ZFX - Zinifex Limited

[cuttlefish]

I believe the "resources in the ground" for ZFX is pretty healthy as well.Zinc reserves are stated at around 13 million tonnes and most of that is proven and probable reserves,not inferred.At present market prices,that is equal to around 60 billion AUD.The market cap of ZFX is around 5 billion.Don't forget they have lead,silver and gold reserves also.

P.E of a mining company would be an indicator of how fast and efficient they are getting the stuff out of the ground.

Its still a point of difference between mining companies and typical industrial stocks - mine life/resources in the ground are an important factor in valuation. The cost of getting those resources out is something to consider as well - and is it going to get more expensive towards the end of the mines life?

Regarding ZFX and whether its under/overvalued it depends directly on long term view of zinc prices. If current prices are sustainable over the long term (i.e. over a period of many years) it may be undervalued. If prices return to near the averages they've shown over the previous 10 years its probably overvalued. (of course other factors like interest rates and exchange rates also contribute as well.)

 

[specman]

Yes,the crucial factor is how long can zinc maintain it's current price.Investors in commodities are obviously worried at the moment about inflation and increasing interest rates having a negative effect on economic growth,which will impact demand for base metals.

I think the China juggernaut has built too much momentum to slow and Americans will remain addicted to cheap Chinese products which appears to get cheaper by the minute.China will continue to foster the U.S trade deficit until the Chinese can absorb their own products which will take a while as asians are savers,not spenders.Perhaps the next generation.China cannot afford to abandon investment in America in the foreseeable future since they are their biggest customer.

Zinc mining has gone years of underinvestment and if demand continues to remain strong,supply will will be tight for years to come.It takes many years to open new mines.

 

[silence]

Looks to me like the H+S has happened, and it's on the way down. I'm not too familiar with candles (specifically what different 'formations' mean) but there were big moves on the days that touched what looks like a new downtrend.

 

[swingstar]

It is definitely a text-book H&S setup. Will be interesting to see if it follows through.

 

[Sean K]

Could drop to $7.00 on the charts. Looks like there's very good support around there. Below $7.00 and you could be going back to $5.00. I'm no expert chart reader of course.

 

[Jay-684]

sold late may for $11 and was thinking of buying back in, but given the lastest posts may wait and see...

$7 would be a very nice price to pick them up!

 

[michael_selway]

Looks to me like the H+S has happened, and it's on the way down. I'm not too familiar with candles (specifically what different 'formations' mean) but there were big moves on the days that touched what looks like a new downtrend.

Zinc price moved up alot on Friday, DOW not much change

so shoudl be up on monday, may touch $11, was about $10 on close

thx

MS

 

[NettAssets]

Ive got to put a good spin on this cause I've got some long $11 calls with high IV that are bleeding badly
I won't be too suprised to see a lower open at 9 or so.
I need it to go to 12 while the IV is high.
John

 

[silence]

My interpretation is that $10 is the neckline..the price also came up to about that from underneath (the most recent day on your chart there) after it broke through it which confirms it.

I'll be looking at puts tomorrow morning I think

 

[alankew]

Apologoies for the dumb questions but in laymans terms what does the following mean-I am trying to understand heads and shoulders now i have necklines to think about! My interpretation is that $10 is the neckline..the price also came up to about that from underneath (the most recent day on your chart there) after it broke through it which confirms it

 

[NettAssets]

The Neckline it open to debate.
Some texts take it as being the market highs between the shoulders and the head, some take market lows and some say market close - take your pick TA is an art as much as a science.

The $10.00 line has actually got a dragonfly doji sitting on it in the left armpit that signaled the reversal from the shoulder up to the head so its probably not a bad pick.

