ZFX - Zinifex Limited

[dubiousinfo]

If you go to the ASX site you can look up all the warrants for ZFX.
To get the dividend you generally want the Investment Warrants.
The type of warrant is indicated by the 4th letter of the code. The letter to indicate investment warrants is an "I"
For example the Warrant - ZFXIZ1 - is an investment warrant that expires on 24 Jan 2007 with an exercise price of $7.00.
Note the I in the 4th letter ZFX I Z1

However you should ensure you fully read the Product Disclosure Statement (PDS) &/or speak to the issuer, prior to investing to ensure you get the entitlement.

Hope this helps

**PLEASE NOTE**

There is a typo in the post above. the word "investment" should read "installment". It's the installment warrants that give you the dividend.

Sorry

 

[michael_selway]

From today's Financial Review: Investor liftout in Sunday's Fairfax newspapers.

Investor
Global shortage fuels zinc miner's dividends growth
David Potts
576 words
17 September 2006

Zinifex is riding the commodities boom, David Potts writes.

WHATEVER it is you do with zinc, other than take it as a vitamin supplement, a lot must want it.

Even after last week's correction, zinc prices have more than doubled in a year, and have been responsible for the greatest corporate comeback since Burns Philp. Zinifex was forged out of the ruins of Pasminco two years ago and, riding the commodities boom, has hardly looked back.

As well as one of the sharemarket's standout successes, it has become a big dividend payer as well which is unusual for a resource stock. Well, admittedly it's been all rather sudden.

Zinifex bumped its fully franked dividend (it goes ex on October 16) from 4 cents a year ago via an interim of 10 cents to 70 cents a share.

In the same period its share price has swung from below $2.90 to a high of $13.54 four months ago.

Just as wild are broker valuations, which range from a mere $6 up to $14 a share. That's some divide. It seems to have settled at around $10.50 to $11.

The main reason for the uncertainty is that the share price moves in tandem with the London zinc price, a daily feast of speculative buying, selling and rumour mongering.

The other is that its Century mine, the world's biggest, will run out of zinc in 10 years.

So what's zinc used for?It turns out to be pretty basic - things like galvanising steel, rust proofing, brass, batteries and to make USone cent coins - which is an advantage because it makes it irreplaceable.

Better still there's a global shortage of the stuff because exploration stopped in the late 1990s when the price of zinc was in the doldrums.

One broker says Zinifex's profits would rise 16 per cent this year and 50 per cent next year just on the current price of zinc.

And while we may be at or near the top of the commodity price boom it would take a global recession for a crash in zinc prices. Even then it would discourage exploration for other mines anyway.

That suggests a sweet spot of stable to rising demand and declining supply for years to come.

Mind you the fact that it doesn't hedge the zinc price has worked brilliantly, but it also means a huge downside were things ever to go the wrong way.

Funnily enough, the shortage of zinc could finish up Zinifex's problem too. Century is expected to become even more profitable the closer it nears its close, but then that's it.

Zinifex is planning to double its exploration spending through partnerships with junior miners, and has high hopes for Dugald River and Rosebery.

Meanwhile its four smelters are going gangbusters. The two stars are Holland and Hobart, presumably for different reasons.

Zinifex is also shedding staff, something the market always appreciates. And it's cashed up.

ADVANTAGES

· Has world's biggest zinc mine

· Potential takeover target

· Debt free

· Generous dividend

· Output not hedged

DISADVANTAGES

· Century mine runs out in 2016

· Top of commodity cycle

· Volatile share price

· Analysts divided

· Rising costs

VERDICT

The biggest share price gains are behind it. One to hold or buy on market bad-hair days

 

[Kipp]

Hi Folks,
I've been away in Sunny North QLD and as suh- not really up to date with the Market. Can anyone tell me why there is that massive fall around the mid of Sept- ZFX slipped from 12.20 to 10.70 in one massive gap?

A quick scan of announcements revelaed nothing bad (just a few JV's)
Did Zinc crumble to pieces?
Thanks.
K

 

[rwkni1]

Hey Kipp,

Nothing material has happened with Zinifex, but base metal prices have been tracking oil and gold lower. Oil prices have come off sharply as some of the geopolitical premium comes out of the market - supplies have been ample for some time but it now seems as though the market is becoming more comfortable with the Iran situation. Ironically, lower oil prices should be good for metal demand and zinifex, but prices have dropped as instos and hedge funds pull thier cash out of commodities on the back of lower oil prices. Zinc stocks have continued to drop in an almost linear fashion and i there is no sign of this slowing, so i think fundamentally the zinc market looks stronger than ever. As for zinc prices, they are down, but have hardly tanked. They're now about US$1.50/lb, down from about US$1.70/lb at the start of the month. Nothing to worry about at all, i think a great opportunity to get in on ZFX if you're a believer in the zinc story. I think its still trading on a P/E of about 3.5 times 2007 earnings. Cheap!!

