it as a short term target for Xtrata and Co.

But AXA must also be agreeing with some of us as its taken a recent substantial shareholding.

Charting this stock won't make any sense as its a different company now with no charting history. So I don't buy that, "if it break $x expect the next support to be $y thing

AXA were substantial in ZFX and consequently have gone substantial in OXR by default of the merger. Its having a good run coming into the close.

 

[3MT]

anyone got any thoughts as whether this will break through $2 mark? can it get much cheaper?
(dont understand why i have to use 100 characters in a message. im just typing now to fill out the limit)

Just curious, why don't you make the guess instead of asking the rest of us to make the guess for you?

It could fall below $2, but if it even comes close again I am topping up again.
At current price you might as well assume the zinc mines are worth $0 . Fair call, but that $0 will continue to generate some nice profit (albeit reduced) for a few years to come yet.

 

[Mofra]

and probably 98% cant afford a car they pobably live on $10 a week - LOL

The inferred reference is to the changing demographics of both countries - China in particular is undergoing the sort of rapid industrialisation that tends to mark the enforced cultural changes of many socialist states, albeit in an (arguably) more friendly manner than the earlier Soviet attempts of Stalin or Mao's cultural revolution.

Of course, all it takes is one Henry Ford like entrepreneur to take a cheap, affordable form of transport and offer it to the people to change the entire cultural demographic of a democracy:

http://www.businessweek.com/globalbiz/content/jan2008/gb20080110_319276.htm?campaign_id=rss_daily

 

[matthass]

Hi all,

in response to the post about "untested" new company without any charting history or valuations perhaps the following...

"I believe that the pricing will stay strong and these stocks will be revalued upwards," Mr. Laciak says, citing Canadian-listed AUR Resources, First Quantum Minerals, FNX Mining Company, HudBay Minerals, Inmet Mining, and Teck Cominco as those most likely to benefit from an increase in valuation multiples. Those stocks currently trade for between five and seven times earnings, net of cash. Mr. Laciak predicts the multiples will rise to above 10." Dundee Wealth (my bold) May 2007.

Where are we now?...

Good trading.

 

[vigilant]

Greetings from Guernsey, Channel Islands

The merger scheme of arrangement says that Ineligible Foreign Zinifex Shareholders will not be issued new shares under the scheme of arrangement. Instead these shares will be issued to a nominee who must within 15 business days after 1 July sell the new shares on the ASX.

Could it be the case that the nominee is selling a significant number of new shares on the market and depressing the price (by my calculations until 21 July)? ZFX, OXR and the nominee give no assurances about the price that may be achieved by the nominee for these new shares - see page 33 of the scheme booklet.

Unless a shareholder is from the UK USA, NZ or Aus they are assumed to be Ineligible shareholders (because other countries' securities laws may not easily allow the issue of new shares).

I could be completely wrong about this, as most Ineligible shareholders may have sold on the market (presumably big investment funds in the Caymans would sell out to have certainty if they were going to be deemed Ineligible), but if they left that until the last day of trading on 20 June or thereabouts that would explain some fairly recent reduction in market price too.

Any thoughts?

 

[dan-o]

Does anyone think the name change and official merging of the companies will affect the share price?

 

[legs]

Does anyone think the name change and official merging of the companies will affect the share price?

I'd like to think so... we need a good boost. What generally happens after a merger?? Is there a pattern anyone knows of? Or is it on a one by one basis???

 

[oldblue]

I'd like to think so... we need a good boost. What generally happens after a merger?? Is there a pattern anyone knows of? Or is it on a one by one basis???

News and expectation usually drives a company's SP on a company specific basis. The actual merging and name change has been signalled long ago so shouldn't have any particular effect. Of course it's not unknown for a company to have a bit of good news to announce to " mark the event" so to speak. Not saying that that's the case here.

 

[roland]

Latest Aegis research newsletter has their outlook on OXR with the stock on a buy. Must be due for a turnaround if we can just get metal prices up

 

[uptonryan]

Hi,

The is a lot of concern about OXR falling stock price lately. The obvious reason the price is falling is that we are currently in a bear market. I sense fear and panic in Mr Market. I know that this is a good time to buy.

Warren Buffett the oracle from Omaha has 24 points for investors from his book "how Buffett does it" by James Pardoe. I'd like to refresh everyone with them because they are especially more relevent and better points than I can make.

1) Choose Simplicity Over Complexity. OXR are simple they dig stuff up and ship it to china

2) Make your own investment decisions. I would put too much faith in what those big funds are doing with OXR whether it's buy, sell or otherwise.

3) Maintain proper temperament. Try not to buy or sell when you are emotionally charged.

