Mineral Sec Share Discussion Threads

[whealan] 15/4/2008 16:57

Copperco are indeed getting a bargain but at least we are probably getting Copperco. And without their cash... . Nice KPMG valuation of Minsec published today. These shares (and Copperco) must surely be near the bottom in the absence of Armageddon if anyone can read. Sadly my boots are already full.

[robbie81] 15/4/2008 13:27

At £1.42 I might actually see a profit - and CopperCo seem to be getting a bargain at 49p.

[bionicdog] 15/4/2008 08:12

Can I have the £1.42 please.

[a0148009] 15/4/2008 07:54

More good news
15/04/2008 07:02 UKREG Independent Expert's Report

AO

[jzd] 14/4/2008 17:23

Copperco Presentation on Boardroom Radio gives review of their operations, expansion plans for the next couple of years and diversification strategy ie MXX merger

[a0148009] 14/4/2008 17:10

Too early to say except that the share price is trading below the offer of 2.2 CUO shares
for each MXX - see my post no 435 which gives closing price of A$0.4775 valuing MXX at 49p
an 8% discount to the offer which should support the price at this level. 55p for mxx would take the share price above the 200 day MA which would be good news. Would expect the share price would have a pop once the deal is completed. DYOR

AO

[vermilion1966] 14/4/2008 13:41

Does the graph show that this has bottomed - or is it just a pause before the next black run...

[robbie81] 08/4/2008 12:21

Chaarat Gold are presenting at the forthcoming Mining Journal 20:20 series Gold Day - 23rd April - www.2020series.com/gold

[a0148009] 07/4/2008 10:05

Cuo closed better today A$0.48 - 49 values MXX at 49p based on merger terms.

AO

[a0148009] 02/4/2008 07:55

Copperco (cuo) closing price.


If deal goes through 2.2 Copperco shares for one MXX
AO

[a0148009] 01/4/2008 16:18

Have been wary of small Ozzy mining stocks from past experience but identified this one a while ago with a respectable management team. Thanks for your previous posts can never get too much info!

AO

[utwiq] 01/4/2008 16:02

yeah, someone read my posts! a very good entry point AO, I think it'll do you proud

[a0148009] 01/4/2008 15:39

Yep - funny old market.
Did some bottom fishing myself in this one today both purchases of 20k are mine.
Does not seem to be much stock around,reading through the proactive posts by utwiq
reconfirmed by resolve and although a couple of months away from hopefully completion of Copperco deal prepared to take the risk as MXX as stand alone business looks very good value at this level.

AO

[pillion] 01/4/2008 14:14

Quo Vadis ??

Down 9% in Oz --- Up a tad here ??

[pillion] 31/3/2008 16:27

LONDON (Thomson Financial) - Mineral Securities Ltd. said it has agreed to
extend the deadline for CopperCo Ltd. to despatch its offer documents to June 7
to accommodate regulatory requirements.
In January, the two companies had agreed to merge to form a 530 mln aud
group.

[utwiq] 30/3/2008 22:26

I posted this lengthy analysis elsewhere - it may be of interest (although be warned it largely sums up [and updates] my last few posts on this board):

With the renewed interest in copper (amongst analysts, investors [witness Grandich's change of heart]), I thought I'd post an account of an ASX-listed company, CopperCo (ASX:CUO). I'm heavily invested (for a minnow such as myself) in a company called Mineral Securities (listed on ASX and AIM in London, ticker MXX), which is a mining house with a major stake in CUO. The two companies are merging. CUO offers very cheap and profitable copper production, MXX offers a very cheap set of listed investments and development projects including one of the most promising new platinum plays (Platmin, London and TSX listed, ticker PPN) and an unlisted 25% stake in a very high grade zince/lead/silver deposit (Xstrata own the rest).

Private shareholders in CUO and MXX were both upset with the merger proposal, which to me suggests it is a fair deal. Certainly the new company, which so far is being termed New CopperCo, will be very attractive indeed.

