OZL - Oz Minerals

[skc]

US$1.2b cash offer, not a bad deal. OZL said after they paid off their debt obligations, they'll have about $600m left over in cash, which is about 20c in current market cap. like i mentioned before, Prominent Hill is said to be "valued between $900m to $1.2b, which is around 40-50c". SP is currently trading at 54c - 20c (cash) = 34c on it's assets. It is undervalued, however we still need to factor in the risks that the deal won't go thru (either rejected by FIRB or Swan).

Last offer was A$0.825 per share. New offer is US$1.2b, or A$1.76b (0.68 exchange rate), or ~A$0.56 per share (3.12b shares listed) excluding Prominent Hill. So Prominent Hill was valued by Minmetals at A$0.265 per share, or about A$830m.

Based on the A$0.2 per share left over after paying off debt, OZL share price should be around $0.265+$0.2+ bits and pieces of other mines/investments. So the current price of ~$0.55 seems reasonable, esp. given the risks of FIRB / banks / Swan / Department of Health (who knows?!) objections. Unless of course there are more to the bits and pieces or a bullish outlook for whatever it is that Prominent Hill is producing.

 

[YELNATS]

US$1.2b cash offer, not a bad deal. OZL said after they paid off their debt obligations, they'll have about $600m left over in cash, which is about 20c in current market cap. like i mentioned before, Prominent Hill is said to be "valued between $900m to $1.2b, which is around 40-50c". SP is currently trading at 54c - 20c (cash) = 34c on it's assets. It is undervalued, however we still need to factor in the risks that the deal won't go thru (either rejected by FIRB or Swan).

Unless I misinterpret this new deal, it is totally different to the previous one, as it means that OZL won't be 100% swallowed up by China.

I know it means that OZL's sp will be in the doldrums for some time, but with Prominent Hill in its' arsenal, at least it has a chance to rebuild in its' own right longterm.

Mr Swan may have done OZL a favour, as maybe they didn't really have the option of saying "yes" to Minmetals' initial offer, "except that we'll keep Prominent Hill".

 

[UPKA]

Last offer was A$0.825 per share. New offer is US$1.2b, or A$1.76b (0.68 exchange rate), or ~A$0.56 per share (3.12b shares listed) excluding Prominent Hill. So Prominent Hill was valued by Minmetals at A$0.265 per share, or about A$830m.

Based on the A$0.2 per share left over after paying off debt, OZL share price should be around $0.265+$0.2+ bits and pieces of other mines/investments. So the current price of ~$0.55 seems reasonable, esp. given the risks of FIRB / banks / Swan / Department of Health (who knows?!) objections. Unless of course there are more to the bits and pieces or a bullish outlook for whatever it is that Prominent Hill is producing.

mind you that the current offer is cash offer only, which Minmetals will not pay off OZL's debts. so after debt, the cash position is $600m or $0.20, the market is valuing its other asssets (Prominent Hill + Martabe) at 35c/share at the current SP or roughly $1b. So essentially market is pricing Prominent Hill@$800m and Martabe@$200m. which is the low end of the valuation, any bidding war that might start on either Prominent Hill or Martabe will see the SP moving up.

 

[tm1234]

just a question
if the new deal goes through, does this mean shareholder will receive a cash payment of around 55c and OZL will still trade on the asx?
tm

 

[cooper276]

Wishful thinking tm - this deal delivers no payment to shareholders, unless whoever happens to be on the board of OZ decides to return some of the $600M odd that should be left over via some sort of div. payment.

What you do get is to keep your shares, have no debt....and significantly fewer mines or exploration areas.

Cheers

 

[skc]

just a question
if the new deal goes through, does this mean shareholder will receive a cash payment of around 55c and OZL will still trade on the asx?
tm

This is no longer a take-over. It is just an asset sale. Shareholders do not receive the cash, OZL does. It may choose to repay debt, or spend it on lollies.

 

[nathanblack]

remember too that reduced assets will result in reduced overheads, so the surplus cash should last awhile. obviouly prominent hill has limited buyer(must be australian it would seem) but would OZL still be wanting to sell mutabe or should they now continue on with these assets?

revenues will be hugely affect as will there market cap. with there cash deposit they could look to make acquisitions but thats what got them into this mess so i doubt they will go down that path.

they could be prey for another company looking for the remaining assets and cash hoard.

maybe a share buyback with surplus cash? gives shareholders the oportunity of all cash (minmetals cash + buyback cash) and those that want to continue on can hold and own more of a smaller company

any thoughts?

 

[oldblue]

any thoughts?

Only that if it all comes off it will be the best of possible outcomes for OZL shareholders.
Debt repaid, nasty zinc assets quit and the best asset, Prominent Hill, left to shape the company's future fortune. All we would need then is an eventual upturn in copper ( and gold) prices and some half-decent management skills.
Hope that's not too much to ask!