4)Be Patient. Currently the stockmarket is volatile. Volatility happens in high inflation bear markets. But Volatility means stocks that go down go up as well.

5)Buy Businesses, Not Stocks. It's important to look at the underlying value of the stocks. OXR has huge cash reserves and profitable mines. These fundamentals will be recognised by the market in time.

6) Buy Low -Tech, Not High-Tech. Can't get any more low tech than digging stuff up out of the ground. Although some mining is highly sophisticated in the main the concept is simple.

7)Concentrate your stock Investments. Without risk there is no reward. If you diversify all your investment over many stocks you loose all your risk and you increase the complexity of managing your portfolio. By concentrating all your investment into a few stocks it is much easier to learn everthing about that stock and judge undervalued and overvalued opportunities.

8) Practice Inactivity, Not Hyperactivity. Robert Holmes Court used to saying there was no problem that couldn't be solved by waiting 24 hours. If you constantly churn your stock your transaction costs go up and you also increase the chance of missing the high highs and low lows.

9) Don't look at the ticker. If you constant look at every change of stock price you may panic your self.

10) View Market downturns as buying opportunities. Warren Buffet made most of his money by buying Coca Cola and other great value firms when the market paniced and undervalued the firms. The bull comes up the stairs and the bear goes out the window. So when value changes you make far more money in quick changing bear markets than in bull markets.

11) Don't swing at every pitch.

12) Ignore the Macro focus on the micro.

13) Take a close look at management. In someways I wish I could have gone to the shareholders meeting. Mayber someone can fill me in on the events?

14) Remeber the Emperor Wears no Clothes

15) Practice Independent thinking

16)
Stay within your circle of Competence

17) Ignore Stock Market Forecasts

18) Understand Mr Market and the MArgin of Safety

19) Be fearful when others are greedy and greedy when others are feerful

20) Read, Reda some more and think

21) Use All Your Horsepower

23) Avoid the Costly Mistakes of Others

24) Become a Sound Investor.

Lastly I would like to add that if you hold stock at 3ish and then buy the same amount at 2ish the stock only has to go back up to 2.5 ish for you to make your money back.

Ryan

 

[seventh]

whats happened to oxiania

has anyone got a reason the bottom is falling out of oxr

 

[uptonryan]

It is true that OXR shares have come under selling pressure recently.

The father of value investing, Benjamin Graham, said that in the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine--assessing the substance of a company.

My impression is that there appears to be a lot irrational votes against OXR in the short term driving the price sub $2 and in the long term the real value of OXR shall weigh the stock in at $6-5.

The forces that are driving the stock down are mostly temporary and a distraction.

• Confusion and Concern over the OZR ZFX merger
• Fear from an Australian bear market.
• Concern over high oil prices impacting costs of production.
• Oversupply of zinc in the market.
• Fear of China’s boom decline impacting the demand for metals.
• Carbon trading scheme impacting on the cost of production.
• A gas explosion in WA has impacted energy supply to the mines
• Credit Crises Recession from the US scaring investors into selling.
• Blow out in time or cost of mine projects due to lack of qualified people.

I wager that many of these effects are temporary because they are largely macro forces. They may have a negative effect but they globally apply to most companies. The strategy to overcome these downward pressures is to find value companies that are resistant.

I believe OXR is a value company because.

• It’s simple. Digs stuff up and carts it off to china
• Has a strategic competitive advantage with the mine assets, mix of resources and size of resource that it holds.
• Has a strong Statement of Financial Position and Statement of Financial Performance.
• Has a large amount of cash to invest in new projects.
• And most important has an experienced team.

The last point about the team is crucial because most companies are separated by the management.

Good management should

• Work to enrich share holders and not work to enrich themselves.
• Be frugal and not waste money as spendthrifts
• Be dedicated to improving shareholder value and rational allocation of capital
• Work toward repurchasing shares and not dilute existing holdings by issuing new shares
• Treat shareholders as Partners and not Patsies
• Is the Annual report straight forward or fluff?
• Are the managers honest with accounting, or do they appear to be hiding information and concealing numbers?

In terms of OXR it worries me that the management are claiming large amounts of money for termination payments and million dollar salaries that don’t seam to be forwarding the interests of the company. I feel happy that the termination payment did not go through and so in all this is a small concern.

The Marketing campaign behind the merger, techno rock video etc does seam to be a little exorbitant. As a counter point I expect a merger to impact on expenditure. It will be interesting to see if they are frugal with the billions of cash from Zinefex or if they waste it on non-core expenses.

In large I believe they are dedicated to improving shareholder value. Although we haven’t seen much in the way of share price increase lately I cant see a way to blame management for this.

I don’t know of any new share issues.