I dont think that there is any clear way to see where its headed from here at the moment. If I am right and the $8.00 support it hit on the 14th was a reversal after the H&S then its on the way into another up trend.
If the bears are right that the H&S was stronger than that then it might be on its way south from the dragonfly reversal yesterday. (Well not quite a dragonfly the body was 4 cents deep )
I guess tomorrow will tell the story.
John

 

[michael_selway]

The Neckline it open to debate.
Some texts take it as being the market highs between the shoulders and the head, some take market lows and some say market close - take your pick TA is an art as much as a science.

The $10.00 line has actually got a dragonfly doji sitting on it in the left armpit that signaled the reversal from the shoulder up to the head so its probably not a bad pick.

I dont think that there is any clear way to see where its headed from here at the moment. If I am right and the $8.00 support it hit on the 14th was a reversal after the H&S then its on the way into another up trend.
If the bears are right that the H&S was stronger than that then it might be on its way south from the dragonfly reversal yesterday. (Well not quite a dragonfly the body was 4 cents deep )
I guess tomorrow will tell the story.
John

Yeah it fluctuates quite alot since dow/zinc price have been

ZFX - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 35.9 188.6 286.0 171.8
DPS 4.0 40.0 50.0 55.0

thx

MS

 

[rederob]

Base metals - at least copper nickel and zinc - are poised for a massive bounce post-July that will take them again over their previous highs of May this year.
The US market's correction is unwittingly setting up conditions for a brief commodity boom by returning "value" to its equities sector - I anticipate this will drag out for a few more weeks yet.
All the while base metal fundamentals have continued to tighten, with zinc exchange warehouse stock levels disappearing at a consistently robust rate.
Zinc inflows remain miniscule this year and "demand" for this metal will ensure much higher prices than present, going forward.
That said, base metal technicals are still quite weak and it will not take much to knock off another 10-15% from any or all of the complex.
Whenever ZFX drops into the $8 bracket it's well worth re-entering on the buy side.

 

[Captain G]

Hi all, Why has Zinifex been constantly doing share buybacks ?? They've been doing them nearly every day for the past 2 weeks. Is it to keep the share price propped up ??

 

[rederob]

Hi all, Why has Zinifex been constantly doing share buybacks ?? They've been doing them nearly every day for the past 2 weeks. Is it to keep the share price propped up ??

Captain
You could always read the company announcements to find out.
Just an idea!

 

[michael_selway]

Captain
You could always read the company announcements to find out.
Just an idea!

hehe yeah

If cash is king, Zinifex wears the crown
Author: Trevor Hoey
Date: 21/06/2006
Words: 663
Source: AFR
Publication: The Financial Review
Section: Portfolio
Page: 35

Mining stocks have been well and truly dethroned in recent weeks but, if cash is king, it is hard to ignore Zinifex, especially for investors looking for buying opportunities after the recent sell-off.

In May, UBS released a research report on Zinifex, titled Awash with Cash. The broker upgraded its earnings forecasts for 2006, 2007 and 2008 by 63 per cent, 95 per cent and 96 per cent respectively. UBS has a price target of $14.50 on Zinifex and the broker's earnings and dividend estimates suggest this is conservative if anything.

Based on UBS's earnings per share estimates for 2005-06 and 2006-07, Zinifex is trading on price-earnings ratios of 5 and 1.8 respectively, for a share price of $10. UBS estimates Zinifex could pay fully franked dividends of $1 and $3 in those years, representing yields of 10 per cent and 30 per cent.

Zinc is UBS's commodity of choice in the present environment and, based on supply and demand, it is easy to understand the broker's bullish stance.

In the past 12 months, zinc warehouse stocks, according to the London Metals Exchange, fell from 640,000 tonnes to 230,000 tonnes. UBS believes there is little scope for a material increase in the supply of zinc to global markets in the near future. A significant decrease in demand is required to undermine the strong fundamentals that should support the zinc price once the volatility caused by commodity funds and speculative investors wanes.

Recent data indicates that the zinc price has been buffeted by speculative traders rather than the fundamentals that tell the real story. Even during the 30-day period in May-June, when the zinc price fell about 25 per cent, London Metals Exchange warehouse stocks fell from 252,000 tonnes to 230,000 tonnes.

