OZL - Oz Minerals

[LeeTV]

OZ MINERALS LIMITED (OZL)

The merged entity of Oxiana ((OXR)) and Zinifex ((ZFX)).

OZ Minerals new ASX ticker code of OZL will be effective as of Wednesday 23 July.



Macquarie 23/07/2008 Outperform $3.10 49.0%
For the first report on the merged entity, which will now be under the code ((OZL)), the broker notes quarterly production was as expected. The broker retains an Outperform on the new OZ Minerals and has reset the old Oxiana target of $4.00 to $3.10.
On the EPS front, it's a case of dilution along with forecast lower zinc prices and higher costs. The result is falls of 46%, 56% and 47% in 2008-10.


Citi 23/07/2008 Buy, High Risk $3.60 73.1%
Citi says Oxiana's June quarter production report shows zinc and gold in-line with estimates but copper and lead lagging, while costs rose for fuel, acid, lime and flotation reagents.
It maintains its Buy rating and $3.60 target price.


JP Morgan 23/07/2008 Overweight $2.50 20.2%
Target $2.50 (was $2.60). The group's production report was mixed in the broker's view as revised production guidance has resulted in cuts to earnings estimates.
This flows through into a slight cut to its price target but there is no change to the broker's Overweight rating.


UBS 23/07/2008 Neutral $2.90 39.4%
The June quarterly report from Oxiana showed output in line with UBS's forecasts. Group zinc production was 2.5% below analysts' forecast.
The analysts believe Oxiana represents good value at current levels. Growth would seem to be around the corner with Prominent Hill on track for commissioning and first nickel sales from Avebury due in August, they note.

The target price for the merged company is $2.90 (previously $3.75 for Oxiana). The broker reminds us all the name change to OZ Minerals takes effect from July 23rd. That's today.


Credit Suisse 23/07/2008 Underperform $2.50 20.2%
Production in the June quarter was in line with expectations but the broker suggests the result highlights the current cost pressures the group faces.
To account for this the broker has cut its earnings estimates going forward, which supports its Underweight rating on the stock.


Deutsche Bank 23/07/2008 Hold $2.60 25.0%
Soon to be Oz Minerals, Oxiana reported one more time quarterly production figures on its own and they did not mesmerise analysts at Deutsche Bank. The analysts point out that zinc operations continue to disappoint due to a sinking zinc price but costs at various operations are an issue as well.
Target price has fallen to $2.60 from $3.00. The broker doesn't see zinc prices recovering before 2009 and thus there's no catalyst for the shares, the analysts believe.

Cuts made to earnings forecasts are quite sizeable.


ABN Amro 23/07/2008 rates OZL as Buy - This is the broker's first entry for the new OZ Minerals, the merged entity of Oxina ((OXR)) and Zinifex ((ZFX)). The first point to note is that the quarterly production reports of both were largely in line with expectations.
Thereafter it's just a matter of establishing some merged forecasts. On a transition basis, the target has risen from $2.88 to $3.67.

The company's fiscal year ends in December. ABN Amro forecasts a full year FY08 dividend of 8.00 cents and EPS of 8.35 cents. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 0.00.


Average Target Price $2.95 41.8% upside


Admin note: Oz Minerals (OZL) was formed by the merger of Oxiana (OXR) and Zinifex (ZFX). For previous discussion on OXR and ZFX please refer to their respective threads:

Oxiana: https://www.aussiestockforums.com/forums/showthread.php?t=4642

Zinifex: https://www.aussiestockforums.com/forums/showthread.php?t=2750

 

[legs]

Vote ushers in the beginning of OZ Minerals
22 Jul 2008


A new era in Australian mining commenced on 18 July with shareholders overwhelmingly approving the new name for the merged Oxiana and Zinifex businesses – OZ Minerals.

OZ Minerals CEO, Andrew Michelmore, who unveiled the new brand at the EGM held on Friday, said that the new corporate logo designed for OZ Minerals was an excellent graphic expression which captured who the company is and the principles it will stand for.

“The logo draws on the traditional stencil alphabets seen across Australia’s outback which, used traditionally on everyday signage, has a direct, no-nonsense appeal.

