TTY - Territory Resources

[Who Dares Wins]

I just got a call from the Territory office regarding the Share Purchase Plan. It has now been opened to New Zealanders due to alot of interest from over here. The share offer will be mailed tonite from New Zealand which should cut down on the delivery time because the offer still closes on 19th November as it originally was when the offer was only open to Australain holders.

 

[noirua]

I just got a call from the Territory office regarding the Share Purchase Plan. It has now been opened to New Zealanders due to alot of interest from over here. The share offer will be mailed tonite from New Zealand which should cut down on the delivery time because the offer still closes on 19th November as it originally was when the offer was only open to Australain holders.

Hi, Many years ago there was talk of the Aussie and NZ exchanges joining together as one. Longtime arriving. This problem, with rights issues, placings and purchase plans, for those not domiciled in Australia, seems to have arrived in 2002.

TTY say its a foreign stockmarket problem, correct for the USA only. It is really a matter of cost and is an Aussie stock exchange problem. Something to do with foreign nominees.

 

[noirua]

Territory appear to be getting back on track and not that far from the price before the CSM debacle. Hopes for continuing discoveries of iron ore, after recent good news, has put the stock in a good position to move on.

 

[noirua]

Now on an upward trend that looks increasingly promising as project upgrades of iron ore continue. An interesting company with its 3 projects looking good for the future and they have come into the iron ore sector at the height of a boom.

 

[noirua]

Territory continue on up after the announcement that they'd obtained 20.3 million shares in Olympia Resources.
TTY trade at $1.70 today.

 

[Rimtalay]

Rio could trample iron minors
By Tim Treadgold



PORTFOLIO POINT: It’s plan to treble output of haematite, the higher-quality iron ore, would wreck the prospects of small magnetite producers.


When elephants fight smaller animals run for cover. It’s the same in the corporate world, which an entire sub-sector of the iron ore business is about to discover as it becomes potential “collateral damage” in the battle between Rio Tinto and BHP Billiton.

Yes, the BHP move on Rio is good for iron ore stocks but only haematite iron stocks. For magnetite iron stocks, it's very bad news. And the magnetite iron sector houses some of the best known punters’ favourites in the mining industry. There's Gindalbie Metals and takeover target Midwest Corporation, along with Atlas Iron, Cape Lambert Iron, Grange Resources, Australian Resources and Goldstream Mining. If you have bought – or are about to buy into – any of these stocks think, again. Here's why:

Magnetite miners were already in trouble but this week's Rio Tinto defence has loaded the odds against them. Rio has revealed plans for a spectacular increase in the production of haematite, possibly trebling output from about 200 million tonnes a year to more than 600 million tonnes, with 420 million tonnes coming from the Pilbara region of WA.

That expansion, which represents a dramatic acceleration of mine development plans, is designed to give Rio Tinto a bigger slice of the world iron ore market than it already has. However, it also means much less room for new, high-cost, miners – and the newest and highest cost are the magnetite hopefuls.

Put simply, magnetite is an inferior ore to haematite – and it's haematite that's preferred by the world’s major iron ore exporters, including BHP Billiton, Rio Tinto and the big Brazilian, Companhia do Vale Rio Doce (CVRD) – and, from next year, Fortescue Minerals. It's also the iron ore preferred by all the miners in my October feature Iron ore’s hotter prospects.

Why are the magnetite miners heading downhill?

The ore itself contains much less iron. Typically, haematite grades 55–60% iron, while magnetite is 30–35%.
Processing magnetite involves physical separation of the iron and the waste rock, and then intense heating, before conversion to a semi-finished product such as high-value pellets.
While the physical separation process is easy (as the name implies magnetite is strongly magnetic), the heating requires very large amounts of energy – a luxury at a time when the oil price is approaching $US100 a barrel, and coal prices are rising in sympathy.
The capital cost of magnetite processing is also high. None of the planned projects in Australia come in at less than $1 billion, and raising the debt component for all resource projects has become a lot harder as banks retreat under the sub-prime credit onslaught.

In a resources boom, when supplies are tight and prices high, mining and processing magnetite might make sense although very little of the material is transported over long distances without expensive upgrading.

