OZL - Oz Minerals

crayfish said:

Has anyone heard the rumour that BHPB is after Prominent Hill? Not sure what the deal is but I heard it today from a good mate of mine.

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Was in the papers somewhere.

Will be a way for OZL to clear some debt.

Some goldies with low debt and good income might be looking at it also, as well as Martabe in Indonesia.

NCM, LGL??

LGL is still sorting through recent acquisitions so probably no. NCM has been waving the M&A opportunity banner about, so maybe yes.

Either could be good long term pick ups at probably a good price.

According to an announcement to ASX yesterday, OZL admitted that it had burnt through an enormous $226m of cash between Nov-30 and Dec-8 and that its net debt position is now $800m (as at 8-Dec).

More worrying for shareholders is the news that OZL has also admitted it is likely to default on its main US$570m debt facilities by the end of the month (OZL only rates its chances as "reasonable" that the terms can be varied and an extension granted for a month). One of its lenders has apparently given notice that it does not wish to roll-over its facilities meaning that the refinancing of these facilities before year end will almost certainly now not be possible (as had been originally hoped).

Furthermore, the announcement stated that one of its funds providers, Societe Generale, has alleged that OZL is in default of the facility. If OZL ends up defaulting on these facilities then IMO it would almost certainly lead to a rather rapid influx of men with briefcases into OZL HQ.

The bad news from all of this is it makes it extremely difficult for OZL to sell any assets (at least for a good price) currently as any potential buyer would presumably wait for the distressed asset sales to happen early in the new year.


"The above is my opinion only - DYOR"

Oxiana in its day was a great company and it built a portfolio of fairly impressive assets. Possibly it got ahead of itself and so the merger with ZFX made some sense. In retrospect, that probably wasn't the best course of action!

Nonetheless, there are still some great assets underneath the pile of poo. I think we'd all be well advised to stop and look the other side of the mayhem...

1. I am not a lawyer but I suspect at some stage someone is going to ask the question "and precisely how much did you lose because the directors disclosed a current liability as a non current liability". Of course the answer will need to eliminate losses sustained because of the million other events and disasters not the least being a AUD300M swing in debt consequential of forex movements. The answer would be interesting but I strongly doubt sufficently definitive. The case might suit lawyers but I'm not sure who else might benefit from a protracted arguement without a conclusive resolve!

2. And if the litigation is successful [in my view looooooooong shot], who will pay? The directors personally? The company? It's insurers? The auditors {an easy target} But will anybody have any money left? Hmmmmm

3. The media is behaving like a bunch of morons. I seen two articles ex Reuters yesterday saying that this company wasn't interested and this other comapny wasn't interested. I can forsee that the media will ask every listed entity whether or not they are interested. OK let's start at A... "it was announced today that the administrators of ABC learning centres is not interested in the assets of OZ...".

4. The MD proudly lets announcements go out about an extremely sensitive issue in a very difficult market environment which have typo errors!!! What is he smoking????

5. But just when you thought that banging your head against the wall wasn't such a great idea, he then lets you know that (a) he is an incompetent negotiator so much so that people are not interested in him and (b) selling assets would be the best way to save the company. Hello... did anyone detect a hint of desperation????? Aren't Receivers and Liquidators more qualified. Has in fact he declared that the company is insolvent???

OK , ingredients of a simple reincarnation:


Does this help this forum? Probably not but now that I've vented my spleen it does allow me the refocus on the quality assets in the portfolio and not the endless dribble that the media seems only too happy to churn out.

Condolences to those that have open OZ positions.

I'm not an advisor or lawyer so do your own research. These are purely my opinions not even worth the paper they are written on!

I would still like to know why the shares in OZL are still in a trading halt. The market is informed of its position so why are investors being prevented from trading in response to their own determination of the circumstances?

I realise that things are still unresolved, but nevertheless the market is aware of the situation. I note that shares in Ford and GM are still trading on NYSE and their situation is at least as perilous and unresolved as OZL.

kennas said:

Was in the papers somewhere.

Will be a way for OZL to clear some debt.

Some goldies with low debt and good income might be looking at it also, as well as Martabe in Indonesia.

NCM, LGL??

LGL is still sorting through recent acquisitions so probably no. NCM has been waving the M&A opportunity banner about, so maybe yes.

