ZFX - Zinifex Limited

[bvbfan]

I'm surprized that a lot of you ZFX think the merger screwed you ZFX holders.

Let me ask where you saw growth for ZFX in the next 12-18months, not withstanding AGM.

I don't recall any major projects coming on line until at least 2010 if not later.

The only growth would be from a zinc price increase.

Now you get OXR shares when copper is at record highs, get on just as OXR increases copper production by 100%.

As ZFX holders (believers) may you can tell me what is so attractive about ZFX that we got sold out on the growth.

Only hope that Michelmore keeps paying out high dividends to compensate OXR holders in the future.
Also hope he isn't the same sell out that gave WMR away so cheaply.

 

[PBH]

Let me ask where you saw growth for ZFX in the next 12-18months, not withstanding AGM.

What do you mean 'not withstanding AGM' ?? ZFX will more than likely be successful in it's takeover bid, and Avebury was already accounted for in ZFX production projections.

Furthermore, ZFX still had a pile of cash left for further acquisitions, which also would have added to short/medium term growth.

I don't recall any major projects coming on line until at least 2010 if not later.

See above.

The only growth would be from a zinc price increase.

Given the major supply disruptions in China, zinc prices look very promising for 2008. Also take nickel production at Avebury into account, and the growth picture actually ends up looking pretty solid.

Now you get OXR shares when copper is at record highs, get on just as OXR increases copper production by 100%.

Excuse me? We "get" OXR shares?? No we don't - we pay top price for OXR shares, given that despite the general market downturn, they were trading close to alltime highs at the time of the merger/takeover announcement.
Thus this increased copper production, exposure to gold and such have well and truly been paid for. No giveaways here!

On the other side, ZFX shares were sold out virtually at half price, compared to prices a mere 9 months ago.

Only hope that Michelmore keeps paying out high dividends to compensate OXR holders in the future.

I only hope that OXR lives up to it's much touted, but as of yet unproven, potential, in the hope of seeing some return on investment in the short/medium term in the form of a dividend.

In addition, I also hope that copper and gold prices don't retrace too much from the record levels they were at at the time of merger/takeover. Given that the OXR share price already reflected these record levels, any retrace would really drag down OXR, and thus deliver us poor ZFX holders a double-whammy along with it.

 

[oldblue]

Despite the apparent friendliness of the two parties, I see a chance of a third party ruining the "party" if either OXR or ZFX is attractive enough to it at current prices.
In particular, I don't think it would take much more sweetening to tempt ZFX shareholders to break the engagement, a lot of whom seem lukewarm towards the merger.

Clearly, some ZFX holders are actively hostile to the proposed merger.
My own view is that the two companies will be a much more attractive, viable investment once they merge their operations to become a significant player in a range of resources, a view that the two boards and managements seem to share. I think we have to trust them on this.



Disc: modest OXR holding.

 

[PBH]

Clearly, some ZFX holders are actively hostile to the proposed merger.

My own view is that the two companies will be a much more attractive, viable investment once they merge their operations to become a significant player in a range of resources, a view that the two boards and managements seem to share. I think we have to trust them on this.

Respectfully, I think you're missing the point.
At issue is not whether the merger will be beneficial to both companies, as I think most people (including ZFX holders) agree it is.
The main objection is to the particular terms of the merger, which seem to be skewed towards an undervaluation of ZFX (and accompanying overvaluation of OXR).

Had the proposed share ratio been closer to 1/3.6 rather than the 1/3.19 it currently is, I think you would have found a lot less hostility amongst ZFX holders.

I know that as a OXR holder you're feeling quite happy/smug about things at the moment. But please understand that not all people on the other side of the transaction necessarily feel the same way.

 

[rederob]

Respectfully, I think you're missing the point.
At issue is not whether the merger will be beneficial to both companies, as I think most people (including ZFX holders) agree it is.
The main objection is to the particular terms of the merger, which seem to be skewed towards an undervaluation of ZFX (and accompanying overvaluation of OXR).

Had the proposed share ratio been closer to 1/3.6 rather than the 1/3.19 it currently is, I think you would have found a lot less hostility amongst ZFX holders.

I know that as a OXR holder you're feeling quite happy/smug about things at the moment. But please understand that not all people on the other side of the transaction necessarily feel the same way.