 

[Kipp]

Hey Kipp,

Nothing material has happened with Zinifex, but base metal prices have been tracking oil and gold lower. Oil prices have come off sharply as some of the geopolitical premium comes out of the market - supplies have been ample for some time but it now seems as though the market is becoming more comfortable with the Iran situation. Ironically, lower oil prices should be good for metal demand and zinifex, but prices have dropped as instos and hedge funds pull thier cash out of commodities on the back of lower oil prices. Zinc stocks have continued to drop in an almost linear fashion and i there is no sign of this slowing, so i think fundamentally the zinc market looks stronger than ever. As for zinc prices, they are down, but have hardly tanked. They're now about US$1.50/lb, down from about US$1.70/lb at the start of the month. Nothing to worry about at all, i think a great opportunity to get in on ZFX if you're a believer in the zinc story. I think its still trading on a P/E of about 3.5 times 2007 earnings. Cheap!!

Thanks for the reply. Yep, i was quite a dramatic gap... I can't believe that it slipped down to $10.50 when there a promise of a 70cent dividend in a months time. But nearly every one of the Miners (except the Ni boys) has had a bit of a stumble I suppose... but I agree, I am not to concerned with Zn at 1.45/lb. Still miles above the long term average.

Zinnifex can be a tough to hold sometimes- (very bumpy SP arcoss the last 3 months). But I sold out ~2 weeks ago, and might get in at 10.70 if the opportity presents itself

 

[nizar]

Kipp,

If this falls to $10 i will be backing up the truck!

The $1.08b NPAT for this year: the average zinc price realised was USD2105 (see their june quarterly)

Now the zinc spot price is USD3300 (us$1.50/lb)

Even if it stays here their NPAT next year will be close to $2billion

Imagine what happens when the spike comes!!...

 

[YELNATS]

Updated again esp 2009

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 219.9 300.8 228.6 143.0
DPS 80.0 140.0 89.5 60.0

thx

MS

Maybe it's a silly question but why do EPS & DPS forecasts tail off in 2008 & 2009? Is it because the company is just not prepared to forecast too far into the future given the volatility of world zinc prices, or do they think prices will fall to this degree, or do they expect their production output to decline, or all of the above?

Regards. YN

 

[scsl]

Maybe it's a silly question but why do EPS & DPS forecasts tail off in 2008 & 2009? Is it because the company is just not prepared to forecast too far into the future given the volatility of world zinc prices, or do they think prices will fall to this degree, or do they expect their production output to decline, or all of the above?

Regards. YN

I think it is mostly to do with zinc prices coming off the levels that they currently are. Almost all analysts are predicting zinc prices to peak in 2007 and decline from 2008 onwards. (I remember reading this in a broker report a while ago so it might be slightly different now). But it is because analysts have traditionally been conservative with commodity prices and this has been evident in the past few years, with continual earnings upgrades as prices continued to rise.

For example, I have kept a ZFX broker report from March 30 2006. Back then, the mean profit estimate was $744 million. Five months later, ZFX posted a profit of $1.07 billion!

 

[michael_selway]

Maybe it's a silly question but why do EPS & DPS forecasts tail off in 2008 & 2009? Is it because the company is just not prepared to forecast too far into the future given the volatility of world zinc prices, or do they think prices will fall to this degree, or do they expect their production output to decline, or all of the above?

Regards. YN

Basically you need to keep an eye on LME Stocks

http://www.basemetals.com/stocks.aspx
http://www.kitcometals.com/

Eg for lead it appears the tide was turning, ie supplies were increasing, thus price dropped

Also need to look at future demand and supply eg how much new supply coming on board next year? KZL OXR all increasing production etc

thx

MS

 

[3 veiws of a secret]

Geee why is my portfolio drifting to the resources sector? Ok I've taken up a position on ZFX....when shares pitstops @ $10.60 ....then Murray Walker stand back. Zinc might drive me crazy

 

[nizar]

Geee why is my portfolio drifting to the resources sector? Ok I've taken up a position on ZFX....when shares pitstops @ $10.60 ....then Murray Walker stand back. Zinc might drive me crazy

ZFX does seem cheap at these prices; but im very greedy and i want them at $10-flat... so i can get a 7% yield... and then about 100% capital gains in the next 6 months and then a $2/share divy.... IMO only of course....