Of course, those mining magnetite iron won't agree. True believers in magnetite argue that it is the iron ore of the future, that Chinese customers are comfortable working with it, and that Australia is endowed with vast deposits of the material.

They’re right on all three claims. The Chinese do want it, the outback of WA is littered with trillions of tonnes of the stuff, and it is an ore of the future.

But, those same Chinese steel mills that say they will buy magnetite, and are willing to invest in Australian projects, will soon be offered increased supplies of haematite thanks to existing expansion planned by CVRD and BHP Billiton, and even more now that Rio Tinto is running scared from BHP Billiton’s marriage overtures and seeks to impress its shareholders by expanding faster than anyone else.



The deciding factor for customers will be price and reliability of supply. On both of those measures haematite, whether from a mega-miner or one of the smaller producers, will be the winner.

What this means for stockmarket values is:

Companies offering a pure magnetite investment proposition, such as Grange, Cape Lambert, and Australasian will struggle. They might prosper in the future but it could be a very, very, long wait for a dividend cheque. Best advice: sell.
Companies that offer a mixed haematite/magnetite investment proposition, such as Gindalbie, Midwest, and Atlas, are almost certainly over-priced. They will make money from selling haematite, but they will struggle to raise the capital or secure energy at a reasonable price to make the jump to magnetite production. Best advice: sell.
Companies that are pure haematite propositions, even if small, have the appeal of production simplicity, and customer preference in their favour. Stocks such as BC Iron, Yilgarn Mining, and FerrAus are following the KISS principle of “keep it simple, stupid”. Best advice on KISS stocks: buy.

The debate over magnetite and haematite is broadly similar to the historic debate of replacing high-grade “sulphide” nickel ore with low-grade “laterite” ore, the key being that there is much more laterite ore in the world than scarce deposits of sulphide material.

But, that comparison fails two tests.

There is no shortage, yet, of haematite as Rio Tinto is demonstrating by casually rolling out a plan to triple output.
Processing laterite ore has been a disaster for everyone who has tried it. Anaconda Nickel (now Minara Resources) was almost destroyed by design failures. BHP Billiton has been hit by a doubling in cost and time at its Ravensthorpe laterite nickel mine in WA.

Sad as it might be, the simple truth about mineral processing is that Australia is not very good at it. High internal costs, such as long transport distances, expensive labor (and potentially getting more expensive), and high energy costs mean that more processing plans fail than succeed.

In WA, an epicentre of the current global commodity boom, and a centre of past booms, there is an appalling record of processing failure with the common thread being high energy costs and distance from markets.



Today’s “magnetite promotion boom” has the hallmarks of booms (and busts) past.

Readers with long memories will recall the time when WA was going to be home to a number of steel mills. In fact, the requirement to build a steel mill is contained in the original iron ore access agreements signed with the WA Government in the 1960s by the corporate ancestors to the modern BHP Billiton and Rio Tinto.

There are no steel mills in WA. But there are: a failed blast furnace at Kwinana; two failed iron pellet-making plants; and a failed hot-briquetted iron plant (that almost crippled the John Prescott-era BHP). There might be a successful HIsmelt plant.

It’s the same with plans for petrochemical plants along the west coast (Alan Bond and the late Laurie Connell promised one of those); numerous chlor-alkali plants converting salt and natural gas into caustic soda and plastics feedstock (none yet); paper pulp plants; and aluminium smelters – to name the best, and least successful.

Magnetite, despite its undoubted potential, is just the latest boom-time commodity, and it faces the same hurdles as all previous west coast boom-time commodities:

Isolation and long transport distances.
High energy costs.
Poor, or non-existent, infrastructure.
Dithering government.

Chinese demand for iron ore lies behind the rush to develop magnetite processing plants, and while one or two might be built they will be the high-cost source of iron and will deliver investment returns (if any) far below the simpler haematite mines of BHP Billiton, Rio Tinto and some of the smaller miners.

For the final test of this investment comparison between magnetite and haematite consider the level of involvement by BHP Billiton, Rio Tinto and CVRD in magnetite – zero. What else do you need to know?