Either could be good long term pick ups at probably a good price.

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NCM looking at Matabe perhaps...

I hope OZ holders get a good price, but as an NCM holder I hope it's fire sale time.


Barrick, Newcrest eye OZ assets
December 12, 2008

BARRICK Gold and Newcrest Mining may be interested in buying OZ Minerals' Indonesian gold asset.

A Sydney-based investment banker led the speculation, but added that Indonesia is seen as a risky investment environment.

The banker said OZ Minerals would have to sell assets to generate cash, as it needs money quickly and an equity raising was not an option given the timeframe.

The troubled miner is in talks with its banks to refinance $US560 million by the end of the year.

The banker said that given the holiday season, the miner would need to do an equity raising in the next 10 days.

Dow Jones Newswires

After the Averbury announcement today, I think there is a much higher probability that Century could be the next casualty at OZ Minerals, given they are chewing through the cash at an astonishing rate. Cash costs at Century are around $US0.65-0.68/lb and the spot price of zinc is around $US0.50. Surely OZ is getting to the point where it has no choice but to close any unprofitable mines which are causing the money to rot away. In addition you’d think the banking syndicate will be advocating strongly for the exact same. Large scale curtailment or closure at Century would have a profound impact on the supply side of the metal.

Nevertheless OZ is going to be a totally different company if it still exists at the end of all of this mess.

OZL - what an absolute shambles of a stock!
I cant believe it has been in a trading halt for so long!

eddyeagle said:

OZL - what an absolute shambles of a stock!
I cant believe it has been in a trading halt for so long!

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Would have to believe that the suspension ( not trading halt) is because directors believe that the market can't be fully informed at present, either because of ongoing funding negotiations or sale/merger/takeover discussions, or both!

Also, have a thought for the town of Zeehan in Tas, where many of the laid-off workers would live. That town only has a population around 1,000. On average, about 400 would be working residents (the rest underage children or retirees or housewives etc). So if 100 of its working residents (1 in 4) have suddenly become unemployed, that is going to have a devastating effect on their tiny local economy.

It's also worth noting that it can take months after registering for Newstart to be paid regularly under current Centrelink asset testing rules which enforce witholding periods if you have ANY money in savings, shares etc - unless you are flat stony broke from day one in which case you can get $500 emergency advance.

The negative knock-on effect for small towns all over Australia that rely on mining employment in their regions is going to be significant and take many years to recover from (if ever). Once a small country town dies, it tends to stay dead. Plenty of "almost ghost" towns around the country already as a testament to that effect.

aj

best wishes to all in Zeehan. The mine will live to see a future. I just hope not too many workers are brought down because of this temporary drop in commoditie prices.

dougit said:

best wishes to all in Zeehan. The mine will live to see a future. I just hope not too many workers are brought down because of this temporary drop in commoditie prices.

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It will have a devestating effect on the locals.
My old man worked there in the early 70's.
Small town and great people, a real shame

Its tragic about the workers getting laid off. I'm sure they are hurting - probably more so than shareholders like myself who have lost a pretty bundle on this whole shambles. At least I've still got my job (for now) which means I can pay for the capital I've lost. It would be horrible to lose your job, especially if you have a mortgage over your roof.

But it really makes me angry when I see pollies in power/union reps jumping up and down about "how dare" Oz lay off workers just before Christmas (hey - its not their money being wasted is it? Just some dumb shareholders).

If the government has $3 billion of Aussie taxes that they can "loan" Indonesia (do they really think we believe that Indonesia will pay it back??), then they have more than enough in the kitty to loan companies like Oz to keep going (they only need a third of that - and their assets are in Australia - not Indo! Blind Freddy can see who would be the better risk/return. Dammed expensive way of keeping boat people out of Australia if you ask me).

Ironic isn't it? The Banks get guarantees on their business by the government, which keeps them afloat. If Oz had the same guarantees by the Fed ALP there would not be an issue with Oz. Yet the Banks cannot show the same mercy to others. Maybe KRudd should put a few conditions on those deposit guarantees that the banks start lending to Aussie companies, which in turn keeps workers in a job (many who probably voted for him), who in turn keep spending. Instead we see the banks keeping massive profits at the direct expense of taxpayers, and the economy (how many more will lose their jobs when/if Oz goes under?).

