OXR - Oxiana Limited

[nizar]

Me too, and I have been following/studying this very closely for a few years now.
There is a chance that zinc will catch up to copper by 2008 due to its price inelasticity.
I might have to go overweight in my already overweight commodity exposure to add more KZL.
I learned that their hedge exposure to copper and lead will have largely unwound by mid year, giving them spot prices for most of the next financial year.
KZL do not hedge zinc and presently have a margin in excess of a dollar per pound: that's 23,000 tonnes for this half year multiplied by 2,200 pounds multiplied by a dollar or so - compelling maths!
By way of comparison, in the 6months to December KZL produced about half the quantity of zinc anticipated this half, and received only 64cents per pound. Present zinc spot price is $1.38/lb and rising!

Yes rederob, it is compelling..

I dont know how people could afford not to hold KZL and OXR..

In the latest half-yearly, KZL reported that costs per pound for zinc were 32c and average sale price received was 64c generating margins of 32c/lb... Currently zinc spot price 1.38, so their margins would have EXPLODED.. more than tripled... costs are set to remain at 30-35c/lb...

And dont forget copper, not that much at 4000tonnes for this year, but thats net revenue of 13million, considering costs of $1/lb, and spot price of $2.50...

Unhedged producers are the way to go, and KZL and OXR are my picks... have been holding KZL since beginning of the year, have topped up last week and will top up again...

People say copper will be in oversupply in 2007-2008... but for KZL in 2007, copper production will be 25000tonnes and then 35000tonnes in 2008, so the fall in spot prices will be MORE THAN OFFSET by increased production..

KZL will get re-rated, the last eps estimate was done after their last quarterly, when zinc spot prices were 95c/lb and consensus eps is 42.2cps... this will be increased to 50cps+ IMO...

Ok sorry guys wrong thread, so onto OXR...

This is the next big mining house on asx IMO... when they get Prominent Hill going in 2008, Prominent Hill to add 90-100,000 tonnes of Cu, 110-130,000 tonnes of Zn and 420,000 oz of gold, and then Sepon upgrades in 2009 to double copper output plus all their exploration upside and potential to increase their resource, in the next 2-3 years i can see this being a $10billion company... unhedged... just sit back and enjoy the ride...

 

[rederob]

Oxiana is IMHO in "No Mans Land" it's surley must be eyed by Xstrata and the quicker it can get to $5+ the better it is able to fend off being a target! right now it has to be a steal at the present price to it's future EPS if it reaches $5 then Xstrata would have to fork out close to $6.5-----> $7

Laurie
Bring up a chart of Tethyan (TYC) to see what a takeover would do.
Entirely possbile that OXR would immediately move over $5 on any formal offer.
However, OXR's numbers are so good they would show shareholders that a stock price of $6 by 2008 is possible.
Tethyan is still a bare resource project whereas Oxiana is already a cash cow.
If the similarites matched then OXR would sell out to Xstrata for around 2.5x present price.

 

[MalteseBull]

This stock is going nuts now, been watching it in the last 10-20 mins, extremly heavy buying

 

[nizar]

$3.38 on the close up 10% on 34million volume

 

[michael_selway]

$3.38 on the close up 10% on 34million volume

Hi i cant believe it!

cant believe how much ZInc it produced in the last quarter

Do knwo what teh zinc production for the next quarter/yrs is for ZFX?

Also copper/gold/silver cause I dont knwo why they are forecasting a big decrease in EPS in the future?

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 5.6 21.8 15.3 13.4
DPS -- 2.0 2.0 3.0


thx

MS

 

[rederob]

Also copper/gold/silver cause I dont knwo why they are forecasting a big decrease in EPS in the future?

MS
The forecasts are based on present production rates and a decline in metal prices going forward.
The forecasters will be badly wrong, as they have been for several years.
Metal prices will be higher still at year end, and zinc is likely to run higher throughout 2007, with gold and silver rising dramatically as well.
There is every chance OXR will significantly raise its next dividend - I expect 5 cents minimum.
OXR upside yet to be realised.............. watch this space.

 

[nizar]

MS
The forecasts are based on present production rates and a decline in metal prices going forward.
The forecasters will be badly wrong, as they have been for several years.
Metal prices will be higher still at year end, and zinc is likely to run higher throughout 2007, with gold and silver rising dramatically as well.
There is every chance OXR will significantly raise its next dividend - I expect 5 cents minimum.
OXR upside yet to be realised.............. watch this space.

Agree

FOr 2007 and 2008 and beyond, analysts/brokers use 55c/lb zinc and 70c/lb copper in calculation

Higher metal prices will allow them to increase their resource so fatter margins and increased production

 

[YOUNG_TRADER]

In 6 months this beasts mkt cap has gone from $1.5billion to $4.5billion !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Its not the same when say TZN goes from 60c to $1.20 as its mkt cap went from $45m to $90m,

No we're talking about an addition of $3billion dollars in 6 months

Good luck to all those brave enough to ride

 

[nizar]

In 6 months this beasts mkt cap has gone from $1.5billion to $4.5billion !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Its not the same when say TZN goes from 60c to $1.20 as its mkt cap went from $45m to $90m,

No we're talking about an addition of $3billion dollars in 6 months

Good luck to all those brave enough to ride

bro OXIANA is earnings heaps of money

look at the latest report..

its NPAT for FY2006 is forecast at $446million, thats eps of 30cps, its not overvalued at all at 10x earnings if thats what u are implying...

