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ZFX - Zinifex Limited

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Re: ZINIFEX..ZFX

Slow day today.....ZINIFEX bought yesterday only out of the 28million shares....250K.....so they have plenty of $$$$ left...not in any rush that broker.....
 
Re: ZINIFEX..ZFX

chicken said:
Slow day today.....ZINIFEX bought yesterday only out of the 28million shares....250K.....so they have plenty of $$$$ left...not in any rush that broker.....
Click to expand...

You have to wonder why they aren't aggressively buying back at the moment.The only answer I can find is that they think the shares will go lower.Seems the only common sense reason to me.

I got out a while ago for a small loss, and won't think about trading them again for a good while yet.
 
Re: ZINIFEX..ZFX

Thats what they would want to do.

Shifting the market higher through your own buying wouldnt be a good move.

They obviously see this price as fair otherwise they wouldnt buy any.
They have just as much idea (The broker) of the direction of the stock as you do.

They just make a judgement on value nothing more.

Havent traded ZFX for ages made a few $$s then left and forgot about it a it hasnt been alerted again.
Come back here and its still held by many----coupled with the usual speculation.

Technically as I pointed out weeks ago its dead in the water.
Worse its still drowning.
 
Re: ZINIFEX..ZFX

The Daily Resource - 5/20/2005

By Dave Forest
May 20, 2005

www.caseyresearch.com

What will be the go-to base metals for investors over the coming months? According to analysts Smith Barney Citigroup, the most upside will come from aluminum, zinc, and iron ore. Iron, notes Australian Investment Review, is a particular favorite of SBC, with the group expecting the price to stay strong through 2008. They also see zinc supply falling short of demand, leading to high prices in 2006 and 2007.

At the same time, however, one of the world’s leading zinc producers warned yesterday that the fate of the market is largely in the hands of suppliers. Representatives of Zinifex, the world’s second-largest zinc producer, told a conference that the zinc market is approaching a “zone of exuberance” similar to 2000 when overinvestment in new supply drove the price down and gutted the industry. The company cautioned that zinc miners must only invest in the highest-quality projects over the coming years if they want to preserve the integrity of the market.

Zinc dipped 1 cent on the day, to a current $0.5507/lb, falling in line with a general sell-off in the base metals. Copper fell more than 1.5 cents to $1.4328/lb, while nickel dropped 15 cents to $7.5978/lb and aluminum shed half a cent to $0.7814/lb. Lead alone bucked the trend, rising a quarter cent to $0.4466/lb.

The fall in base metals was in line with a broader decline in metals. Gold, after rising nearly $4 Wednesday, promptly gave back most of the gain yesterday, falling more than $3 to briefly touch $419/oz late in New York trading. The metal then bounced back above $420 overnight, currently trading at that mark. Silver also fell on the day, although not as sharply, giving up only 10 cents to a current $7.08/oz.

The losses came as the dollar hovered uncertainly around $1.2640 against the euro following poor US economic news. A report yesterday showed that the Philadelphia manufacturing index fell to 7.3, down from 23.5 in April. The slide was more than twice as large as expected by many analysts. The news sent yields on 10-year US Treasuries lower, likely driving investment away from the US and the dollar.
 
Re: ZINIFEX..ZFX

chicken said:
Slow day today.....ZINIFEX bought yesterday only out of the 28million shares....250K......
Click to expand...

Yet another error by chicken.

The 250,000 shares were bought on Wednesday.

ZFX has not filed any Notice of the Buy Back of shares, on Friday, for any purchase on Thursday.

Either ZFX did not buy any shares on Thursday; or is late with the filing; or there has been a technical problem with the reporting.

We will have a better indication on Monday, provided there is a filing of documents.

The broker doing the buy back program, like any other broker, has to take instructions from its client, ZFX. This is merely stating the obvious. If it is slow, it is because ZFX wants it to be slow.

As I have already stated, in a previous post, the logical reason why ZFX is taking it slow, is probably because it expects the price to fall. At any point in time, ZFX has more information to form expectations of its own SP than anyone else, including any broker.
 
Re: ZINIFEX..ZFX

tech/a said:
.....Technically as I pointed out weeks ago its dead in the water.
Worse its still drowning.
Click to expand...

For all readers who hold ZFX, there is no need for any alarm.

On fundamental analysis, ZFX has a very strong financial position (liquidity position is excellent and gearing risk is low - total liabilities $587.7 million of which $246 million are provisions for future EPA compliance - against equity of $1,105.6 million as at 31/12/04). It will not collapse like Pasminco did.

