Feature Article
Terramin Australia2: Angas all good, TZN great value!
Last traded: $1.30
Market cap: $152M
Sector: Materials
BUY / OUT PERFORM
Valuation: $ 5.09
Summary of previous report dated 02/10/08 What’s new? On 16 September 2008, Terramin Australia (TZN) announced a financial restructure for their Angas Mine in an effort to free up future cashflow and provide flexibility to develop the world class Tala Hamza deposit. TZN’s Angas mine has been successfully developed and it is now ramping up production. TZN is trucking product to Port Adelaide and has already shipped a 5,000t parcel of zinc concentrate. TZN has also been trucking lead concentrate to the Port Pirie smelter. Restructure details The total financing restructure package for Angas included:
closing out the lead-zinc hedge book, providing $13m in cash,
replacing the Angas’ project finance ($45m over 36 months) with a corporate facility on friendlier terms ($35m over 54 months),
an $11m capital raising comprising;
an institutional placement of 3.55m shares at $1.70 to raise $6m, the issue of $5m of unlisted 8% unsecured convertible notes at $2.21 with a term of five years.
Valuation and recommendation The TZN share price has fallen heavily over the last five months, from nearly $4.00 in May to $1.35 currently. CommSec’s current base case valuation is $5.09 per share. While there is a significant difference between the share price and our valuation, there has been nothing in TZN’s performance, or that of the zinc price which has fallen from US$2,280 to US$1,680 (or $2,425/t to $2,090 in AUD terms) that has not been fully anticipated by CommSec. In our view, there is huge upside in TZN not reflected in the TZN share price. CommSec retains its BUY / OUT PERFORM recommendation on TZN.
Trading halt in respect to a proposed capital raising. Given the share price rise over the past couple of days in a falling market one would suspect word was leaked early so those wanting to participate could jump on the register before the trading halt. As most companies are now making the ex date the day the company comes out of the trading halt meaning new shareholders cannot participate. Definitely one to watch for the future if it can get its Algerian project up and running and in production on budget and producing within forecast cash cost estimates.
Not necessarily, just seeing some speculative heat coming off the market with economic data out of the US not living up to bullish expectations. Most data is looking in the rear view mirror now, The US is on the improve but just not as smooth and quick as analysts first thought, hence the pause and pullback. If word did in fact leak of the capital raising, then strong buying before the trading halt would indicate to me that investors are more than happy to be entering into TZN at higher prices. I wonder what sought of discount will be offered? $0.75-$0.80 mark?
Trading halt in respect to a proposed capital raising. Given the share price rise over the past couple of days in a falling market one would suspect word was leaked early so those wanting to participate could jump on the register before the trading halt. As most companies are now making the ex date the day the company comes out of the trading halt meaning new shareholders cannot participate. Definitely one to watch for the future if it can get its Algerian project up and running and in production on budget and producing within forecast cash cost estimates.
looking for update on TZN.Price seemed to tank when a founder got out in May yet Algerian prospect seems to be getting bigger all the time.decision to mine expected soon and should be a formality.I don't know why no lift in price - is it sovereign risk? I noted a year ago that one major s'holder didn't take up an issue at 65c .Mixed signals seem to be the problem .
Any informed comment ?
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