Just because a share price has gone up so much doesnt mean it cant go higher...

 

[rederob]

its NPAT for FY2006 is forecast at $446million, thats eps of 30cps, its not overvalued at all at 10x earnings if thats what u are implying...

nizar
I have not had time to run over the numbers in detail, so I just looked at Comsec - one broker recommends the Ox as a "sell" (wish I could find out who). My view is that the analysts forecasts at Comsec for the next year are not even on the page. I am forecasting OXR's eps for the next financial year at over 80cps conservatively.
Moreover, I think the numbers for OXR's present quarter will again stun the market to "accumulate".
We seem to agree that present price action does not even factor in Prominent Hill. But that name will creep into more and more broker reports next year, and we really will be looking at a minimum price for the Ox of $7 by end 2007.
While the Ox is only a bit over 10% of BHP's present price, by 2010 I foreacast it to be no less than 40% and possibly higher depending on gold's upside.

 

[kariba]

In 6 months this beasts mkt cap has gone from $1.5billion to $4.5billion !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Its not the same when say TZN goes from 60c to $1.20 as its mkt cap went from $45m to $90m,

No we're talking about an addition of $3billion dollars in 6 months
Good luck to all those brave enough to ride

Young Trader

The same was being said about the PDN @ $1.50, & $2.00, $3.00, $5.00 ...AND they havent even made 1 cent yet! At one point recently both OXR & PDN had the SAME MC ....I am a fan & owner of PDN shares ...But what a joke! OXR is a cash cow & has been MASSIVELY underpriced - It is only now coming to near where it should have been .... not even including PH & other factors etc.

No mate we are nowhere near yet!!!

cheers

 

[bvbfan]

OXR

Gold 600 - 450 = 150 x 180,000
= 27,000,000

Copper 2.75 - 0.85 = 1.90 x 60000 x 2205
= 251,370,000

Zinc 1.25 - 0.30 = 0.95 x 150000 x 2205
= 314,212,500


= 592,582,500

costs of production and depreciation included in the costs of individual metals

other costs
admin 10,000,000
misc 5,000,000
finance costs 40,000,000
exploration 25,000,000
income tax 100,000,000

total costs 180,000,000


estimated profit = 412,582,500

 

[YOUNG_TRADER]

OXR certainly is a cash cow,

Wasn't saying that it was over valued or undervalued, was just commenting on how quickly its huge market cap trebled!

Come on a $1.5Billlion dollar stock to treble is impressive isn't it?

 

[laurie]

Has everyone forgotten OXR 24.7% of TOE!

cheers laurie

 

[rederob]

bvbfan
Simple maths - nice bottom line.
And the prices you used for the metals have already been surpassed, so your bottom line is conservative.
As I have said a few times, these numbers exclude any exploration success, and known upside that will come from opening up Prominent Hill.
Unfortunately my exposure to OXR (at 20%) is a bit over my trading rules, or I would be adding on today's dip.

 

[clowboy]

Im wondering if there will be any dip left on monday with the way zinc and other comodites (ex gold/silver) have bounced back in the last few hours

 

[michael_selway]

Im wondering if there will be any dip left on monday with the way zinc and other comodites (ex gold/silver) have bounced back in the last few hours

Actually todays Dip was mainly due to Silver which dropped 20%, from 14 to 12 in 1 day

thx

MS

 

[nizar]

Actually todays Dip was mainly due to Silver which dropped 20%, from 14 to 12 in 1 day

thx

MS

U reckon?

silver contributes very little to OXR's bottom line, i think it was due to the fall in gold/copper/zinc and it was due to some profit taking.. i mean, last week it closed at 2.75, thats alot of movement for a top100 company...

 

[clowboy]

All things being equal,

Silver and gold made reasonably recoveries over night.

Zinc and Copper went to new records, so as per my statement I think I may have missed the boat trying to by on any "DIP"

 

[rederob]

I think I may have missed the boat trying to by on any "DIP"

Me too!
I was hoping for a "blow off", but zinc, copper and nickel did a "Monica" overnight and intensified.
In relation to OXR, I do not believe that the market has yet priced in the company's excellent numbers that were reported on Thursday.
Add last night's price action on metals and we are looking at $3.50 in no time and $4 early into the next half.
Elsewhere a poster mentioned PDN as a stock that had doubled, and doubled again, yet had not earned a single cent: It remains a triumph of euphoria over reality - a testimony to our yearning for future profits despite having "realised" money in front of us if only we cared to look.