 

[craig_oneill]

So really we have gotten rid of what we dont want and kept what we still want??? It seems like we have done the best in a bad situation as prominent hill will do well over the longer term providing that the copper price improves.

 

[oldblue]

So really we have gotten rid of what we dont want and kept what we still want??? It seems like we have done the best in a bad situation as prominent hill will do well over the longer term providing that the copper price improves.

That's how I read it - fingers crossed for all the necessary approvals!

Of course, selling assets at the bottom of the cycle is not the way to go if one had any choice in the matter. Nothing more certain than that the price if zinc, lead etc won't always be in the cellar. Century and the other "bad" assets will have their day in the sun again.

 

[bigdog]

http://money.ninemsn.com.au/article.aspx?id=796871

Most likely a former associate with $8 million in the bank!!

I believe that the Martabe purchase price was $400+ million back in 2007!!!

OZ Minerals has preferred bidder for Martabe-official
2/04/2009 4:00:25 PM

SYDNEY, April 2 (Reuters) - Australian miner OZ Minerals Ltd (OZL.AX , 0.575, +0.040, +7.480%) has a preferred bidder for its partly developed Martabe gold and silver project in Indonesia, an OZ Minerals official told Reuters on Thursday.

"We have still got a competitive process going, but we have got preferred bidder and we would expect they would be people who complete (the deal)," Bruce Loveday, general manager business development for OZ Minerals said.

On Wednesday, OZ Minerals agreed to sell most of its assets, excluding Martabe and the Prominent Hill mine in Australia, to China's Minmetals for $1.21 billion. [ID:nSYD495273].

Separately, a source said the Martabe negotiations were progressing well.

"The discussions are progressing and a transaction could be completed on Martabe within a fairly short time frame," the source close to the transaction said.

The source declined to be identified due to the sensitivity of the issue.

............................................................

 

[craig_oneill]

the point i still wonder about is how did they burn through cash when the two companies formed?? When the merger took place there was 1.2 billion in cash...i understand alot when into prominent hill to get up and running. However why did they go paying out dividends and using up all the cash leaving the company in the postion it is in??? i suppose i am annoyed that the company had really good potential and prospects and now thanks to the FIRB rejecting selling PH to the chinese we have somehow still ended up with a decent deal all being considered.

 

[bigdog]

the point i still wonder about is how did they burn through cash when the two companies formed?? When the merger took place there was 1.2 billion in cash...i understand alot when into prominent hill to get up and running. However why did they go paying out dividends and using up all the cash leaving the company in the postion it is in??? i suppose i am annoyed that the company had really good potential and prospects and now thanks to the FIRB rejecting selling PH to the chinese we have somehow still ended up with a decent deal all being considered.

Mismanagement, a change of management, management that are deserting the ship and encouraging shareholders to accept the original offer of 82 cents and doing absolutely nothing the save the company. Most likely incapable to running the company???

What has management done to save the ship?

How many believe that accepting 82 cents is in the best interest of shareholders???

There are many shareholders that paid $3+ and $4+ per share; is this in the interest of shareholders???

There are quite a few OZL employees who purchased OZL options and are now really out of pocket; is this again in the best interest of shareholders.


OZL called the trading halt in November to prevent seeing the share price continue to fall!!!!

It is just like Cadburies chocolate reducing the size of blocks because the customers wanted it.

 

[oldblue]

I'm not making any excuses for management - or, rather, "mis-management" in this case - but there's no point in dwelling on past mistakes and omissions.
I paid somewhere north of $3 for my Oxiana too but that was then, this is now.
Back then, minerals were booming - "stronger for longer" was the cry and I don't recall too many dissenting voices. Prominent Hill was coming along nicely although a bit slower than planned and costing a bit more. But that strong operating cash-flow was coping with that.
The collapse of commodities prices put a stop to the party and PH, plus a few other smaller projects still had to be paid for. A merger with Zinifex looked like a good idea - using ZFX cash to pay for the Ox's expansion.
Those who didn't like the look of that got out. The rest of us are stuck with today's reality and must make the best of it that we can.

Sorry for the rant.

 

[PP123]

And i was told this would be a safe share to invest in????
just goes to show, never listen to anyone.

 

[johenmo]

I'm not making any excuses for management - or, rather, "mis-management" in this case - but there's no point in dwelling on past mistakes and omissions.
I paid somewhere north of $3 for my Oxiana too but that was then, this is now.
Back then, minerals were booming - "stronger for longer" was the cry and I don't recall too many dissenting voices. Prominent Hill was coming along nicely although a bit slower than planned and costing a bit more. But that strong operating cash-flow was coping with that.
The collapse of commodities prices put a stop to the party and PH, plus a few other smaller projects still had to be paid for. A merger with Zinifex looked like a good idea - using ZFX cash to pay for the Ox's expansion.
Those who didn't like the look of that got out. The rest of us are stuck with today's reality and must make the best of it that we can.