First half NPAT of $88.9 million. This represents 87% of the previously forecast full year NPAT of $102.0 million and equates to an interim EPS of 17.8 cents.

On annualised basis, EPS is 35.6 cents. At closing price of $2.80 on Friday, the P/E is 7.865 which is not demanding.

Consensus P/E FY 30/6/05 from 6 brokers is 6.3 and consensus P/E FY 30/6/06 from the same 6 brokers is 4.9 (April 05 figures).

The P/E for ZFX is low to reflect the high risk nature of the investment. To use the P/E of 7.865 that I have calculated above, for analysis; it means that if ZFX continues to earn EPS at that rate; it would take a payback period of 7.865 years for an investor paying $2.80 a share, to recoup the principal sum invested. Any return above that is profit on investment, ignoring the time value of money.

NTA per share as at 31/12/04 was $2.21 which does not really mean much but provides a small indication.

The inverse of the P/E ratio gives an expected yield on the investment. At $2.80 a share and EPS of 35.6 cents, the yield is 12.71% p.a.

The consensus P/E FY 05 and 06 from the 6 brokers (for whatever it might be worth - a guide at best) provides an expectation by those brokers that future EPS for ZFX up to 30/6/06 will rise from the actual EPS as at 31/12/04.

In its half yearly report, ZFX stated:

"At 31 December 2004 the company held cash reserves of $164.4 million. With outstanding borrowings of $158.5 million at the same date, the company was effectively debt free. In accordance with previously stated intentions, the directors have determined that a portion of this cash is surplus to the needs of the company and should be returned to shareholders. Accordingly, commencing in April 2005, Zinifex intends to conduct an on market buy back of its issued capital up to $70 million."


ZFX is also spending millions on exploration costs to try to find new ore reserves. If such exploration should prove successful in finding new reserves, a market re-rating of the SP is likely. There is never any certainty that money spent on exploration by any mining company can be successful or whether new reserves if found, can be rich enough to be viable. The latest JV with Terramin looks promising at this juncture, but potential ore reserves have yet to be accurately estimated because it takes time and money to complete the process.

There is still considerable upside towards holding ZFX if the consensus P/E FY 05 and 06 are realised, but it needs to be understood that this is a relatively high risk investment, with the attendant risks that I have already outlined in a previous post. This is reflected in the relatively low actual and forward P/E vis a vis ASX 100 mining companies.

With a market capitalisation of $1.4 billion, ZFX currently ranks at number 100 in the ASX 100.

With the profile of some of the major shareholders of ZFX, expect SP volatility. It is a given. I continue to hold 30,000 shares. At my low entry price in 2004, volatility in the share price has never bothered me.

Warning: This post is not investment advice. I do not hold a licence to provide financial advice.
 
Re: ZINIFEX..ZFX

Investor.

Why hold a fundamentally sound company when its clearly headed south?

While ZFX may well retutn to being percieved as good value by the market --its not now.

Youll see when the market does and thats when to go back in.

My post is prompted by reading time and again countless posts of people looking for the slightest scrap of positive news they can find to substantiate their purchase.This is not limited to this thread either.
The market clearly in control of their "hard earned" and not they!

While longterm holding is a valid trading stratagy---------I use it myself--- those who are forever looking for reasons to feel happy about their purchase arn't in that group.They've lost control and mostly they are losing money.

Both tragic consequences of either NO Trading Plan or No ability to STICK to a trading plan.

Im certaintly not advocating Technical analysis is better than Fundamental.
There is a place for both.

Its those traders Im refering to.
 
Re: ZINIFEX..ZFX

tech/a said:
Investor.

Why hold a fundamentally sound company when its clearly headed south?
Click to expand...

Your view is that it is clearly "headed south". That is not my view, although I clearly admit that I could be wrong. If I am wrong, I only make less on an after tax basis, when I exit. If I am right, I make more money. In any event, I merely enjoy the process of analysis and the challenge of this risk / return proposition. Otherwise, I would place the money on more AGL or WOW (lower beta) shares or 6% bank interest.

To me, hedge funds unwinding and foreign shareholders selling out (due to consensus view of weakening AUD) have been a factor for the supply of ZFX shares driving the price down, in recent times, but I could be wrong.

The other main reason for recent SP weakness has been the uncertainty with the outlook for the global steel industry (a prime user of zinc) and questions about the extent of previously undeclared zinc stockpiles, but again I could be wrong.


tech/a said:
While ZFX may well return to being perceived as good value by the market --its not now.

You'll see when the market does and that's when to go back in.
Click to expand...