 

[noirua]

An excellent point on the magnetite versus haematite front. Many miners in S.A. have very large deposits of magnetite and it sounds impressive when they say they have 1 billion tonnes. Often they find pods of iron ore at high grade but often as little as 2 or 3 million tonnes or if they are lucky, up to 20 million tonnes.
Hawks Nest in S.A. has 800 million tonnes of low grade magnetite and that's been sitting there, quite close to One Steel's plant at Whyalla, with no interest shown.
Lots of danger in these explorer come producers as the article posted by rimtalay so glaringly points out.

 

[jozepp]

Hawks Nest and WPG, this report from The Age, December 3rd 2007

http://business.theage.com.au/weste...in-on-the-steelmaking-boom/20071202-1eee.html

IT'S been a big year for South Australian iron ore group Western Plains Resources.

And it could be about to get a lot bigger if the street talk is right that Michael Kiernan's acquisitive Northern Territory iron ore producer, Territory Resources, has snuck on to Western Plain's share registry in the past couple of weeks with an undisclosed holding of 4.6%.

 

[chewy]

Territory adds mineral sands to the mix

Wednesday December 19, 2007, 1:52 pm


Iron ore producer Territory Resources Ltd may pursue a merger with mineral sands miners Matilda Minerals Ltd and Olympia Resources Ltd in the next 12 months.

Territory chairman Michael Kiernan, who vowed at the firm's annual general meeting last month to pursue fresh acquisition opportunities, told AAP that his strategy was to ultimately build up Territory to produce about 250,000 tonnes of mineral sands concentrate.

The company, which intends building itself into a diversified carbon steel material producer through mergers or acquisitions, on Wednesday lifted its stake in Tiwi Islands-focused Matilda Minerals from 8.6 per cent to 13.66 per cent.

Territory acquired a 20 per cent interest in Indonesia-focused Olympia Resources last month.

"It's not going to be a full blown takeover or anything like that ... slowly, slowly creepy, creepy catchy monkey," Mr Kiernan, a non-executive director of Matilda, said.

"In a modest way, we want to build up a mineral sands business within Territory out of cashflow.

"I'll build Territory up to being a 15 million tonne iron ore company but, as a second string, it will be a mineral sands business, primarily in Western Australia."

Despite not being the flavour of the month, Mr Kiernan is bullish on mineral sands due to his firm belief in the future strength of China.

"Zircon is going to be in very strong demand for their tiles, glazing etcetera," he explained.

Mr Kiernan - who sits on at least half a dozen boards including India Resources Ltd, Windimurra Vanadium (formerly Precious Metals Australia) and Peel Exploration Ltd - says his main two vehicles will be Territory and Monarch Gold Mining Company Ltd, which operates the Davyhurst gold mine in WA.

"Those two business will stand alone because gold requires a different psyche to a bulk materials firm, which Territory will be.

"Of the others, one way or another, they'll come under the umbrella of Territory ... possibly including India.

"It depends on the strength of India, which is going gangbusters at the moment and may have a serious strong life of its own."

Monarch listed on the Dubai International Financial Exchange (DIFX) in June and Mr Kiernan intends to list both India Resources and Territory in Dubai some time next year.

He also plans to list Monarch on the Toronto Stock Exchange.

"Dubai is going to be a two or three year exercise to get traction," he said.

"I can see that DIFX three to five years down the road is going to be more significant that London's Alternative Investment Market and that's a big call but I just know the psyche of the ruling family and whole Middle East area."

Mr Kiernan did not comment on Territory's plans for multi-commodity explorer Northern Mining Ltd, in which it acquired a 15.7 per cent stake last month.

Territory backed out of the takeover battle for fellow diversified mining company Consolidated Minerals Ltd in September.

Shares in Territory were 4.5 cents higher to $1.315 at 1312 AEDT Wednesday while Matilda's shares were five cents, or 10.87 per cent stronger to 51 cents

 

[chewy]

Ann out (wont let me copy and paste):

Basically ramping up production and shipping - 2mtpa by june and 3mtpa by end of year. Sounds good. Able to take advantage of the Iron Ore prices now.

