ZFX - Zinifex Limited

[roland]

Firstly I like a challenge. Secondly ZFX holders can't expect to walk over AGM holders. It is they little boy standing up to the big bully. Thirdly ZFX holders post on the AGM thread. You dont have to read my posts. My aren't ZFX holders touchy.

I think anyone can post anything anywhere, and you are most welcome to post here nioka.

Your comments about being touchy doesn't have much to do about being a ZFX holder, it tends to be more of the type of reaction your negative and unproductive comments inspire.

Post away, it doesn't bother me

 

[Thrive]

Hi all,

Need some help - I'm sure I'm missing something fundamental.

ZFX market cap looks to be getting close to $4.5b, ZFX appear to have $2b+ in cash, still hold 7.8% in Nyrstar approx 185m AUD?

ZFX half yearly earnings (ordinary activity) looks to be somewhere around $260m.

So I'm looking at (as a shareholder) a company earning around $520m pa with a nett capital exposure of $2.3b - sounds good to me.

Whilst well down on prevous earnings the SP seems to have well and truely accounted for the downgrade including any zinc/mine life outlook.

Therefore as a shareholder I would like to see similar value in AGM. All being equal AGM needs to deliver $175m pa in earnings for the $800m investment - not immedaitely but at some point.

Maybe this can be achieved, however I look at SMY now producing nearly 14,000 t Ni pa based on last quarter with a market capital of $750 - $800m and earnings of around $100m pa based on last half and ask the question is their better value for ZFX shareholders elsewhere.

I have complete confidence in ZFX management and believe we will pay for AGM no more than it's worth.

As I say I'm sure I've missed something so be nice.

 

[treefrog]

With today's drop in share price for ZFX of almost another 5% for Zinifex to below $9.50, that dividend return is looking even more attractive.
Any thoughts on where the next level of support would be for Zinifex, or whether we'll see some buying on the run up to the Dividend record date?

It still surprises me that a company which is producing, has cashflow to return such a high dividend to shareholders should have more than 60% of its value wiped in less than 6 months (even with the declining Zinc price). Possibly oversold? Perhaps when the AGM business is resolved one way or the other, confidence will return to the stock?

Cheers,
Kruegs

Hi K
two key things the market doesn't like about ZFX
1) mainly a zinker and world zink price has more downside this year
2) it is running out of ore and cannot grow without more to replace mainly the massive century mine
3) growth prospects atm are poor (comparatively)

the following paints a less than rosey pic for zfx - there is no way they will be able to keep paying previous divvies

FORECAST EARNINGS TREND
Have the analysts been upgrading or downgrading their forecasts over the last 3 months?

 

[shinobi346]

Saw this on the AGM board and thought it would be relevant for discussion here as well.

A rougue employee at AGM lost $8M trading stock.

http://www.afr.com/home/viewer.aspx...ce=/_xmlfeeds/industry/metals_mining/feed.xml


Bad news for ZFX who is now bidding for a company that has 8M less in assets.

But good news for AGM holders as their company is now worth 8M less in value but ZFX is still offering the same amount for it.

 

[roland]

Sorry to say, but I am having a little trouble with NOT feeling that the AGM board are beginning to become an emabarrassment.

Here is the latest from the Chairman:

Takeovers Panel Application
Allegiance Mining NL (“Allegiance”) advises shareholders that it has made an application to the
Takeovers Panel in relation to the off-market unsolicited takeover bid for Allegiance announced
by a wholly owned subsidiary of Zinifex Limited (“Zinifex”) on 17 December 2007. Allegiance
seeks a declaration of unacceptable circumstances and final orders.
The application relates to events leading up to the extension of Zinifex's offer at 6.59pm on
Friday 8 February. The offer had been due to close at 7pm. Allegiance is concerned that a quote
in the press attributed to a Zinifex executive, and other conduct of Zinifex, misled at least 3
shareholders. As a result, those shareholders accepted the offer at 7pm believing that it had not
been, and would not be, extended. The shareholders accepted for a combined holding of
approximately 40 million Allegiance ordinary shares.
On the morning of 8 February, Allegiance publicly expressed its concern that the market was not
informed about Zinifex's intentions and invited Zinifex to inform the market, but Zinifex made no
public statement until approximately 7.30pm when Zinifex advised the market that its offer had
been extended. This was of course some 30 minutes after the offer would have closed if it had
not been extended.
Zinifex’s offer is now scheduled to close at 7pm on 22 February 2008.
Allegiance has sought orders that the relevant shareholders be permitted to withdraw their
acceptances and that Zinifex not process the relevant acceptances.
The Allegiance Directors reiterate their unanimous recommendation to shareholders that they
REJECT Zinifex’s unsolicited, opportunistic and inadequate offer and to IGNORE all
correspondence received from Zinifex.
Yours sincerely
Tony Howland-Rose
MSc, DIC, FGS, FIMMM, FAusIMM, MAICD, FAIG, CEng
Chairman

