OZL - Oz Minerals

[finicky]

I wonder if those global market intelligence chart painters have a global deflationary collapse among their scenarios. How serious will nations be about 'accelerated energy transition' if/when it comes to the crunch.
How does cold or hot war fit in? Germany for example is already turning back to coal because of Putin.

BHP usually makes mistakes with its big acquisitions (and divestments arguably)
Probably has the magnificent Hammer Metals (HMX) or CNB in its sights now.

 

[bk1]

the dearth of Cu discoveries in the past 10 years and current mines running out of inventory

Surely the biggest decision will be over West Musgrave...... FID expected this year and could cost a Billion dollars.
Prominent Hill expansion...
Cash on hand, $80M.
Who do you think can handle it the best ?

 

[Sean K]

I wonder if those global market intelligence chart painters have a global deflationary collapse among their scenarios. How serious will nations be about 'accelerated energy transition' if/when it comes to the crunch.
How does cold or hot war fit in? Germany for example is already turning back to coal because of Putin.

BHP usually makes mistakes with its big acquisitions (and divestments arguably)
Probably has the magnificent Hammer Metals (HMX) or CNB in its sights now.

Yes, agree, the World growth projections/demand may not be as expected with all that's going on. But, I think once we get over the coming depression and WW3 we'll go back to trying to stop the weather getting hot.

 

[qldfrog]

Yes, agree, the World growth projections/demand may not be as expected with all that's going on. But, I think once we get over the coming depression and WW3 we'll go back to trying to stop the weather getting hot.

Or too cold based on solar and earth cycles or volcanic eruptions.goodluck achieving that with windmills and Teslas ?

 

[divs4ever]

Could be a good time to switch to a dividend play, banks getting expensive with all their interest rate hikes. I sold OZL a long time ago.

i sold DOWN OZL ( not out ) has been a patience tester ( in 2016/2017 ) , but is finally looking OK ( considering it is risk-free income for me )

has been a bumpy ride , and would be unhappy if my copper exposure was mainly AIS and BHP

but time will tell

but was pleasantly surprised that OZL management rejected the offer quickly ( some other companies i have held have been just as quick to sell out )

div. plays might be hard to find if the easy credit dries up

 

[divs4ever]

Yes, agree, the World growth projections/demand may not be as expected with all that's going on. But, I think once we get over the coming depression and WW3 we'll go back to trying to stop the weather getting hot.

depressions normally last for years and sometimes including a major war in the financial devastation

am not sure climate change will get much traction if we survive WW3 ( most will be desperate to stay alive , and tone-deaf to almost every government )

Australia is a very different place to WW1 and WW2 eras

 

[divs4ever]

I wonder if those global market intelligence chart painters have a global deflationary collapse among their scenarios. How serious will nations be about 'accelerated energy transition' if/when it comes to the crunch.
How does cold or hot war fit in? Germany for example is already turning back to coal because of Putin.

BHP usually makes mistakes with its big acquisitions (and divestments arguably)
Probably has the magnificent Hammer Metals (HMX) or CNB in its sights now.

i see OZL bought a few shares in CNB , surely BHP wouldn't buy OZL for all the OZL investment plays

if that was the strategy i am surprised S32 didn't jump in first ( ahead of BHP ) ( i also hold S32 )

 

[finicky]

James Gerrish's comment on Monday 8 Aug regarding the BHP offer. The analyst quoted reckons $30 would provide a more conventional premium. Anyway, Gerrish's 'Market Matters' fund has taken something off the table - "Wise move", I emailed him and directed him to my own valuation publsihed here. Am still waiting on a reply but will post here when it arrives.

Livewire: Market Matters

OZL +35.25%: This morning, OZL rejected an unsolicited, conditional and non-binding indicative takeover proposal of $25.00 per share in cash from BHP. The board thought the proposal undervalued OZ Minerals and, as such, is not in the best interests of shareholders. The OZL CEO said…. OZ Minerals CEO comments: "We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations. We are mining minerals that are in strong demand, particularly for the global electrification and decarbonisation thematic and we have a long-life Resource and Reserve base. We do not consider the proposal from BHP sufficiently recognises these attributes.".

While the price represents a 32% premium to the last close for OZL on Friday, it’s only a 13% premium to the 6-month volume weighted average price which highlights the opportunistic timing from BHP as they try to take out OZL after a deep pullback in the share price. So, if $25 is not the price, what is? Our (Shaw) analyst, Peter O’Connor thinks it should be based on a 30% premium to NPV for OZL, which is a typical sort of resource premium for a change of control transaction. At that level, OZL is worth ~$30 per share.