 

[Rimtalay]

$US100/ ton for TTY iron ore



Territory May Turn the “Tyranny of Distance” to its Advantage
January 29, 2008

By Our Man in Oz



Separating sheep from goats is normally a job for farmer Brown. In Western Australia last week a couple of mining company bosses indulged in a bit of verbal culling. From the top (and bottom) end of the iron ore industry came warnings that the time is fast approaching when the 80 small iron ore “sheep” promising to develop mines will be cut back to a more manageable flock. From the big end of town came rumblings from Rio Tinto iron ore boss, Sam Walsh, who warned that many of his small rivals would not deliver on their promises. From the small end came a surprisingly similar observation from Territory Resources boss, Michael Kiernan, who has successfully started exporting iron ore, but reckons a lot of the hopefuls he’s looked at will never ship a tonne of the stuff – and some might even become tasty takeover targets for him.
The common view of the two men, who are approaching the industry from opposing directions, should serve as a warning shot across the bows of investors thinking about a spot of fresh speculating in the boom which has gripped the iron ore sector. To continue the farming analogy, the sheep might safely graze as China demands ever increasing tonnes of raw materials for its steel industry - but the goats are heading for the knacker’s yard.

Walsh, who has a rod of steel running through an apparently soft exterior, delivered his cautionary sermon to a number of reporters after escorting them on a tour of Rio Tinto’s iron ore operations in the remote Pilbara region of WA. The initial reaction of Walsh’s audience was reminiscent of an old and familiar bon-mot from the Profumo scandal: “Well, he would say that, wouldn’t he?” The feeling was that Walsh was “talking his book” as the man charged with running Rio Tinto’s most important division during the company’s defence against a proposed takeover bid from arch-rival, BHP Billiton. “A lot of people are making bold statements,” Walsh was quoted as saying about the junior iron ore stocks, “what guarantees are there that these companies will bring on these deposits themselves?” Kiernan’s reaction was that Walsh was being “a little naughty” in rubbishing the small players in the iron ore game, but then admitted that: “he’s probably right”.

The common thread linking Walsh and Kiernan is Australia’s great nemesis: distance. Books have been written about this subject, including a history classic by Professor Geoffrey Blainey: “The Tyranny of Distance. How Distance Shaped Australia’s History”.

What Blainey saw in 1966 remains as true today. Nothing is “just down the road” in Oz. It’s all a bloody long way off. For miners wanting to haul a relatively low-value bulk commodity such as iron ore (or coal) the challenge is not finding a deposit, it is finding a railway and port to get it to the customer.

In Rio Tinto’s case that is not such a problem because it has been building and operating iron ore railways in the Pilbara since two years before Blainey wrote his book. For new and wannabe iron ore miners it’s a case of hitching a ride off someone else’s transport infrastructure (not easy), build your own (too expensive), hope that a government builds it for you (dream on), or discover a resource close to a rail line and port. The latter is what Kiernan did, illustrating that he has a tighter grip on how to run a successful mining business in Oz that most of his newcomer rivals.

The key to Territory, which is still a truly modest iron ore producer with an even more modest resource base, is the combination of the freshly laid Adelaide to Darwin rail line that runs past the front door of its Frances Creek mine, and the port of Darwin which is super-keen to boost tonnage. “The Northern Territory government has been fantastic,” Kiernan told Minesite in his Perth office. “It has done everything possible to encourage us.” That’s all added up to the shipment of 350,000 tonnes of ore in the half-year to December, and a target of lifting annualised output to 2.5 million tonnes a year by the end of 2008, and then up to three million tonnes a year. Given that Territory is getting roughly US$100 a tonne in the booming spot market it’s easy to see why Kiernan is cracking the whip over his crew to squeeze maximum production from the mine.

“We’re making a pretty good margin right now with costs running at A$60 a tonne,” he said. “The aim is to get that down to around A$40 a tonne because it’s likely that the price will fall over the next few years.” Kiernan’s other aim is to boost his resource base from the current reserve of 4.8 million tonnes at 61.3 per cent iron, supported by an additional 9.7 million tonnes at 60.7 per cent in the resource category. A busy drilling programme is underway, prompting Minesite’s Man in Oz to comment that he had had this conversation with Kiernan 10 years earlier when he inherited control of the unloved Woodie Woodie manganese mine which at that stage needed someone to get the transport economics sorted and the reserve position boosted. “Spot on,” he said. “We’ve both been here before.”