 

[3MT]

Just abit of ameteurish gibbering by AGM management. Nothing unusual there.

What I want to know is why a mining company would punt on penny stocks and compare themselves to SocGen out of amusement (not funny losing 8M). Absolute professionalism there.

Looks to me this amateur lot will run the company into the ground (pun intended)

What they need is some books by Graham Benjamin or Warren Buffet and selective reading on asf not hot copper. And of course a new business plan to go with it.

As for ZFX, I'm not coming back onboard until they start buying something of substance.

 

[roland]

Zinifex are NOT sitting on their butts!

ASX/MEDIA Release
13th February 2008
TRAFFORD AND ZINIFEX SIGN $8.5 MILLION
LEAD/ZINC/SILVER FARM IN AGREEMENT AT
WILCHERRY HILL
• Trafford to Manage First $4.5 Million Expenditure
• Exploration Programme to be Accelerated
• Historical results over +2km strike at Stuart include up to 4m @
15.2%Pb, 3m @ 2.8% Pb and 7m @ 5% combined Pb / Zn. At
Telephone Dam a best intersection of 6m @ 15.3% combined Pb / Zn
has been recorded
• Drill Ready targets
The Directors of Trafford Resources Limited (ASX:TRF) wish to advise that the Company
has signed a Farm In Agreement with Zinifex Australia Limited (Zinifex), a wholly owned
subsidiary of Zinifex Limited (ASX:ZFX) under which Zinifex may spend $8.5 Million to
explore for and develop Lead / Zinc / Silver (Pb/Zn/Ag) mineralisation within Trafford’s
Wilcherry Hill Project in South Australia’s Gawler Craton.
As announced by Trafford last year, Zinifex can earn up to a 75% interest in all
lead/zinc/silver discoveries within the project area over five years by the expenditure, in three
stages, of $8.5 Million. The major conditions are:
During phase 1, Zinifex must spend $500,000 within the first year of signing the Farm
in agreement before equity earning can commence.
Zinifex must then spend a further $4.0 Million over the next 2 year period to earn a
51% position in all Pb / Zn / Ag projects.
Zinifex must then spend a further $4 Million over the next 1 year period to earn an
additional 24%.
Zinifex may withdraw at any time after the phase 1 expenditure has been completed.
Trafford, which will be the manager and administrator of the joint venture during the first
three years and $4.5 million of expenditure, plans to commence the exploration programme
as soon as drill rigs and geophysical crews can be sourced
Trafford currently has a number of Pb / Zn / Ag prospects identified within the Wilcherry Hill
Project area of which two are at an advanced stage:
• Telephone Dam – best intersection of 6m @ 8.9% Pb & 6.4% Zn from 279m
• Stuart – 4m @ 15.2% Pb from 24m bottom of hole (including 1m @ 21.3% Pb)
during earlier reconnaissance drilling.

 

[YELNATS]

Allegiance publicly expressed its concern that the market was not informed about Zinifex's intentions and invited Zinifex to inform the market, but Zinifex made no public statement until approximately 7.30pm when Zinifex advised the market that its offer had been extended.

The Allegiance Directors reiterate their unanimous recommendation to shareholders that they REJECT Zinifex’s unsolicited, opportunistic and inadequate offer and to IGNORE all correspondence received from Zinifex.
Yours sincerely
Tony Howland-Rose
MSc, DIC, FGS, FIMMM, FAusIMM, MAICD, FAIG, CEng
Chairman

Seems that these two paragraphs are in contradicion.