We own OZL in our Flagship Growth Portfolio with a 5% weighting and an entry price of $18.11. We have trimmed the position today back to 3% and will see how this plays out from here.

Not Held

 

[Dona Ferentes]

It turns out BHP and OZ Minerals were in discussions about offtake agreements for the latter’s West Musgrave project in Western Australia, prior to the bid for the entire company.

This brings the view round to two major points

• BHP is looking for better performance for Olympic Dam and its copper operations
• Also had been thinking strategically about securing nickel concentrate for its WA smelters.

 

[divs4ever]

It turns out BHP and OZ Minerals were in discussions about offtake agreements for the latter’s West Musgrave project in Western Australia, prior to the bid for the entire company.

This brings the view round to two major points

• BHP is looking for better performance for Olympic Dam and its copper operations
• Also had been thinking strategically about securing nickel concentrate for its WA smelters.

an expensive way to access more nickel ore for Nickel West

since OZL has financial interests in several juniors ( or JVs in projects )

would a BHP take-over would that trigger divestments ( or further take-overs ) ( of those juniors )

i guess we will have to wait to see if BHP makes an offer OZL management is willing to listen to

 

[Sean K]

an expensive way to access more nickel ore for Nickel West

since OZL has financial interests in several juniors ( or JVs in projects )

would a BHP take-over would that trigger divestments ( or further take-overs ) ( of those juniors )

i guess we will have to wait to see if BHP makes an offer OZL management is willing to listen to

Yes, OZ has a large number of JV and exploration plays. I guess BHP would have to look at them each in detail post takeover and decide what they'd keep or toss. Anything that wasn't potentially T1 in a T1 jurisdiction would probably get the boot.

 

[divs4ever]

so far i hadn't seen any JVs that are a jaw dropper , but some are very early stage , so could be hard to tell

last i heard Olympic Dam has massive room for expansion and yet BHP opted to focus investment in South America

maybe we will find out more later

surely BHP wouldn't just keep Musgrave and shunt the rest at S32 who is quite happy with tier 2 assets ( that would make some sense if BHP still had an interest in S32)

 

[divs4ever]

since i already hold MCR ( 'free-carried' ) wouldn't an offer thrown at MCR ( and a cash injection later ) make more sense , if they were mainly after more nickel ( and copper with a little cobalt )

 

[Dona Ferentes]

At the Annual Results, BHP boss Mike Henry reiterated his disappointment that the OZ board had rejected the bid without offering BHP the chance to conduct due diligence, saying the $25 per share offer represented “very full value and a fair offer".

Mr Henry said he would remain “so, so disciplined” about the offer for OZ, adding that the South Australian copper miner would be “nice to have” but was by no means an essential addition to BHP’s portfolio..

.... tough guy talk ?

 

[Sean K]

At the Annual Results, BHP boss Mike Henry reiterated his disappointment that the OZ board had rejected the bid without offering BHP the chance to conduct due diligence, saying the $25 per share offer represented “very full value and a fair offer".

Mr Henry said he would remain “so, so disciplined” about the offer for OZ, adding that the South Australian copper miner would be “nice to have” but was by no means an essential addition to BHP’s portfolio..

.... tough guy talk ?

I think he's keen to display a sense of discipline, but what price is discipline? Probably under $30 as a guess. $28-29 maybe - OZL's highs made in Jan. That might still seem unders for the OZL board but I'd be happy for that considering it went as low as $15.80.

 

[divs4ever]

i was buying as low as $2.72 in December 2013

but it has sure tested patience and faith to get here today

depending on how quickly OZ expands ( over expansion/over-investment is possible here ) it could be a solid mid-tier player BUT has lots of interests and JVs so maybe not what BHP desires ( extra complexity )

 

[Sean K]

2022 Half Year Results.

I think the drop off in performance to guidance was reflected in the SP decline until the BHP offer came in. It's a poor H1 compared to 22 guidance. Can't find any guidance in their report that they're going to make up the difference in H2.

 

[Dona Ferentes]

now, will this influence BHP one way or t'other?

• OZ Minerals makes Final Investment Decision on West Musgrave
• West Musgrave to be one of the world’s largest, lowest cost, lowest emissions coppernickel projects
• Capacity to fully fund West Musgrave
• ... New $1.2 billion syndicated facility supported by key relationship banks, subject to final binding agreements
• Feasibility Study finalised

 

[Sean K]

I wonder how much extra BHP are going to pay? $30 I guess.

 

[divs4ever]

i wasn't assuming that

OZL has plenty of interests in small and mid-cap miners , and i was thinking one of those is being snapped up ( or just a controlling stake without a complete buyout )