TTY - Territory Resources

[noirua]

Territory Resources are known recently for their surprise bid for Consolidated Minerals (CSM).
Details about the company are at: http://www.territoryResources.com.au

The companies main interest is at Frances Creek, 190Km South of Darwin, on the Stuart Highway. First shipment of Iron Ore will leave from Darwin for China by the end of the current quarter. Iron Ore production is set for 1.5mtpa to build up to 3mtpa.

Mount Bundey Project is 100Km East South East of Darwin.

Yarram Project is 100Km South of Darwin and reserves vary from 40%FE to 60%FE.

Warrego Project is near Alice Springs and the adjacent Railway. Iron Ore is at 62.3%FE and the resource is 10mt.

Largest shareholders are Crawley Resources - 30.5% and OM Holdings with 12.7%.

 

[ta2693]

It is a good iron company but involved in CSM bidding war.
There is good chance that it may fail the bid war or win at big cost.If that is the case, the price will down further. I am waiting to see the result of CSM bidding war and may take a position after the war is over.

 

[The Barbarian Investor]

They were doing pretty well (growth wise) before they tried to take on CSM..someone has a bee in their bonnet re: acquiring CSM

Hope it gets back to some normality

 

[noirua]

They were doing pretty well (growth wise) before they tried to take on CSM..someone has a bee in their bonnet re: acquiring CSM

Hope it gets back to some normality

Territory certainly are suffering from a form of CSM disease as they plunge to 89 cents, down 40% from their price before the bid. No doubt the recent market conditions have not helped.

As you infer, bees in bonnets are bad news indeed. Difficult knowing quite quite when to jump in on this one.

 

[noirua]

TTY look a reasonable bet at around $1 or less on the prospect that the bid for CSM will fall flat on its back. The iron ore sector is still looking good and from an Aussie point of view the currency should weaken after a long bullish run against the greenback, imho. Now about A$1.16 to the US$1.

 

[noirua]

Down and down go Territory to close at 74.5 cents. Keirnan is thought to be thinking about raising his bid for CSM, you know what, give it up as TTY has sent you a strong opinion from their shareholders - "74.5 cents"

 

[robert toms]

I have been watching this one play out for a while.Although Kiernan says that he does not want CSM because of sour grapes...they dismissed him I believe,there is always the thought that this is the case.
You could argue I suppose that he knows CSM very well and got others on board to make a bid.
If TTY still wants CSM it looks like as if they will need to come up with a superior all cash offer...and this will further push TTY's share price down
As you say ..give it up Kiernan

I hold shares in neither...just looking

 

[Rimtalay]

Michael Kiernan is not after ConsMin due to sour grapes, nothing is further from his mind. He knows better than anyone that CSM will make $200 million FY08 on manganese alone. Their contracts are for US$7.25-US$7.50/dmtu for Sept and October. If you follow the metal markets in China, it's starting to go higher.
Every US$1/dmtu increase is another $60 million profit.
ConsMin is the only producer of Chrome ore in Australia, it has the ONLY viable deposit, it produces 2.5% of the worlds high grade Chrome ore. The price has just gone up 25%, did you know that, I doubt it. Chrome ore is about to go higher again. Just wait till you see the report July -Dec 07 it will blow you away. ConsMin will make more from manganese in 3 months than it did FY07 total ( all commodiies)
I hope that MK doesn't get ConsMin, I don't want to share it with TTY.

 

[noirua]

Michael Kiernan is not after ConsMin due to sour grapes, nothing is further from his mind. He knows better than anyone that CSM will make $200 million FY08 on manganese alone. Their contracts are for US$7.25-US$7.50/dmtu for Sept and October. If you follow the metal markets in China, it's starting to go higher.
Every US$1/dmtu increase is another $60 million profit.
ConsMin is the only producer of Chrome ore in Australia, it has the ONLY viable deposit, it produces 2.5% of the worlds high grade Chrome ore. The price has just gone up 25%, did you know that, I doubt it. Chrome ore is about to go higher again. Just wait till you see the report July -Dec 07 it will blow you away. ConsMin will make more from manganese in 3 months than it did FY07 total ( all commodiies)
I hope that MK doesn't get ConsMin, I don't want to share it with TTY.

Now at 72 cents are TTY and for all the blustering this bid, with a credit crunch likely to stick around for a while, is not sunk yet, but is nearly dead in the water.
Shareholders in TTY are unlikely to back this herring that is trying to swallow a whale.