On the one hand AGM complains that ZFX is not informing the market adequately, yet on the other hand when they do, they advise their shareholders to ignore averything ZFX says.

 

[roland]

Zinifex's turn:

Zinifex seeks full disclosure of Allegiance losses
Zinifex Australia Limited (“Zinifex”) (ASX:ZFX) has sought assurances from the
directors of Allegiance Mining NL (“Allegiance”) (ASX:AGM) that leveraged
speculative share trading by the company has ceased and all losses have been
disclosed to the ASX, as per the attached letter.
Zinifex CEO Mr Andrew Michelmore said Zinifex’s interest in the reported
Allegiance share trading losses was justified given that Zinifex had made an
unconditional Offer for all Allegiance shares.
“Zinifex is legitimately concerned to know if there are additional losses, real or
potential, beyond the $7.9 million dollars already reported to the ASX”, Mr
Michelmore said.
“Allegiance directors are yet to confirm that the company is no longer exposed
to speculative share trading, leveraged or not.
“We believe all Allegiance shareholders should be advised of the extent of the
share trading positions that Allegiance have taken, whether any of these
positions remain in place, who exactly authorised this highly speculative trading,
how exactly these positions are financed and what relationship the company
and directors have to the companies invested in.
“Zinifex is seeking full disclosure of the recently revealed share trading activities
as it may impact the future of its Offer for Allegiance.
“Zinifex is disappointed that Allegiance’s share trading activities were not
disclosed in the Target’s Statement and that disclosure thus far has been
limited to a one line entry in its Quarterly Report.
“In the event that Allegiance is facing additional potential losses in the current
volatile market or fails to provide adequate disclosure, Zinifex reserves the right
to allow its Offer for Allegiance shares to lapse on the scheduled closing date of
Friday 22 February 2008.
“Allegiance is not the only game in town. We have other opportunities we are
assessin”, Mr Michelmore said.

 

[YELNATS]

Zinifex's turn:

“Allegiance is not the only game in town. We have other opportunities we are
assessing”, Mr Michelmore said.

Ah, the parting barb, the final twist of the knife, not a lot of love lost between these adversaries.:

 

[roland]

AGM's turn:

13 FEBRUARY 2008
RESPONSE TO ZINIFEX ASX RELEASE
Allegiance made full and immediate disclosure of trading losses
Zinifex Australia Limited ('Zinifex') today made a release about Allegiance Mining NL's
(Allegiance's) recent share trading losses. Allegiance has for several years conducted and made full
disclosure about limited investment trading activities.
Most of the recently reported share trading losses were identified after the date of Allegiance's
Target's Statement, so could not have been disclosed in it as Zinifex suggests.
Allegiance made full disclosure of the losses on 31 January 2008, as soon as the amount of the
losses was determined, and over a week before this issue was mentioned in the press. The
disclosure comprised detailed information over nine lines of text, not one line as Zinifex said today.
Allegiance considers that the losses reported are the maximum amount claimed and may be less
but not more.
Allegiance terminated its investment activity immediately after the January losses were identified.
Allegiance considers that Zinifex is using inaccurate statements about the losses and their
disclosures as a diversionary tactic in the context of its opportunistic and inadequate $1.00 per
share takeover bid for Allegiance. Allegiance notes the lack of traction in acceptances of Zinifex's
offer which is about to enter its seventh week.
Notwithstanding this Allegiance remains prepared to discuss with Zinifex improvements to the terms
of its bid.

 

[roland]

Takeover Panel Halts the Processing of Lion Selection and others:

Corporations Act
Section 657E
Interim Orders
In the matter of Allegiance Mining NL
1. Allegiance Mining NL (Allegiance) made an application to the Takeovers Panel
dated 11 February 2008 in relation to the affairs of Allegiance.
2. Zinifex Australia Limited (Zinifex) has made an off-market takeover bid for all of
the shares of Allegiance (Offer).
Under section 657E of the Corporations Act 2001 (Cth), the Panel ORDERS:
1. Zinifex not take any further steps to process the acceptances of Lion Selection
Group Limited, Andrew Lambert and Caroline Lee and the Andrew Lambert
and Caroline Lee Superannuation Fund received by Computershare Investor
Services Limited on 8 February 2008 (Acceptances), or dispose of or otherwise
deal with any of the shares the subject of the Acceptances.
2. These orders are to have effect until the earlier of:
(i) the determination of the proceeding
(ii) 2 months after the date of this order.
Dated 14 February 2008
Alan Shaw
Counsel
with authority of John Fast
President of the Sitting Panel



One wonders if the shareholders involved are happy about their transaction being put on hold ????