The wild card is the US economy and the potential impact of a downturn; there is no doubt that demand for commodities would be affected. But determining the effect's extent is difficult, especially in light of the increased demand related to domestic consumption in emerging economies such as China and India. If we use UBS's preboom zinc price as a guide, Zinifex's cash flow, valuation and yield still appear impressive. Using a zinc price 25 per cent below the commodity's recent low, Zinifex's P/E ratios for 2005-06 and 2006-07 are 7 and 5, relative to a share price of $10; the respective yields would be 5 per cent and 9.3 per cent.

While Zinifex presents as an attractive yield investment, it has scope to improve its already impressive growth prospects. Some of its cash could be directed at acquisitions, particularly if the share prices of smaller players fall substantially. Zinifex has existing alliances with junior base-metals producers and explorers, including CBH Resources, Terramin Australia and Haddington Resources. In March 2006, Zinifex reached an agreement in principle with Smartrans to enter a joint venture in relation to the company's nine base-metal tenements in the vicinity of Zinifex's Century mine in Queensland, but this is yet to be formalised.

Zinifex's joint venture with Terramin is arguably the one most consistent with the company's existing operations. The joint venture grants Zinifex a 70 per cent interest in Terramin's Menninnie zinc, lead and silver project, where recent exploration has confirmed that a large Broken Hill-style mineralisation with high-grade zinc intersections exists on South Australia's Eyre Peninsula.

Apart from increasing its traditional zinc and lead business, part of Zinifex's strategy is to penetrate selected niche minerals markets, where it can become a dominant player with the same type of competitive advantages it has with its zinc business. Consistent with this goal is Zinifex's heads of agreement alliance with tantalite producer Haddington Resources.

Though Zinifex's share price could be driven by expanding its zinc and lead business, broadening its exposure to other minerals could provide more stability as the company's share price tends to react sharply to movements in the zinc price.

 

[NettAssets]

My interpretation is that $10 is the neckline..the price also came up to about that from underneath (the most recent day on your chart there) after it broke through it which confirms it.

I'll be looking at puts tomorrow morning I think

You still bearish on this Silence
Just seems to be playing about at the moment
John

 

[michael_selway]

You still bearish on this Silence
Just seems to be playing about at the moment
John

Zinifex smelter upgrade to cut emissions
Production at South Australia's Port Pirie lead and zinc smelter will stop for more than a month from the start of July, so maintenance work can be done to help it reach emission reduction targets.

The $33 million upgrade will include rebuilding and replacing furnaces, and the refurbishment of other equipment.

Up to 350 contractors will be on site over the 46-day period.

The smelter's general manager, Ivan Cauley, says the shutdown will help Zinifex meet its targets to reduce blood lead levels in the city's children to meet international standards.

"The work that we're doing on the blast furnace is certainly aimed at reducing emissions," he said.

"We have fast-tracked the work to do as much of the installation as possible during the shutdown.

"In addition to that, we're doing a large amount of work in other areas of the plant, refurbishing ventilation systems and improving fume capture at many parts of the plant."

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Skitzy
please read the red
Before acting on any of the information you read and making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 35.9 188.6 286.0 200.5
DPS 4.0 40.0 50.0 55.0

thx

MS

 

[Realist]

Anyway - Zinifex is a dud, I wouldn't touch it with your money, try Sons of Gwalia instead!

Jan 05

Possibly the worst advice ever offered on this bored?

Turning down a 7 bagger for a zero bagger.

 

[nizar]

Jan 05

Possibly the worst advice ever offered on this bored?

Turning down a 7 bagger for a zero bagger.

Its bad call but i think for worst advice on the thread; ur advice on rent instead of buy will give it a good run!!!

(but lets not get into that, again)

As for zinifex, $10 will seem cheap in 6 months time