OZL - Oz Minerals

[oldblue]

The new OZL becomes almost a pure copper play where the key variables are the PoC, the USD/AUD exchange rate and of course the successful mining of Prominent Hill.
I'm sure the brokers have nice spreadsheets showing all sorts of outcomes from various combinations of the first two factors.
Unfortunately, they're no better at this than any of the rest of us.

 

[nioka]

The new OZL becomes almost a pure copper play where the key variables are the PoC, the USD/AUD exchange rate and of course the successful mining of Prominent Hill.

Remember there is a gold component at Prominent Hill. PH has great potential and the company will be cashed up after the sale to MM is complete. OZL will also be left with a majority holding in Toro Energy. So it is not just the copper at PH

 

[oldblue]

Quite right, nioka.

Hence the "almost".

I don't know how much gold we can expect from PH? - and Toro I regard as a nice "maybe" for the future.
Copper is therefore what will make or break OZL, IMO.

 

[JTLP]

Remember there is a gold component at Prominent Hill. PH has great potential and the company will be cashed up after the sale to MM is complete. OZL will also be left with a majority holding in Toro Energy. So it is not just the copper at PH

Weren't they cashed up after the merger with ZFX? What happened to all that cha ching??? Hopefully they don't make the same mistake twice.

 

[fighting41]

http://www.macquarie.com.au/emg/prime/prime_prtradingpickofday_1.htm

Oz Minerals: Minmetals approved

Oz Minerals (OZL) announced that the Treasurer of Australia had approved the Minmetals revised cash bid of US$1.2bn for all the assets of OZL except Prominent Hill and Martabe. Separately, OZL also announced the sale of Martabe for US$211m to Hong Kong listed China Sci-Tech Holdings (CST). According to Macquarie Research Equities MRE 27/4), the Treasurer’s approval of the revised Minmetals bid eliminates the greatest uncertainty in OZL’s quest to stand alone once more. Going forward, with the seeming inevitability of Minmetals’ deal completion following the Treasurer’s approval, MRE see OZL as a stand out from its copper peers. It has low perceived geopolitical risk relative to PanAust (Laos) and Equinox (Zambia) and a stronger balance sheet to either.

Macquarie has them at OUT PERFORM so the business channel said today

It would want to be some sort of performance.........

 

[nioka]

Weren't they cashed up after the merger with ZFX? What happened to all that cha ching??? Hopefully they don't make the same mistake twice.

There should be a change of management and board members in the very near future as the new OZ will be smaller,meaner and will not require either the fancy head office,as large a board or the same CEO. Hopefully most of the current top management will go with the sold businesses to MM. The next general meeting should be a firey one. OZ should end up with the head office in Adelaide (a logical place for the PH operations). There would be no excuses for repeating the mistakes of the past.
Then again the fat lady hasn't sung yet. We have no idea what is going on behind the scenes. Why have management continued to have roadshows promoting a business when there is supposed to have been a sale made of a large proportion of the assets. Are there still efforts being made to refinance and continue as is. There is only a $25m penalty if they pull out.
OZL is a secret society that treats shareholders as a necessary evil,to be tolerated but mainly ignored.
Regardless of all or any of the above the value of the company must be more than the current SP.

 

[Front Runner]

I see macq now has price target of 75c (DCF) and have upgraded to outperform. Dont know about any other brokers.

I am still worried about a gold collapse if credit confidence bounces back, but as oldblue correctly states, SP most sensative to Cu and AUDUSD. In my humble experience in the industry, it is these input assumptions that have the most impact on the SP, not the fundamentals of the stock itself. Why do we trade equities again??!

Macq assumptions below for 75c DCF if anyone has interest:


Price forecast 2008a 2009 2010 2011 2012 2013
Copper USc/lb 316 155 180 200 250 250
Zinc USc/lb 85 56 65 75 100 100
Gold US$/oz 877 928 963 925 800 805
Silver US$/oz 15.19 13.37 14.81 14.23 12.31 12.38
Nickel USc/lb 958 450 500 600 700 750
Lead USc/lb 95 53 60 70 85 100
A$/US$ exchange rate 0.85 0.67 0.74 0.80 0.80 0.80

 

[oldblue]

Good to see a bit of positive comment on OZL here.

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=E51DFF8F-1871-E587-E1196E3634EF4202

 

[PBH]

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.

Release it to where though?

I'm not a fundamental trader myself, however I don't completely disregard them either.
At the end of the day we're now talking about a 1 mine company (= increased investor risk, should the mine not perform to expectations), with more than 3 BILLION outstanding shares.

Unless copper prices do something crazy, or there is a major resource find near Prominent Hill, I just cannot envision the sp getting over $0.85 for a very long time.

As for the $800 million in cash....... Michelmore could spend his way through that in less than 6 months.... ;-)

 

[oldblue]

To be fair to M, he won't have the big capital spend on Prominent Hill from now on.
But I wouldn't worry about that. Reliable goss tells us that he will form part of the package that Minmetals are buying.

 

[mez33]

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.

OZ is already spending dollars it doesn't have on new furnishings from Schiavello furniture, and it ain't cheap! It makes you wonder!