I have my own style and you have your own style.



Rest assured that I do not look for the slightest scrap of positive news to substantiate my purchase. That is not my style. If you have that mis-perception of my posts, then please be corrected. I only post here to keep my brain active and to get some "interaction" with people now that I have left the workforce.

As for the market being "in control and not they", again, that is your view, not mine. I am in control - it is my money and I can decide what I do with it. To me, that is my control.


tech/a said:
While longterm holding is a valid trading stratagy---------I use it myself--- those who are forever looking for reasons to feel happy about their purchase arn't in that group.They've lost control and mostly they are losing money.
Click to expand...

I wonder whether you are insulting my intelligence. Have I unwittingly stepped on your toes, that you feel the need to appear (to me) to be so confrontational? All I did was to state my opinion that ZFX is not "drowning" (your words not mine).


tech/a said:
Both tragic consequences of either NO Trading Plan or No ability to STICK to a trading plan.
Click to expand...

I am not a trader and thus, have no need for any trading plan. My investment plans have enabled me to retire at 43, wealthy enough for two generations. I have never been a trader and will never be a trader. What is so tragic about the consequences???


tech/a said:
I'm certaintly not advocating Technical analysis is better than Fundamental.
There is a place for both.
Click to expand...

Agreed.


tech/a said:
Its those traders I'm refering to.
Click to expand...

I am not a trader. So you are not referring to me then?
 
Re: ZINIFEX..ZFX


Hello Tech/A,

I have read this post many times and cannot discern your intended message.

I am guilty of being positive on ZFX and I have a plan. Yes, PLANNING is important as are opinions.

With respect to technical analysis and fundamental analysis I see them as both being useful.

What traders are you refering to? Day traders?

Thanks for your informative posts in the past.
 
Re: ZINIFEX..ZFX

Investor/Tina

Id have thought that reading this and the MUL thread would have clearly indicated where I'm coming from.

To use as an example "chicken" bought ZFX at $2.37 has a veiw of $4 watches stock increase 50%(approx) ,then watches it fall to near enough his buy price.Still ramping all the way down.

A trader on MUL thread admitted buying at 1.7c watching it go to a staggering 12c (700%) then watched it fall to around 2.8c (Its now 1.5c) They were as happy as larry that at 2.8 they had an 80% profit.Its possible they still held to here!

Over 95% of people trade like this.They have no idea when to fold'em and when to hold'em.

Some of the 5-7% successful traders ARE here.So to are many of those who fall in the 95% of strugglers


Im simply pointing out very bad trading habits,hoping that they can be recognised even by those using them,and along the way making suggestions and offering up ways in which to improve their trading.

If there are nothing in my posts for you(Meaning everyone out there in cyberland) thats fine.
Specifically in this instance I wasnt targeting you Investor

I try not to target anyone---although I must admit its very difficult to be specific in general terms!!
 
Re: ZINIFEX..ZFX

POST 244 tells you what the advisers think the price should be...not my advice but from brokinghouses...and with the new deal it will get there as soon as the finicial year is finished in the meantime same old situation...
 
Re: ZINIFEX..ZFX

Chicken

Advisers price targets are ALWAYS met contrary to price action? Is that your philosophy?/Plan.

Longterm investors dont comment on every piece of news coughed up.Short termers who get caught generally do!!

The only problem/s they have is when is the stock a good buy.
$3 ,$2.50, $2.00?? any price under $4?
How long do you hold the stock when it is below your purchase price OR below your selling price target?
Do you hold indefinately if price is below your buy price?
Do you sell at $4 exactly---$3.98---or would you hold if trading went above---when/why then would you decide to sell?

Investor

Im interested in your comments to the questions above.From your Fundamental experience and veiw.
Im a Technical Trader and you Fundamental---how do you look at a trade like this.
Do you consider lost opportunity cost?

There are only 2 ways I know of of increasing your profits from trading.

(1) Trading winning trades MORE OFTEN (not conducive to buy and hold and sitting in falling stocks)
(2) Trading bigger winners for longer (also not conducive to being in a falling stock waiting for the market to turn).

Im genuinely interested if there are some ways I,m not aware of.
 
Re: ZINIFEX..ZFX


I bought ZFX in 2004 when I realised that it was underpriced by the market. I knew the reasons why it was underpriced by the market.

During the last 2 months, there has been a well documented and explained "pause" or pull back in the theory of the super mining cycle.