Zinc stocks on LME just hit 150,000tonnes
2 months ago they stood at 200ktonnes
Any1 wanna predict where zinc spot price will be in 6 months.... ??

 

[Kipp]

Maybe it's a silly question but why do EPS & DPS forecasts tail off in 2008 & 2009? Is it because the company is just not prepared to forecast too far into the future given the volatility of world zinc prices, or do they think prices will fall to this degree, or do they expect their production output to decline, or all of the above?

Regards. YN

YELLIE, I think even the Chairman of ZFX would have to agree that future profits would not be able to match those of 2006 and 2007...
It's no secret that these spot prices are unsustainable in the long run (Zn will probably eventually fall back to $1200 a tonne) but the market isn't stupid, that is priced at the moment.

ZFX is trading at ~5x 2006 earnings, compared to a market av of 15... so even when profits do slip back in a year or 2, ZFX could still be trading at 12x earnings at a SP around the $13-14 mark. (well, given there yield if shares were still sitting at $11 most investors wouldn't be too upset!)

I suppose even if Zn fell through the floor, profits are partially sustained by Lead (though it is responsible for a smaller portion of overal revenue) and their Smelting business... which I THINK would operate at a similar profit regardless of spot prices (correct me if I'm wrong Nizar), smelting seems to be more affected by energy prices, shutdowns etc.

Volume won't decline in the near future, Century is pretty steady, and Rosebery has an INCREASING resource base (with more prospecting potential), and of course there is Dogould River which is pretty huge as well.
Of course, Century only has about ~10 years of mine life left in it.

Hope this helps.

 

[Nicks]

If you are an idiot, then dont buy this stock.

It is common knowledge that the ready supply of Zinc is getting lower. Therefore supply and demand will dictate that Zinc and consequently ZFX will go up in price. Considering the excellent dividends this company pays it wont be long before someone realises this and the stock moves toward $20 by the end of the year.

 

[Kipp]

If you are an idiot, then dont buy this stock.

It is common knowledge that the ready supply of Zinc is getting lower. Therefore supply and demand will dictate that Zinc and consequently ZFX will go up in price. Considering the excellent dividends this company pays it wont be long before someone realises this and the stock moves toward $20 by the end of the year.

Isn't SP about to hit (or hitting) resistence at ~$12.20? It has been to $12 3 times before this year (and has gone below 10 since...) I agree with you, I think it still has further to go, but I'm waiting for a retracement back to 11.50 before I get in once again (almost got there yesterday at 11.65).

 

[rederob]

Isn't SP about to hit (or hitting) Resistance at ~$12.20? It has been to $12 3 times before this year (and has gone below 10 since...) I agree with you, I think it still has further to go, but I'm waiting for a retracement back to 11.50 before I get in once again (almost got there yesterday at 11.65).

Kipp
Resistance at $12.20-12.25 range, and a very interesting one cent gap at $13.01 to 13.02.
Zinc inventories are falling almost as heavily as lead's - both moving in right direction for ZFX to garner great profits over coming months.
My view is that sometimes if you want a stock, you just buy - it's not always what I do, but if I did not already own ZFX I would just but "at market", and not worry for a few months.
I still think $15 by year's end is well in range.
Coming weeks are likely to see good momentum northwards.

 

[YELNATS]

Kipp
Resistance at $12.20-12.25 range, and a very interesting one cent gap at $13.01 to 13.02.
I still think $15 by year's end is well in range.
Coming weeks are likely to see good momentum northwards.

With the very attractive fully franked and growing dividend you would think that the SMSF funds would be very interested in ZFX at least over the next 2 years. A lot of upside capital growth and very little downside I would say.
Regards YN.

 

[scsl]

Isn't SP about to hit (or hitting) resistence at ~$12.20? It has been to $12 3 times before this year (and has gone below 10 since...) I agree with you, I think it still has further to go, but I'm waiting for a retracement back to 11.50 before I get in once again (almost got there yesterday at 11.65).

ZFX closed strongly above this resistance at $12.48. Are you still looking for a pullback to $11.50 or are you planning to get in on the next pullback, however large it may be?

I've been in and out of ZFX, last sold some at $12.20. I'm now looking to get in for the end of year run-up in sp.

 

[imajica]

Zinc hits new highs at $1.71 a pound - I think we might see $2 sooner than expected.

this chart speaks for itself

 

[nizar]

Zinc hits new highs at $1.71 a pound - I think we might see $2 sooner than expected.

The high was us$1.80/lb reached in May. If we breach that, then yes, $2 will only be the first milestone.

 

[imajica]

any predictions for todays close?

Im guessing a rally to around $13.20