 

[bigdog]

http://www.marketwatch.com/news/story/dj-bhp-billiton-plays-down/story.aspx?guid={8E96D6F8-E813-4906-9105-8A65E071B3C6}&dist=msr_2

DJ BHP Billiton Plays Down Speculation Over OZ Minerals - Report

Last update: 4:42 p.m. EDT May 4, 2009
May 04, 2009 (Dow Jones Commodities News via Comtex) -- DOW JONES NEWSWIRES

BHP Billiton Ltd. (BHP) is playing down speculation it will bid for OZ Minerals Ltd. (OZL.AU), The Australian reported on its Web site Tuesday, citing recent comments by the head of BHP's uranium activities, Dean Dalla Valle.

Dalla Vale declined to comment on a takeover, but indicated the company wasn't interested in Prominent Hill, saying that the mine wasn't viewed as a tier-one asset, the Web site said. The mine would be OZ Minerals' sole asset after approval of the sale of other assets to China Minmetals Corp., the Web site said.

OZ Minerals wouldn't comment on Dalla Vale's remarks, which came after OZ Minerals recently gained an extension to its finance commitments, the Web site said.

Separately, The Australian reported that South Australia Premier Mike Rann had warned BHP that there would be no "blank cheque" for the expansion of its Olympic Dam mine, saying the cost to taxpayers was still being negotiated.

"I want to see at least a doubling of the processing that currently is undertaken in South Australia at Olympic Dam and I expect that to be fulfilled," the Web site quoted Rann as saying.

Full story: http://www.theaustralian.news.com.au/business/story/0,28124,25429314-643,00.html; http://www.theaustralian.news.com.au/business/story/0,28124,25430230-5005200,00.html

 

[magiceye]

So I received my Notice of AGM today. What are peoples thoughts on Stephen Mayne of crikey.com.au fame running for board membership?

 

[oldblue]

Stephen Mayne has a bit of a track record of running for a seat on boards with "disgruntled" shareholders.
I believe he has minimal shares in a host of companies, largely to keep track of company affairs rather than for their investment merits.
He is a perceptive, entertaining journalist in my view but his suitability as a prospective company director hasn't been tested yet as far as I know.

 

[Front Runner]

Response from Jim Copland (Macquarie Securities) on this mornigns AFR.

"If the Board decides that a recapitalisation is superior to asset sales it would allow Minmetals the opportunity to walk away. Understood Morgan Stanley's proposal is fully underwritten. (AFR, Pg44)"

1. On OZL, with the world outlook looking better and better, China Minmetals looks increasingly like a lowball bid at US$1.2b (vs independent valuation of US$1.4 to US$1.6b). Even a month ago, that looked warranted given the risks inherent in any valuation, the dire credit markets and OZL's financial circumstances. Now, the market may be prepared to look again at the OZL zinc assets.

2. OZL's senior management and Board has a fiduciary duty to shareholders to extract value for them, even despite vast massive "OZL fatigue" over the past 6 months. At the very least, an alternative may draw out a higher Minmetals bid.

3. One issue mitigating against a recapitalisation is that current shareholders have bought OZL on its copper, and zinc is probably a less favoured metal, hence the probably lower desire to have Century and Rosebery back in the mix. This could cause weakness in OZL share price if a recap was announced, with register turnover (yet again). but this would be a buying opportunity.

4. Shareholder vote is 11 June, so it will have to happen fast.

 

[laurie]

And I for one will be voting NO do a spp there is more value to shareholders if that was to happen

cheers laurie

 

[OAKENFALL]

I have also voted No on my ex Zinifex Holding, Oxiana Holding and Superannuation Fund holding acquired in disbelief at 54.5c which I think was about the low point. (Dosn't make up for personal side decline)

I have had a hard time coming to grips with the arrogance of the Directors.
When the MD secured himself a paracute to Minmetals I saw red.
We have been stone walled by these guys.

Merchant Banks are now saying better deals are possible, a couple I understand have even offered to underwite a rights issue at 40c to repay the debt.

When I first heard of the terrible mess the Co was in I emailed them and asked why a rights issue had not been done. Standard PR response - get lost we know whats best for your money!

We also badly need to vote in a new board on a No or Yes vote.

The Century Mine and Rosebury are class assets and why I invested in the first place. Prominant Hill is still iffy and very expensive for what it is.

The directors I think would be happy for the Co to be liqudated as they show no motivation to do anything - money from china for them I guess.
Good work Guys (Stuff the Sharholders!)

Not Happy with this one AT ALL.
Well thats my wrant.

 

[JTLP]

Just a question...why would OZL holders want Minmetals to walk away?

They were basically your lifeline when OZL were suspended...it could have ended in disaster for OZL. Now because the markets have "turned" (a big gamble on OZL's and others behalves) this Minmetals deal looks unlikely at the current price?

What happens if the market keels over again and metals prices slump?? Who is going to be left holding the baby then?

 

[laurie]

Then the banks will have to make a decision whether there is light at the end of the tunnel or not but what you are saying is a valid point not sure though we were told the full truth by management

cheers laurie

 

[oldblue]

I'm with JTLP on this one.

The banks have proven to be unreliable as far as funding OZL in adverse markets is concerned. The board should certainly be looking at the prospects of getting an underwritten equity injection, to include current shareholders, in lieu of the Minmetals deal, but this would need to take account of OZL's present and future cash requirements if the metals markets were to tank again.

Overall, I'm coming to the conclusion that the merged OZL was always going to be a stretch unless metals had continued at their heady highs. Which of course almost everybody, not just OZL management, thought that they would. Given the huge expenditure still required for Prominent Hill at that stage, that applies especially to OXR. Hence the rationale from OXR's point of view for the merger.