I'm not too sure what the point is?
The merged entity will likely go ahead and holders of either stock can jump ship now or later.
To suggest one is better than the other and that you were on the better one before the merger suggests you also have divined the future of the markets and therefore need not be too concerned either way!
I am a long term holder of both equities, although had taken some profits last year.
I have always held the simple proposition that cashed up, low (or no) debt, unhedged, lower quartile metals producers will prosper more than their peers.
Both companies fit my investment style and my suspicion is that when the US is over its present woes (next year), I will add to my present holdings. In fact, it was always my intention to reinvest back into OXR what I had recently put into cash (a 3 month term deposit so I couldn't touch it for a while!!!).
Once ZFX has gobbled up AGM, it will effectively have done what OXR achieved when it bought into Golden Grove - ie, value added disproportionate to cost.
The present commodity bull has slumped insignificantly given overall market turmoil, suggesting the next upleg will be very strong, and come off a much higher floor than the analysts ever anticipated.
In the interim, both ZFX and OXR are very profitable operations, and the only issue of concern to me is the extent that dividends will, in the short term, be impacted. In outyears the merged entity will deliver more strongly than BHP or RIO ever did, and it's for this reason I will maintain a core position from my long term holdings.

 

[arms]

Well if one reads the Fin Review today it certainly sounds to me like OXR expect some people not to be to happy with the current deal and they may have to sweeten the deal to get ZFX shareholders to vote the deals exceptance.

One must remember that this probably won't be voted on for many months so pleanty of time for another party to make a better deal, especially if zinc prices move strongly up as many commentators now suggest could well be the case.

One to sit on and wait for everything to unfold.

 

[bvbfan]

What I meant in regard to ZFX and AGM was that without the AGM acquistion ZFX had no growth pipeline until at least 2010+.

I don't mind AGM and it's a good move for ZFX and will probably go through.
But explain outside of the AGM mine what production growth ZFX will have?

I'm talking from the point of view that OXR had defined growth pipeline for 2008-10.

ZFX earliest was Dugald River and maybe some extension of Century Mine life.

Onto commodity prices, yes I think zinc will increase but it will still be 1/3 the price of copper to perhaps 1/2
(So my copper price forecast is $3.50-$4.50/lb whereas zinc I see between $1.25-$1.75 for 2008/9)

As OXR being close to record highs, well the outlook for copper was looking good, the PH earnings were not entirely factored in.
As for ZFX, well the price was half because they lost the earnings from the smelters, the zinc price is down about 50% from highs.

From my calcs, OXR would be earning a profit of around $600-700million and have revenue around 1.2billion which I have posted elsewhere on ASF from 2009
(https://www.aussiestockforums.com/forums/showthread.php?p=250311#post250311)

As for dividends, yes I'd like more but then at a yield on my purchase price around 70% it's not a great concern.

As for paying top price, I don't think Minataur or Agincourt holders would be complaining too loudly now.

Anyway we'll have to see what happens and agree to disagree about the merger.

Maybe the fact that both parties seem to be upset about it means they got the price about right (if you believe the adage about mergers/takeovers)

 

[Boggo]

Looks like there may be some downside to come, $7 though ???

This is the MTPredictor view of ZFX.
OXR will probably fall in sync if this unfolds.

 

[sjss]

hope that will not come ture...
zfx is down hell of lot today...
anyone would guess what will happen tomorrow for us?

 

[ans25]

I sold out, have had enough of ZFX...lol

but having said that I predict the market will be up somewhat tommorow then down then up....

 

[sjss]

looks ok...

Indicative Price: 10.100
Trading Status: Pre Open

Dow Jones has a big boost in the morning today, 12,156.81 increase 416.66

all we hope is the zinc price go up..

 

[antkey]

Any suggestion about ZFX, yesterday was $9.90 and today is $9.49, how come more than 40cents down these days.

 

[PBH]

ZFX will continue to be dragged down as OXR retraces from near record highs, to more realistic levels.

Expect $7 to $7.30 shortly.

If Michelmore had given a toss about ZFX shareholder value, he would have merged with OXR whilst at current levels, and not at $4...