 

[robert toms]

As a generalisation,why do directors advise shareholders to accept takeover bids.
If as what you say CSM are on the verge on substantial gains from chrome etc. ,why advise shareholders to accept takeover offers?
Alintas gas used the rationale that the market did not recognise their value,and consequently shareholders would be better served by accepting a takeover premium by BNB.
I would have thought that it was up to the company prinicipals etc. to continue producing good results and then the market would surely respond.
Western Mining sold out for a similar reason,just before the mining boom.
Perhaps the principals of these companies just get bored and want to move along.
Maybe I am a bit slow ,but ,to me,there is some strange logic here...worry about the short term first...I do not understand?

 

[noirua]

This plunge to 60 cents today looks, IMHO, like another well overdone fall from a level before the bid for CSM, of $1.49. Worth a gamble at this low level maybe, it is for me anyway.

Lost money today, but buying has been exciting. Would not have missed this.

 

[Rimtalay]

Noirua, I agree. TTY is a great buy now, I'm a shareholder now, and will buy lots at these prices.
PERTH (MarketWatch) -- Officials from Anglo-Australian mining giants BHP Billiton (BHP.AU) and Rio Tinto (RIO.AU) said Monday that they see no imminent slowdown in China's rampant demand for iron ore.
The rosy assessment comes as analysts tip another sharp iron ore price hike, with global miners struggling to ramp-up supplies of the steel-making ingredient.
BHP Billiton Iron Ore President Ian Ashby told a AusIMM Conference in Perth that his company is expanding aggressively in response to Chinese demand and efforts by Brazilian producers to "steal" market share from Australian exporters.
"China is going gangbusters and is likely to continue to go gangbusters," Ashby said. BHP is confident of expanding its Western Australian production to 300 million metric tons per year by the middle of the next decade, he said.

 

[noirua]

Hi Rimtalay, The rise to 95 cents now represents over a 50% recovery in Territory stock and I'm not certain that is likely to hold, with the present speculation over the CSM bid. I have now sold out and hope you all make a good deal more profit that I have. - Good Luck

 

[noirua]

Hi Rimtalay, The rise to 95 cents now represents over a 50% recovery in Territory stock and I'm not certain that is likely to hold, with the present speculation over the CSM bid. I have now sold out and hope you all make a good deal more profit that I have. - Good Luck

Starting to watch TTY again as they move down to 85 cents. Lots of speculation with the CSM bid still in progress and a dive back towards 60 cents, MAY, present an opportunity, imho.

 

[michael_selway]

Starting to watch TTY again as they move down to 85 cents. Lots of speculation with the CSM bid still in progress and a dive back towards 60 cents, MAY, present an opportunity, imho.

Jumped alot today thsi one?

Do you know why?

thx

MS

Territory Resources Limited (TTY, former Territory Iron Limited) is a minerals exploration and development company with the four main projects located in the Northern Territory. Companys immediate focus is on developing the Frances Creek project into production.

 

[ta2693]

I think the TTY bidding war for CSM is over and ASX comes to new high. TTY should be adjusted back to the price before participating CSM bidding.
I think it will go back to $1.40 to $1.50. But I think IOH may be better than TTY. similar iron deposit, but only 1/3 market cap.

 

[Rimtalay]

The TTY shipment to China has even made the news in the China Business News.
http://www.chinaeconomicreview.com/logistics/2007/10/03/iron-ore-shipment-to-china-from-darwin/

 

[Rimtalay]

Steel boom unbridled
Steel demand to completely outstrip global economic growth, with big knock-on benefits for numerous mining companies.

Author: Barry Sergeant
Posted: Monday , 08 Oct 2007

JOHANNESBURG -

The International Iron and Steel Institute (IISI), has upgraded its global forecasts for apparent steel consumption, for both 2007 and 2008, implying significant ongoing positive knock-on effects for mining companies producing the various inputs that go into the steel making process.

Apparent steel use is expected to increase from 1121 million tons last year to 1198 million tons in 2007, an increase of 6.8%, and one that significantly outpaces the rate of global economic growth. The IISI's latest projections for 2008 suggest a similar global growth rate to 2007, at 6.8%. The figures represent an upward percentage point revision of 0.9 for 2007 and 0.7 for 2008 over earlier forecasts, published in March.

While iron-ore diggers stand as the most visible beneficiaries of strong ongoing demand for steel, producers of other steel ingredients such as coking (metallurgical) coal, manganese and molybdenum stand to benefit; in the case of stainless steel, demand for chrome and nickel is set to remain strongly underpinned.