Sorry for the rant.

I was like you oldblue - had OXR, similar price.I put an end to my misery and sold 'em at 53 cents. Then had a lavish meal at Golden Arches Restaurant! I moved on.

I had a small position on OXR so only down a couple of K.

But made me look at the stock market harder, and so I saved more than that by taking an interest in my super last year. Saved a 25% drop. THAT felt good.

 

[oldblue]

I was like you oldblue - had OXR, similar price.I put an end to my misery and sold 'em at 53 cents. Then had a lavish meal at Golden Arches Restaurant! I moved on.

I had a small position on OXR so only down a couple of K.

But made me look at the stock market harder, and so I saved more than that by taking an interest in my super last year. Saved a 25% drop. THAT felt good.

Fair comment, johenmo.

In fact, I'm more positive about the OZL situation now than when it looked like the 82 cent takeover was going to happen. I reckon that if OZL is left with Prominent Hill plus the sale proceeds of Martabe, no debt and a bit of cash in hand, then there is a fighting chance that this company can have some sort of decent future when the price of copper recovers as I'm confident it eventually will.
All this presupposes a reasonably competent management, of course.

 

[bigdog]

OZL SP closed today 67.5 cents up 4.5 cents

http://www.businessspectator.com.au...-safari-pd20090424-RE8XS?opendocument&src=rss

Martabe safari

Fresh from receiving Wayne Swan's imprimatur on its deal with Minmetals yesterday, Oz Minerals has announced the sale of its Martabe project to Cayman Islands-registered and Hong Kong-traded China Sci-Tech Holdings (CST).

CST bought Martabe, a gold and silver mine in northern Sumatra, for $US211 in cash, of which $US10 million will be paid upon signing. The remainder is expected to be paid in early June. Oz will also be reimbursed for $US7.5 million spent on the project since April 1. Oz will use the money to keep paying off its debt.

For CST, the Martabe investment represents a departure from some disastrous forays into the world of financial instruments. CST reported a loss for the 2008 financial year of $HK305.5 million. In the same year the group recorded total income of $HK29.14 million.

No doubt its executive team, led by Chiu Kong, Jimmy Kwan and Richard Hui, the latter of whom was educated in Sydney, will see gold to be a more tangible thing to assign some of its rich cash reserves to.

"We are pleased that, in CST and its Indonesian partners, we have been able to transact with a team who has paid an acceptable price after a competitive bidding process and who also understand and respect the requirements of doing business in Indonesia," said Oz chief Andrew Michelmore.

As for those “requirements”, CST has a strategic relationship with the Soeryadjaya family, especially Judith Soeryadjaya. The founder of the dynasty, William Soeryadjaya, started automaker Astra International, while his son Edwin is one of Indonesia's richest men. The other son is an executive in Suharto's Golkar Party.

Former Oxiana boss Owen Hegarty was also believed to be a contender in the Martabe bid. It is thought that his private company Tigers Realm Gold was unable to secure the necessary funding however. The scarily-named Tigers Realm may list within two years, Hegarty recently told media in Singapore.

Oz was advised by Creagh O’Connor, Rob Greenslade and Chris Johannsen from Gryphon Partners. They were the same bunch who advised Oxiana on its merger with Zinifex, propelling Gryphon up the league tables.

Gryphon has also recently advised Unmin on its bid for Consolidated Rutile (Lines in the sand, April 17) and Beach Petroleum's sale of Tipton West to Arrow Energy (Arrow finds its mark, April 3).

Christian Johnston and Alistair Lucas at Goldman Sachs JBWere plus Richard Phillips’ crew at Caliburn Partnership have meanwhile been advising Oz on the Minmetals transaction. Freehills’ Rodd Levy has also been involved in that process.

Advising CST was Azure Capital, which is also advising Fortescue on its deal with Hunan Valin. Hunan Valin received the tick from China’s regulatory bodies earlier this week.

 

[Front Runner]

Anyone know the target price for OZL (post this deal) according to macq, UBS, citi, CS etc? Not sure what gold/copper assumptions to use.

(ps thanks to some good 'doubling up', I am almost breaking even on my OZL holding which i initially paid $3+ for )

thanks all

 

[Sean K]

No idea about what funnymental value this may have with what it's got left, but the chart looks interesting now. Found a floor and is slowly moving up to this resistance line around .70. Breaking through there should release it you'd expect.