Yes, I could have sold in Feb 2005 for a tidy profit (over 100% return in less than a year) and pay the CGT this financial year and buy again when the SP goes down. If I was a trader, I might do that. Book keeping costs (I find tedious even though I am a CPA), transaction costs (though relatively small) and CGT are factors to consider.

To cut to the chase, I continue to hold ZFX because I view it to be a potential takeover target. There can never be any certainty with such prospects of course, but I do have some track record for picking potential takeover targets (some are hits, ... others are misses ... the profits from the hits more than cover for the opportunity costs of the misses).

To analyse the upside of a takeover target .... take the current price $2.85. Adding a 35% to 50% takeover premium (the market norm, depending on bidding competition) equates to $3.85 to $4.27.

Current downside risks are not huge. Perhaps short term SP movement down to $2.50 should the number one American shareholder exit entirely. A movement down to that level would be merely temporary, while other buyers move in, provided ZFX's earnings momentum is intact. From one of Warren Buffett's writings, "In the short term, the market is a voting machine. In the longer term, it is a weighing machine." Short term volatility tends to revert to fundamentals.

Analysing ZFX's financial position; the actual P/E and forward P/E; provides guidance that the downside risks of a big price fall is remote.

The likelihood of ZFX being a takeover target hinges on whether the theory of the super mining cycle resumes the upward trajectory after the current pause. If it does, I continue to hold. If it becomes evident that the cycle is over, I exit at a later stage.

I am currently balancing the upside against the downside of holding ZFX and the upside wins.

A study of previous mining cycle booms (some time ago now) indicate that the mining giants, when flushed with cash, tend to go shopping, to take out the smaller competitors.

Potential mining giants who could be interested in a takeover of ZFX, if the super cycle resumes, are BHP, South Africa's Anglo American, Brazil's CVRD and Canada's Tech Cominco.

I also think it is only a matter of time, before China steps out and buys mining companies, not just commodities, to secure supply chains.

Time will tell. But, time is what I have. I have very little risk of ever losing capital on this play. It is merely a matter of how much I make. The opportunity costs do not bother me.

It is positive to note the latest ASX filing by Barclays Global Investors on 23/5/05 that it has increased its shareholdings from 7.55% to 8.68% at average buy price of $2.96. Despite the outlook for the AUD, Barclays see upside in ZFX.

A falling AUD increases ZFX's EPS, other things being equal.

My play in ZFX is relatively small, in proportion to my portfolio. It is merely a side bet. I do not spend too much time on it.

I posted information on this thread for the benefit of readers who might be lured by chicken's ridiculous rampings.

Bottom line - all readers of this thread are now better informed about ZFX than if I did not post.

Any comments, except from chicken (please give it a rest chicken, clearly you are out of your league).
 
Re: ZINIFEX..ZFX

Investor.

Thanks for the reply.
As ZFX has overtime remained profitable the decision making process has held for you---so its no biggy riding out a correction.

However lets look at potential investors (Longer term having a similar veiw to you---re under or fair valued possible take over bid.).

Without the added security of having a profit buffer how would a buyer (Now)
(who traded fundamentally) approach the questions I posed Chicken?
While youve answered my question re possible selling points----how long do you hold---if the share stagnates?/worse continues to fall (Making it more appealing to potential buyers).

Perhaps its one of structuring a plan as it unfolds?
This could be dangerous if the plan doesnt follow as one expects.

Profit certaintly affords one time to think and opens many positive options.
Failure---well options are limited---often in action which compounds any problems.

tech
 
Re: ZINIFEX..ZFX

tech/a,

I will get back to you. I am going out to a concert tonight - Katie Melua from UK, is performing.

BTW, I have never read the thread for MUL. I do not read many threads in this forum. My interest is mainly in ASX 150, with a few in the ASX 200.

A reasonable day in the market today. No profit downgrade.
 
Re: ZINIFEX..ZFX

No rush just interested.
 
Re: ZINIFEX..ZFX

here is something of intrest...www.kitcometals.com 23rd may article by Mr DAVE FOREST THE DAILY RESOURCES.....great mention re ZINIFEX..... also Investor I enjoied what you posted...but what you said about ZINIFEX I could not have said it as good as you posted ,and I am allways intrested in your posts...ZINIFEX as I said before is very much in the situation of being taken over...its just to gooder price for someone even at the figures you posted...its only a matter of when.....and at what price....I am sure it will happen......
 
Re: ZINIFEX..ZFX

What's happening with the buyback? They haven't posted any news on the amount of shares being bought back.

In a buyback can companies miss days and buy when they want to? Or, do they have to buy everyday? This is proof I don't know what I'm doing!
 
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