According to the IISI, the BRIC (Brazil , Russia , India and China ) countries, which accounted for about 41% of global steel demand in 2006, will again be leading the growth with an expected increase of 12.8% for 2007 and 11.1% for 2008. Overall, 77% of world growth in 2007 and 71% in 2008 will take place in BRIC.

China's apparent steel use is expected to grow by 11.4% in 2007 and 11.5% in 2008, accounting for 35% of the world total. For India, forecasts for apparent steel use point to an increase of 13.7% in 2007 and 11.8% in 2008.

The IISI spelled out its belief that recent financial market volatility would do little, if anything, to stem demand for steel. IISI executive committee chairman John Surma said in a statement that "although global economic risks have increased, the IISI forecast assumes that the recent credit market volatility will not move the US economy into recession".

The stock price for the world's leading iron ore digger, Brazil's CVRD (NYSE: RIO, US$33.56 a share), has more than tripled in the past 12 months; stock prices for the second and third dominant members of the club, Rio Tinto (RTP.L, £43.10), and BHP Billiton (BHP.L, £17.66), have also soared. Among junior iron ore stocks, Fortesque (FMG.AX, A$53.95) is currently trading at record levels.

Seen at the steel end of the story, the price of Arcelor Mittal (MT, US$78), the world's biggest steelmaker, has more than doubled in the past 12 months, and is currently trading up around record highs.

The analyst community anticipates that global iron ore production is set to increase from nearly 500m tons in 2000 to close on 1000m tons in 2010. By that stage, it is expected that CVRD will be producing some 32% of the world total, followed by Rio Tinto (25%) and BHP Billiton (15%). All other producers combined are expected to supply 28% by 2010, and include Kumba Iron Ore (JSE: KIO, R229), and by 2010, no doubt also emergent producers such as Fortesque.

 

[Icharus]

Quote from today's fin review
"Argonaut Securities has upped it's valuation on iron ore producer Territory Resources to $1.66. Territory, which yesterday launched a shareholder share purchase plan priced at $1.00 a share, made its maiden iron ore shipment last month following a successful start to mining at the Francis Creek mine in the Northern Territory. Argonaut says the company is undervalued compared with its peers in the iron ore sector. Analyst Troy Irwin expects Territory to be involved in the consolidation among resource stocks generally and iron ore plays in particular. A potential union with NT mineral sands miner Matilda Minerals is on the cards".

SPP allows for 5000 shares @ $1.00 could lead to some arbitrage given todays closing price of $1.19

cheers Icharus

 

[Rimtalay]

Iron ore’s hotter prospects
By Tim Treadgold



PORTFOLIO POINT: It helps to consider the logistics of iron ore mining when choosing between the juniors.


There’s no shortage of iron ore in the world, but there is a shortage of railways and ports.

It's that capacity shortage latecomers should consider if joining Australia’s great iron ore party, which has sent some stocks such as Fortescue Metals Group and Portman Mining into orbit while contributing greatly to powerful price increases in leading resource stocks such as BHP Billiton and Rio Tinto.

Separating a very crowded house into its component parts of good, bad and ugly is essential for successfully playing the hottest game in the resources sector. And it's not too late! However, if you are hunting for iron stocks with “big” potential the sector, those with latent appeal must be the “mid cap” miners – stocks such FerrAus, Iron Ore Holdings, BC Iron, Territory Iron and Centrex Metals.

To understand why railways and ports are so important, consider first the nature of iron ore: a relatively low-value “bulk” commodity that is traded in millions of tonnes, not kilograms or grams.

Then ask yourself three questions:

1: Has your preferred iron ore investment got any hope of ever getting a tonne of iron ore to a port, let alone taking the next critical step and get it on to a ship? In most cases the answer is no, so think again.

2: Is your preferred iron ore investment proposing to mine haematite, or some other high-grade material grading more than 55% iron (as is held by BHP and Rio) or a low-grade ore such as magnetite which grades around 33% iron (as makes up much of reserves held by “hot” junior Gindalbie Metals)? If it’s haematite, proceed. If it’s magnetite, take care because the essential upgrading before shipping adds to the cost and risk.

3: Will your preferred investment become a takeover target in the consolidation phase of the iron ore sector that has just started? If the answer is yes, proceed with caution for what might be a big payday.