“It obviously draws on the achievements of the two companies with the linking of the O and Z, but it also has a great sense of forward motion, action and growth. This is very much who we are,” he said.

Mr Michelmore said that the colour yellow had been chosen for OZ Minerals’ corporate identity for a number of reasons.

“The experts say it is the colour of energy, clear thoughts and getting things done. It also has powerful positive associations in Asia. Regardless of theory, I believe it’s a terrific look for a great new company,” he said

Mr Michelmore said that expectations would be high for OZ Minerals as its starts life as the third largest diversified resources company listed on the Australian Securities Exchange.

“I acknowledge that the past couple of months have been difficult ones for shareholders but this new organisation is born from two companies with strong success stories and rich histories.

“With these unique qualities and the combined strength of our organisations we are confident we can achieve the growth and the results which we know we are capable of, while demonstrating leadership in responding to new challenges and expectations,” he said.

OZ Minerals currently has five mining operations located across Australia and in Asia, three new mining projects in development and a large portfolio of exploration projects throughout Australia, Asia and North America. It produces copper, zinc, lead as well as other base and precious metals.

“Our strong production base, attractive development pipeline and prospective exploration portfolio together with a sound financial position and prudent management means OZ Minerals is well-positioned to succeed and deliver solid value for shareholders.

“We launch OZ Minerals with a commitment to produce commodities efficiently and profitably and we see our people, communities and partners as core to our success. Together, we are creating a great resources company,” he said.

OZ Minerals new ASX ticker code of OZL will be effective as of Wednesday 23 July.

 

[tm1234]

new to asf but read some good posts.

just seeing if anyone has any views/opinions on investing in this stock at current prices

cheers tm

 

[roland]

well, I'm in at $1.975 - been wanting in since the name change and just waiting to buy on a dip, which presented itself today.

 

[Nyden]

well, I'm in at $1.975 - been wanting in since the name change and just waiting to buy on a dip, which presented itself today.

Wow, you're game Roland. Buying in at possibly the beginning of our markets next dip down to the 4xxx range

I wish you luck! I'm steering clear of commodity stocks for the time being though. This new housing data in the US is only going to put downward pressure on copper / commodities imo... shake out some speculators.

I don't think we've been anywhere even close to the bottom yet; where's the sheer panic, the fear? I don't see any blood yet :

OXR's & ZFX's charts are enough to keep me out of this one for a while yet as well.

 

[tulasi74]

Wow, you're game Roland. Buying in at possibly the beginning of our markets next dip down to the 4xxx range

I wish you luck! I'm steering clear of commodity stocks for the time being though. This new housing data in the US is only going to put downward pressure on copper / commodities imo... shake out some speculators.

I don't think we've been anywhere even close to the bottom yet; where's the sheer panic, the fear? I don't see any blood yet :

OXR's & ZFX's charts are enough to keep me out of this one for a while yet as well.

Hey Nyden

Can you please expand on your comment about the charts. Would really appreciate some advice. Thought it was a good buy at 3.11 and got in then and still holding. Its hurting a lot.

Tulasi

 

[Nyden]

Hey Nyden

Can you please expand on your comment about the charts. Would really appreciate some advice. Thought it was a good buy at 3.11 and got in then and still holding. Its hurting a lot.

Tulasi

Well, being that neither stock exists anymore... I can't seem to find any charts. Although I don't follow T/A - being more of an FA myself ... I do place value in trends. Both ZFX & OXR were in terrible downward trends, especially ZFX; OXR wasn't any better though.

Fundamentally they don't look so great to me either; as it's my belief that many of these fundamentals are still in question - commodities could be nearly anywhere in a few years ... way up or down. We're all just probably placing too much hope on China.

Zinc, well; some say we'll be in deficit in a few years time ... others disagree. If it were a sure thing; surely this would already be priced in. Why isn't everyone buying Zinc if it's a sure thing that in 2 years there will be a shortage? Because it isn't a sure thing; & I think it was a very silly business move to dilute the share price on a punt.

 

[roland]

Ever the pessimist Nyden, gotta get in somewhere and I am missing ZFX

Be it a bad method or not, it works for me to choose a stock and trade it to a position that I am happy with. If OZL goes up I'll probably sell it, on the other hand I have prepared myself for some weakness and can happily follow it to $1 if necessary and sell it off on the return.