It worried me that the shareholding meeting was controlled and that management appear to not respond to shareholders concerns. To be fair they are most likely under some workload from the merger.

I thought the Annual report and presentation from the meeting was not too fluffy. Although they did seam to talk more about there past accomplishments and ranking compared to other companies and potential markets. I would like to have seen more talk about generating value.

OXR accounting seams to be fairly open and transparent. There does not appear to be too many confusing foot notes and lots of value discussions.

In my view a sub $2 share price means an irrational Mr Market. The company is making profit and demand is strong. Prior to the merger OXR was $4 and ZFX was $8. The combination of the two companies equates to roughly $5-$6. The assets of those companies have not disappeared and the value should roughly be equivalent.

Alternatively a finance company is made largely of paper and has no assets to buoy value. Beer and Sterns can fall to zero as there are no underlying physical assets that can be sold to recuperate value.

The Markets for Metals are world wide and established. China has become a large market and won’t disappear overnight. Similarly the US, even depressed, shall require metals. I personally find it hard to see the loss of value.

Warren Buffet says buy and hold when Mr Market undervalues irrationally. A sub $2 OXR to me signals buy.

Ryan

 

[oldblue]

Hi Ryan
I go along with most of your points but think the biggest factor is the concern about the takeover - it's hardly a merger - of ZFX.
The sub-points of this include:
- the fact that it was presented as a fait-accompli as far as OXR shareholders were concerned with no opportunity to vote on the issue.
- Concern about the increased exposure to price of zinc.
- ZFX history as "successor" to a failed company.
- Expectation that the zinc business is probably operating at a cash loss at present.
-Loss of OH, widely perceived by OXR shareholders as the driving force of OXR, coupled with some unease about the new MD.

So market sentiment is heavily against the newly merged company and may remain so until it can demonstrate that it will operate profitably in its new form. Prominent Hill is an important factor here but the critical issue is still the PoZ, as zinc will still be the biggest chunk of the business once PH is up and running.
For myself, I'm holding a small parcel at well above current price but will keep it on my watchlist for consideration once the market stabilises.

 

[vegemite]

You can't really make the statement below unless each company had the same number of shares:

"Prior to the merger OXR was $4 and ZFX was $8. The combination of the two companies equates to roughly $5-$6"

More pertinent would be to say that each had a market cap of approx 6 billion prior to merger so all else being equal the new market cap would be 12 billion and the OZL share price would be $4.

However as oldblue points out, ZFX is not going to be contributing much at all to earnings due to the weakness in the zinc price (and the nickel price also) so the market is being quite reasonable in halving the share price - with the current metals prices it is essentially just OXR contributing all the earnings but with twice as many shares on issue.

When zinc prices increase then it will be a different story but most commentators suggest this isn't going to happen for a couple of years (2010).

Still confounds me my why OXR boarding a zincing ship but thats another issue,

Cheers, V

 

[rederob]

When zinc prices increase then it will be a different story but most commentators suggest this isn't going to happen for a couple of years (2010).

A lot can happen in 2 years and zinc could drop further.
But this year was to see a substantial stock build, which so far has not happened.
So my suspicion is that zinc's cycle of lows has about arrived, and I believe a price rise of meagre proportions is in the wind.
ZFX Century mine cash costs are around break even, but its other projects will generate some reasonable net earnings, albeit nothing like OXR's.
The low zinc price has put a few projects on care and maintenance, and made the going tough for some smaller operators.
I'm thinking a more realistic price in the medium term is the 100 - 120cents/lb
range, which, given China's cutback of lead and zinc refining, should have good support.
On the downside is the fact that commercials have no trouble sourcing zinc at the moment, leading me to think the rise of zinc to a dollar will not happen soon.

 

[Speewha]

Hello,
Results OXR are due this week unless totally off the planet should not have much affect on SP

So where to from here ?
Do you think OZ minerals will make a tilt a major takeover next twelve months ?
Do you think their statements of wanting to get into bulk commodities means iron ?
Do you think they will need to move quickly with an acquisition to fend off themselves becoming a target ?
Possibility of share buyback ?

Would appreciate thoughts

Regards

 

[redsmartie]

I have been a holder of OXR for a while now and I have sold most of my holdings, at profit and bought some back recently. I think the company is now in a position to sit and wait for projects to mature. I think the share price has matured enough to prevent it falling back too much, but this zinc thing has really got to be replaced by some good commodity product. Zinc is just one of the many options for Oxiana and other types of commodities can be expensive to get into so the cheap one was probably the best option for the company board.

 

[Whitsy]

Lets hope todays announcement of the official name change can get things going for OZ. I must say i dont mind the new logo and the reasoning behind it.