Most small miners in Australia have not been where Kiernan, or Minesite’s Man in Oz, have been. Both have seen how markets fluctuate and how Blainey’s tyranny of distance is forgotten when a boom inflames optimism. As reality dawns, consolidation takes place and while Walsh can only rubbish the juniors yapping at his heels, Kiernan smells opportunity. “Quite clearly, the small companies which don’t have access to rail or port have a seriously hard road to travel,” he said. “They will have trouble getting up, and it’s just been made tougher by the sub-prime credit crisis.”

One man’s fish is another man’s “poisson”, as someone once said, and in Kiernan’s case cash flow from Frances Creek, plus strong financial backing from Richard Elman’s Noble Group, means that Kiernan might soon be on the takeover trail seeking to replicate his “train and port” iron ore formula. If that bit of speculation on the part of Minesite’s Man in Oz is correct then the names most likely to be on Kiernan’s desk are Atlas Iron and BC Iron. Atlas because it is “just up the trackâ from Port Hedland, and BC because it is about 30 kilometres from the new Fortescue Metals rail line. Whether Kiernan chooses to move on Atlas or BC is an interesting debating point, as is the fact that BC is chaired by his brother, Tony. Food for thought!

 

[agro]

yes

i have been watching TTY since their first shipment last year when they were under $1.

one substantial holder has increased their stake by 1% - this goes to show how valuable iron ore plays like this one is becomming

i think they will prove the goods in the long term

 

[porkpie324]

Good post 'Rimtalay' that seems to be MK's style re Monarch gold, buy up the other close by mines and consolidate as occured with CSM,porkpie

 

[Rimtalay]

MK did a presentation at the Sydney Mining Club on the 8th Feb 08
Link to presentation
http://sydneyminingclub.org/presentations/2008/february/territory%20resources/player.html

 

[Who Dares Wins]

Are there any TTY holders out there who are not happy with the companys propping up of MON?

I sold out of MON several months ago before the share consolidation and avoided what would have turned into a big loss, only to recently find myself effectively a holder of them again through TTY!

I've recently heard this manoeuvre describe by others as 'dodgy' which I wouldnt go as far to say myself because it implies that its illegal, which it isnt.
But what ever it is I'm certainly not happy with it.

I'm sure Keirnan thinks he knows what he's doing but considering the purchase of the MON holding is becoming controversial you'd think he'd send out a letter to TTY holders explaining himself.

 

[nioka]

Are there any TTY holders out there who are not happy with the companys propping up of MON?

I sold out of MON several months ago before the share consolidation and avoided what would have turned into a big loss, only to recently find myself effectively a holder of them again through TTY!

I've recently heard this manoeuvre describe by others as 'dodgy' which I wouldnt go as far to say myself because it implies that its illegal, which it isnt.
But what ever it is I'm certainly not happy with it.

I'm sure Keirnan thinks he knows what he's doing but considering the purchase of the MON holding is becoming controversial you'd think he'd send out a letter to TTY holders explaining himself.

I'm not real happy, especially when Michael Kiernan is the head man in both companies. I would hope the other directors of TTY are watching and approving. TTY has bought into MON at a good price and at the bottom of the market. Didn't MON raise new capital at 50c recently. TheTTY purchase has been for less than that.
TTY must grow and although I would have expected it to invest in more iron ore I am not too worried about gold. I'm a little in the red with TTY but I will hold.

 

[urgalzmine]

TRADING HALT!!


Have a look at today announcements regarding a takeover proposal.

Since the sp is now under $1 and the reserves for TTY is only 3 years. I was hoping they would announce some MAJOR increase in their reserves. Anyone know who will be interested in this stock for a takeover and what it may mean for investors?

cheers

 

[Who Dares Wins]

I think everyone was hoping it would be about the resource upgrade - isn't that due shortly?

Couldn't the announcement be about TTY taking someone over and not the other way round? Its more likely I feel given Keirnans approach and low share prices at the moment.

WDW

 

[Real1ty]

I think you will find the T/O will be TTY taking over OLY.

Both are in a trading halt and TTY has a significant stake in OLY

 

[nioka]

I think you will find the T/O will be TTY taking over OLY.

Both are in a trading halt and TTY has a significant stake in OLY

The market certainly didn't like it and punished the share price for the premium it is paying for OLY. I actually like the move. OLY just going into production is due for a bounce. DYOR