 

[rub92me]

Reading all this tit for tat between AGM and ZFX, I'd think it is perhaps better for ZFX to move on and look at other opportunities. If they do, how do they get rid of the shares they already bought though? If they dump them all on market, they're sure to make a loss. Bit of a catch 22 here.

 

[roland]

Reading all this tit for tat between AGM and ZFX, I'd think it is perhaps better for ZFX to move on and look at other opportunities. If they do, how do they get rid of the shares they already bought though? If they dump them all on market, they're sure to make a loss. Bit of a catch 22 here.

Yep - it's getting tiresome. (I think I may have even said that before). At least if the offer falls through Zinifex maybe able to offload at a profit.

 

[ozrob]

Reading all this tit for tat between AGM and ZFX, I'd think it is perhaps better for ZFX to move on and look at other opportunities. If they do, how do they get rid of the shares they already bought though? If they dump them all on market, they're sure to make a loss. Bit of a catch 22 here.

I totally agree, ZFX should let Lion Selection Group Limited keep its shares and walk away from AGM. They can then sit back and watch the price drop to 50 cents.

 

[roland]

I wonder what else is up the sleaves of the directors since wasting away $8mil - maybe an accidental fire? Would help reduce the value of the company - maybe enough for Zinifex to withdraw.

 

[roland]

What happened to the 400mil shares sitting on the buyers list of AGM, I thought that was Zinifex???

Notice also this morning Barclays have increased their stake in Zinifex - from 7.91% to 9.15% average buy at $10.50. Obviously they see ZFX as being a good buy even at prices above where we are now.

 

[3MT]

Maybe barclays are just switching out of financials and into the resources? they gotta park their money somewhere

Vague facts are Zinifex have good management (at least provened) and good cash reserves (I am assuming that they have not invested their money in centro or mfs). Who knows these days. Everything seems opaque nowadays (just using the trendy word of the week). But extreme cynicism aside, I am keen to find an entry point into this company because of those 2 vague facts.

But first they must walk away from AGM (no, this is not a threat to Michelmore as I'm sure he doesn't venture near these forums). Even if the acquisition succeeds, I feel the level of animosity between the 2 now will make it impractical for any "handover" to happen smoothly - when you spend that much money you need these things to go smoothly.

 

[roland]

It's seems odd that Barclays are buying, since I have checked my managed funds with Colonial and they have just ditched Zinifex - quoting worries of sustainable profits.

It's possible they have 2 x different takes - i.e. Colonial looking for long term dividend returns (Zinifex could be on shakey ground here), Barclays looking for capital gain (hard to argue Zinifex's SP should be higher than what it is).

 

[happyjack]

It's seems odd that Barclays are buying, since I have checked my managed funds with Colonial and they have just ditched Zinifex - quoting worries of sustainable profits.

Barclays have 10% they can either take the dividend and then quietly sell off as the share price recovers or they can keep on accumulating up to 19 % and then say to bhp or rio Hey Guys ya wonna by a Zinker ? sort of TO by stealth the exact opposite of how ZFX hit AGM.

By law the large funds, here and in England have to be so much cash, so much bonds and so much shares. Taking it that Barclays have just sold down their US and pommie port folio's they have to put Huge amounts of cash somewhere, So who has got one of the strongest currencies and the highest interest rates in the world? along of course with a pommy style legal system and to make it perfect we speak english, sort of (the lower case "e" on english was deliberate) basically they have done their dough in the northern hemisphere so they scuttled down here to heal up and grow again.

Of course if one was a complete Cynic one could say that this tiny investment would give the directors an excuse to take a tax deductible trip to the colony to see how the investment is going, probably the same time that the cricket is on

Happyjack