In the last iron ore boom during the 1960s, when BHP Billiton and Rio Tinto carved out the best deposits for themselves in the Pilbara, about 1500 kilometres north of Perth, the iron ore business model had nothing whatever to do with finding or mining.

Iron ore was, and remains, a game called “transport economics” because the world, the planet on which we live, is more than one-third iron. The scientific measure for curious readers is that 34.6% of the world is iron, comfortably ahead of oxygen (29.5%) and silica (15.2%).

Most investors can forget those measurements, but should never forget that there is an awful lot of iron ore looking for a market, and high prices always trigger a development boom, almost certainly leading to over-development.

That’s why Fortescue’s charismatic boss, Andrew Forrest, continues to fight for access to the railway system of BHP Billiton, and why another iron ore billionaire, Hamersley heiress Gina Rinehart, has teamed up with Rio Tinto to develop her first mine at Hope Downs.

The Rinehart experience is sobering. Her father, the late Lang Hanc-ck, played a pivotal role in the early stages of the Australian iron ore industry. But, Hanc-ck never developed a mine of his own despite controlling some of the best deposits in the Pilbara.

In fact, Hanc-ck spent a lot of his time designing railway systems and ports, including one famous plan to use a nuclear bomb to create a deep harbour on the Pilbara coast. The “father” of the hydrogen bomb, Dr Edward Teller, was once a consultant to Hanc-ck on the harbour plan at Cape Keraudren.

This is an extreme example of how critically important railways and big ports are to iron ore, and why some of the smaller players in the game today using trucks and small ports to get their cargo to market will not survive any future downturn in the price of iron ore – which will come because of the first factor in the equation – there is no shortage of iron.

Company promoters are claiming that this time the game is different. They point to:

Surging Chinese demand for steel, and predictions of another big rise in the price of iron ore later this year.
The development of new iron ore provinces, such as the Mid West region of WA.
The advent of the magnetite era.
That remote iron ore deposits in central Africa will yield a quick return.

On those claims the touts are almost certainly wrong.

First, there is nothing new about mining for iron ore in the region known as “Mid West” in WA – the area where the iron ore boom is actually taking place. Mid West was the site of one of Australia’s first iron ore export adventures in 1964 when Western Mining Corporation (now part of BHP Billiton) shipped material mined at Tallering Peak to Japan via the port of Geraldton.

Today, there is a scramble for access to Mid West iron ore, including the takeover bid launched last week by Murchison Metals for Midwest Corporation.

More takeovers in the region will follow, largely because there are so many small players in the Mid West region and the adjoining, but remote reaches of the Yilgarn region where transport distances stretch out to 1000 kilometres and more.

Distance is the first critical point in this exercise in picking potential winners, plus the fact that there is no viable railway system in the Mid West. A track once ran all the way to Wiluna, but was pulled up decades ago. Also, there is no big export port on the coast, just the relatively small port of Geraldton which can handle only modest cargoes.

To fully capitalise on the Mid West iron ore deposits, which are sub-standard when compared with the Pilbara, a new railway is required, and a new port. For those assets, add about five years to your investment equation, and factor in a series of environmental, and other government approval, hurdles.

And what of the magnetite boom promised by companies such as Cape Lambert (CFE), Australasian (ARH), Grange (GRR) and Gindalbie (GBG)?

It is possible that WA will see a magnetite boom. But, that possibility is in the same category as the promised 1960s steel-mill boom on the west coast (failed), aluminium smelter boom (failed), petrochemical boom (failed), value-added iron ore processing boom such as BHP Billiton’s $3 billion hot briquetted iron plant at Port Hedland (failed), and a paper-pulp boom (failed).

Magnetite is an ore of iron best suited for short haul transport to a steel mill. It’s the stuff now being used by OneSteel at Whyalla in South Australia after it decided to export its reserves of haematite – the ore best suited to long-haul transport because of its higher grade.

To be exported, magnetite must have its waste material (such as silica) removed and lifted from its average of 33% to 65% or more. That requires a major investment, and that’s why BHP Billiton and Rio Tinto have not gone down the magnetite road, and why they are pouring billions of dollars into expanding their haematite mines, railways and ports.

There is also a new factor in the magnetite equation: the US sub-prime credit crisis, which is making it harder to raise big dollops of debt for resource projects.

As for companies with remote deposits in central Africa, these might be winners one day, but that day is a very long way off, and will require the building or ports and railways, and raising large amounts of debt in a world becoming more risk-averse.

SEE PART 2