OZL are extremely well diversified and have plenty of cash. They pay dividends, have a very liquid volume and have a mature management team. All in all I am comfortable with the position I have taken and expect I'll have quite a bit of fun and eventual profits - bring it on, up or down - I'm ready

 

[Nyden]

Ever the pessimist Nyden, gotta get in somewhere and I am missing ZFX

Be it a bad method or not, it works for me to choose a stock and trade it to a position that I am happy with. If OZL goes up I'll probably sell it, on the other hand I have prepared myself for some weakness and can happily follow it to $1 if necessary and sell it off on the return.

OZL are extremely well diversified and have plenty of cash. They pay dividends, have a very liquid volume and have a mature management team. All in all I am comfortable with the position I have taken and expect I'll have quite a bit of fun and eventual profits - bring it on, up or down - I'm ready

Gotta admit Roland, I admire your ability to bounce back! So, despite my pessimistic view on this one ... I really do wish you well on it

Bit off a bad view there though; you're ready to follow it down to a 50% loss? No stop losses or anything?

 

[roland]

Gotta admit Roland, I admire your ability to bounce back! So, despite my pessimistic view on this one ... I really do wish you well on it

Bit off a bad view there though; you're ready to follow it down to a 50% loss? No stop losses or anything?

Stop Loss??? - nahhh, I watch my stocks every tick, every day and - after my "learning experience" with BBP I know when to bail.

"Bad View" - nahhh, call it another op to add at a better price

 

[Nyden]

Stop Loss??? - nahhh, I watch my stocks every tick, every day and -

Been there, & unfortunately done that! Not too good for the mental health I'm afraid, & I made a choice to never put myself into such situations again : It's strict stop-losses, small holdings, & following the trends all the way now Unfortunately ... the only option my new criteria has allowed for me at the moment is a bankwest savings account 8.5%, and nights full of sleep!

 

[oldblue]

Here's my

I hold OZL ( ex OXR ) at prices a bit north of current. Very keen on the OXR assets, less so on the Zinifex concentration on zinc. Prominent Hill coming into production later in the year will change that to a degree but zinc will still be the big metal.
So I'm still comfortable with the company but it has no track record in its present form and we need to see how the rejigged management performs. The present market will stop me buying.

 

[stargazer]

Hi

Is there any indication of the dividend that might be paid on OZL.

ZFX was i think around 1.40c
OXR was i think around 0.04c

Cheers
SG

 

[subaru69]

ABN Amro forecasts a full year FY08 dividend of 8.00 cents and EPS of 8.35 cents.

I've read here and somewhere else (can't remember where) that $0.08 is the best guess. Things are tight, read: huge share price drop, for the 'new' entity so I don't see them spending too much on Div's. The other issue is that they have insinuated that if assets are spun-off from BHP-RIO merging then they will want to buy, ie they need cash at hand.

 

[bvbfan]

Sharehoder buy back.

I've posted this on other forums so no need to reply here if you have already indicated elsewhere.

I'm fed up with the spin the company is trying and failing to put out to the market.

Time for shareholders to act!

Looking for those shareholders to call an EGM, we need 100.

So if you are a shareholder please put in here if you want to call an EGM.

We can discuss other issues if you want.

If you have holdings in multiple structures ie personal, company, superannuation then indicate if you are going to vote with those as well.

So for easy of tracking could you (those that have not posted at HC) say

shareholder support EGM - X votes (X for the number of different holding structures - company, trust, individual)

For spam and privacy, don't place your email address here. PM me if you want

Thanks

 

[bvbfan]

For those opposed to a buyback have a read and then think about these issues...

Suppose OZL makes a bid for another company. They will have to bid at least 30-50% premium to current price. And even then that may not be enough.
The target company could have decent management and refuse the approach or heaven forbid they may even let their shareholders vote and the deal will not proceed if those shareholders see it in their best interests.

As for borrowing, I don't see the point in borrowing at perhaps 10-12% rates to buy something while also paying a 30-50% premium unless they have get a world class deposit with long mine life.

If they do try to buy something I'll be happy to bet this will trade under $1 before it trades over $4 again.