 

[savtin]

I think you are dreaming if you think ZFX will get there...........OXR was excellent value at $4.....let alone sub 3's..........they both will move up in due course............but I don't think we will see 7 in front of ZFX share price..............commodities may be out of favour in the short term but in the long term the commodity demand will stay firm and supply side will remain constraint.

ZFX offers great buying at the moment IMHO.

 

[legs]

I think you are dreaming if you think ZFX will get there...........OXR was excellent value at $4.....let alone sub 3's..........they both will move up in due course............but I don't think we will see 7 in front of ZFX share price..............commodities may be out of favour in the short term but in the long term the commodity demand will stay firm and supply side will remain constraint.

ZFX offers great buying at the moment IMHO.

Expect high 9's on tuesday. Commentators are saying we have hit rock bottom and NYSE up 2.39 percent to end the week at 1,329.51. The Nasdaq Composite Index .IXIC jumped 48.15 points, or 2.18 percent, to close at 2,258.11.
"This will be the bottom," said Mark Zandi, chief economist and co-founder of Moody's Economy.com. "We got an incredibly aggressive Fed and three to five years from now, we will realize that this was the start of a bottoming process."

Stock investors already have been quick to sniff that out.

 

[Garpal Gumnut]

Looks like there may be some downside to come, $7 though ???

This is the MTPredictor view of ZFX.
OXR will probably fall in sync if this unfolds.

I have been watching ZFX for some time and rued not getting in at $4-6 before it took off. Since then I've found it expensive.

With all the bother in the markets it is back on my radar. It has done a 1 2 3 4 down on the wave count and if it continues down a little more will be into consensus technical targets others have noted in different posts.

It may hold at $8 if it breaks out, sideways or up, of the recent triangle formation.

It is still in a downtrend though and I will wait until $7 to put any gumnuts into it, unless it trends sideways at $8 for some time, in which case I might consider getting in above $8.

Both charts are weekly.

The first chart shows the possible down triangle formation. Increasing volume on a down move would be indicative at this stage of a break below $8, and a closer assessment for a buying opportunity.

The second shows the support resistance lines back in mid 2006.

Watch the RSI in the upper panel. If it continues to risse then those who bought recently will have had their decision validated with a price move up.

They sure are interesting times. I never thought I'd get within cooee of getting ZFX at $7-8

cheers

gg

 

[uhu]

Hi Nyden,

I am a bit confused. I noticed the moving of OXR's and ZFX's share price is almost the same...but just almoust- so, there is difference. For ex. yesterday ZFX +5,2%, OXR +3,4%.

So...is this only speculation or there is an other logical answer?

Hello Uhu, long time no see!

Yes, the price of ZFX is now tied to the price of OXR; they'll fall/rise pretty much identically at the moment. Now, one could argue that a premium has essentially not been offered : Should OXR fall another 5-10%, ZFX may very well end up back at 10 & below again ... which it may not have if not for this merger.

 

[Nyden]

Hi Nyden,

I am a bit confused. I noticed the moving of OXR's and ZFX's share price is almost the same...but just almoust- so, there is difference. For ex. yesterday ZFX +5,2%, OXR +3,4%.

So...is this only speculation or there is an other logical answer?

I think Zinifex shareholders still get their dividend .... which could definitely explain it. More reason to hold ZFX than OXR perhaps

Got more of AGM as well, sentiment could have gotten a boost : Just wild speculation here though!

 

[golfmos123]

I think there are different things at play here than just one against the other. My guess goes along the following lines...

• people are expecting further shocks in the US
• this will drive up the price of gold
• OXR has gold exposure but ZFX doesn't
• but they are now tied together and hence rise and fall together
• if you buy ZFX instead of OXR, then you get the gold exposure due to OXR, and you get the divvy as well (if you are quick - notice date is next Tuesday I think)

Just my 2c worth, whatever that is worth.

I hold ZFX (not bought recently though) and have sold out of my OXR position back at 3.80 (thankfully!).

 

[vishalt]

I would buy into the merged entity. ZFX has a lot of exploration potential while OXR has the production power, and together they are basically the perfect mid-tier miner like Teck Cominco.

What's wrong anyway? Aren't ZFX holders tired of seeing their stock have erectile disfunctions each time it hits $10?