Anyway - I read an interesting article about why it isn't worth it for the Banks to screw Oz, because in the process they will screw themselves (if Oz is wound up they will dump $7 Billion of minerals/mines on the markets at a discounted price. Imagine what that would do for the job security of Aussie workers and market valuations.).

http://www.businessspectator.com.au/bs.nsf/Article/Staving-off-the-wolves-$pd20081219-MGC8T?OpenDocument

Question (but don't answer it here); What do prostitutes and banks have in common?

Date: 19/12/2008
Author: Barry FitzGerald
Source: The Age --- Page: B3
Australian-listed OZ Minerals will consider asset sales or takeover approachesas it seeks to refinance its debt. The mining group had intended to conclude anew deal with its lenders by 29 December 2008, but discussions are now likely to extend into the new year. OZ could also opt to issue new shares at a steep discount

http://www.businessspectator.com.au/bs.nsf/Article/Dicing-with-danger-$pd20081222-MK2UW?OpenDocument&src=sph

Another report,comparing the resources/Ozl Minerals scenario to the property/Centro situation.

ANZ's Mike Smith:
"There is no point in pulling the plug, because what happens then? The whole bloody thing spirals down. All the banks would have to re-evaluate the credit risk on their portfolios. That would require increasing capital and it goes on and on. You have got to be calm, considered and sensible. This is a time for statesmanlike banking."

Let's hope this sort of thinking prevails.

Why Aussie banks happy to see Aussie assets in fire sale?
It's because their directors are not Aussie at all.
Aussie feed them, they sell Aussie.
After a few decades, young Aussie will have nothing left.
Australia will no long a developed country, but as poor as Africa.
Remember who did this: CBA, NAB ... etc

http://www.news.com.au/business/story/0,27753,24849926-462,00.html

TODAY is D-day for OZ Minerals shareholders, who have had their investment locked in limbo for more than a month.

Shares in the mining company are scheduled to resume trading on the stock exchange after going into a trading halt on November 28 as the company tried to refinance its debts.

OZ, which has developed South Australia's new Prominent Hill copper and gold mine near Coober Pedy, revealed on December 4 that its $1 billion pile of cash in June had shrunk to $405 million by November 30, as its projects swallowed money while commodity prices crumbled.

On December 10 it said cash levels had dwindled to $279.4 million - affected by redundancies, closure costs and commodity price weakness - while net debt was $802.6 million.

Speculation about the future of OZ has ranged from it sliding into administration to it being taken over or selling assets to reduce the debt.

Prominent Hill, scheduled to start production next month, is seen as the jewel in the portfolio. BHP Billiton has been touted as an obvious buyer as it already owns the nearby Olympic Dam mine, but some analysts say BHP might wait for OZ to crumble completely so it can pick up the mine more cheaply.

Shares in OZ, formed from the merger of Oxiana and Zinifex, last traded at 55c, down 87 per cent on their 2007 high of $4.32.

Oxiana founder Owen Hegarty was forced to sell $6.2 million worth of shares late last month in a margin call and resigned from the OZ board.

Whatever the answer, it looks as though OH was "luckier" than the rest of us "loyal" shareholders.



Disc: Holding a few - wishing I'd sold em all.

Ashsaege said:

How do we know if this statement is true? Hegarty probably knew the ship was sinking and jumped! and may of said he got a margin call, but really he knew things were sinking.

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Even if this was the case - who cares? What would him have holding done for you, to what benefit? None. Sour grapes is all it is. You would just like to see him dragged down with you.

Many were just foolish enough to hold an ever-dwindling down stock, and now you're just looking for a scapegoat. Honestly, they've overpaid for basically all of their new assets - there's no quality about it! Trade it, don't hold it

Nyden said:

Even if this was the case - who cares? What would him have holding done for you, to what benefit? None. Sour grapes is all it is. You would just like to see him dragged down with you.

Many were just foolish enough to hold an ever-dwindling down stock, and now you're just looking for a scapegoat. Honestly, they've overpaid for basically all of their new assets - there's no quality about it! Trade it, don't hold it

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I'm sure many are looking for an a escapegoat. I held this stock many moons ago! Glad i got out when i did.