Think about it from an independent point of view, where you are looking at all the companies as an outside investor with no holdings. You buy the best stock that you see is most undervalued with least risk.
To me there are only a handful of companies with earnings capacity of $200mill+ a year in that field right now.

Going by that metric
EQN, while cheap does have to tax issues and commissioning to get through. Also First Quantum hold a blocking stake.

SDL, while has huge potential the time frame to construct let alone the infrastructure costs of perhaps $2billion+ rule it out.

MOL, getting funding is the main issue. Harbinger and Twiggy holding about 25-30% of the stock which would also be a blocking stake.
Funding wise, the kitty OZL has would be sufficient to get it constructed. It would bring in a new commodity similiar to nickel, but one with a much better fundamental outlook given energy needs in oil, coal to liquids, oil infrastructure.

ALB, I'm not familiar with but seems a possibility mentioned. Location I guess is the risk. There is a stake of about 20% waiting to be offloaded so I think it is a option that is in play. The costs after credits are about $2-3/lb so margins are pretty good still. Hedged a bit of production for 2009 at higher prices.

Finally
OZL, the only risks are with getting Prominent Hill online on time and on budget. The other risk is the declining zinc price making the ZFX operations loss making.
From broker reports I have seen they seem to think ZF operatins will deliver $100-150million in profit whereas OXR operations to add $250-300million in 2009.

Now to me, there are two stand out stocks to buy as an outsider.
Surely a buying OZL would be a better option than buying another company and having to pay 30-50% premium + adviser costs + a potential financial cost if the bid was over $1.5billion.

Also, a buyback will produce better returns in the long run once (if) zinc prices recover towards $1-1.25

So assuming profits get to $1billion in 2011 or so as per the broker reports, then the EPS would be 31c a share as it is now, or if 300million shares are bought back, 34.5c.
Using a P/E of 12 that would be a $3.72 share price or a $4.14.
About an extra return of 20% on current prices.

 

[Sean K]

For those opposed to a buyback have a read and then think about these issues...

Suppose OZL makes a bid for another company.

Going by that metric
EQN, while cheap does have to tax issues and commissioning to get through. Also First Quantum hold a blocking stake.

Posted this is the EQN thread.

1217 [Dow Jones] Share price weakness for Equinox Minerals (EQN.AU) makes company attractive to potential acquirers, says Credit Suisse. Canada's First Quantum (FM.T) is in box seat, already holds 17.3%, might even be able to fund bid at 100% premium, using debt. Equinox share price falls to near 1-year low of A$3.70 this week, down 26% since late June. Company's Lumwana copper project in Zambia was supposed to be commissioned last month, but fire at transformer delays progress. CS says Equinox immediate outlook clouded by Zambian fiscal uncertainty, but medium-term "stellar." Lumwana is 170,000-ton mine, one of largest additions in copper market in stressed supply environment. Other possible suitors OZ Minerals (OZL.AU), Xstrata (XTA.LN), Lumwana already has offtake agreement with major Xstrata shareholder Glencore. (EFB)

Everyone has a price, but you are right about the premium. Should anyone be paying top dollar in this environment?

 

[Mofra]

Everyone has a price, but you are right about the premium. Should anyone be paying top dollar in this environment?

It certainly pays to develop contingency plans on all options, considering the bourse is currently sitting at 19 year lows on a P/E basis.

OZL may also benefit of looking smaller - the benefit to MGX from the AZR takeover could serve as an example, paying a premium pre-development/expansion can still deliver satisfactory returns in the hands of an experienced mine operator.

 

[The Mint Man]

what's going on with OZL today? 10% off atm and thats on top of the poor run lately!
I checked LGL and noticed they were off so I thought I had better check OZL to se if they were in the same boat, and what do ya know!

Cheers

 

[legs]

metals took a hammering..

Lead 2001 -136.5 -6.39% USD/tn Market Close / Aug 04
Copper 7734 -339 -4.20% USD/tn Market Close / Aug 04
Nickel 17885 -285 -1.57% USD/tn Market Close / Aug 04
Tin 20570 -980 -4.55% USD/tn Market Close / Aug 04
Zinc 1756 -77.5 -4.23% USD/tn Market Close / Aug 04


thats enough to do this i believe..However I thought they were cheap at their current price..IMHO