Here is the breakdown (all these figures in A$):

761.7m shares (after having taken out MXX's 97m holding in CUO)
$388.47m Mcap at $0.51 (current CUO price)
$207.37m liquid assets (setting aside CUO cash/debt; this figure does however take into account MXX's $51m cash and $72m debt, so $21m net debt)
$181.09m enterprise value (ignore CUO cash/debt)

$82.60m (post-tax profit at current 19kt production)
$112.23m (post-tax profit at 25kt production [mid 2008])
$136.93m (post-tax profit at aimed for 30kt production [end of the year])

This assumes copper is at US$3.73/lb. The company has hedged 27.5kt over three years at US$3.02/lb equivalent (the hedge is in A$, hence the equivalent bit) but the rest of production will be unhedged.

Of the $207.37m net liquid assets, $151.27m is the investment in PPN, which will be a very serious producer from Q1 2009 (shallow, low-chrome platinum ounces - a very attractive company indeed).

At 30kt copper the ratio of enterprise value to earnings is 1.322. Just going on MCap, the P/E is 2.84. All post-tax. Mine life is not terribly long at present (7yrs), but there is a great deal of potential to expand this, especially since the merger with MXX brings together a lot of land in Nthern Queensland, which is where the copper operation is.

None of the above takes any account of the unlisted assets that MXX brings to the table. They include Vostok (a copper property into which Vale is earning an 85% interest - by funding a feasibility study), Sappes (an 800koz gold property in Greece; feasibility completed in 2006, awaiting permitting [a tricky business in Greece] before production), and the jewel in the crown, Lady Loretta, in which they have a 25% interest (Xstrata holding the rest). Here is the analysis for Loretta:

13.7mt at 17% Zn, 5.8% Pb, and 96g/t Ag. Assuming 90% recoveries, each ton contains 336.6 lb/t Zn, 114.8 lb/t Pb, and 2.8 oz/t Ag. At $0.75/lb Zn this is $252.45/t for the zinc, at $0.50/lb Pb, $57.42/t fot the lead and at $12/oz Ag, $33.45/t for silver. Add it up and you have $343.32/t - at conservative metal prices. Assume $50/t opex and you have $293.32/t margin. Outstanding by any measure. Further assume:

2kt/day (19.6yr mine life)
700kt/annum (350 days)

$205.32m operating profit
$51.33m (New CopperCo [pre-tax] share)

I haven't estimated capex for a 2kt/day operation. There was a technical report from April last year which set out some alternatives (one of which was toll milling through Xstrata's nearby Mt Isa operation: higher opex [although my $50/t was a high stipulation] but much lower capex). I wouldn't think it would exceed $200m, of which the company's share would be $50m, so pay-back in less than one year.

Increase the production rate (which is very possible) or up the metal prices and the annual profit leaps accordingly. Very latest metal prices: $1.04 zn, $1.24 pb, $17.79 ag. The value per ton (at 90% recovery, as above) is $542 and the margin $492. MXX's pre-tax annual profit would be $86m. Or increase production to 3kt/day or 4kt/day - pre-tax profit leaps to $77m and then $102.6m.

A very nice kicker for the New CopperCo.

I think this is screamingly good value.

And it gets better.

Since the merger plan was announced CUO and MXX have traded in lock step, but they have diverged slightly since then (the deal is 2.2 CUO shares for each MXX share). The last close for CUO was A$0.51. The merger equivalent is $1.122 or 51.83p. MXX closed at A$0.99 (45.73p equivalent) and 43.5p in London. This gives a nice value gap, into an already startlingly cheap proposal. Invest £1 into MXX now and it buys £1.19 in the New CopperCo (this is just 51.83/43.5). If you buy on the ASX your A$1 buys $1.133, so not quite as cheap, although getting an instant 13% uptick into an already absurdly cheap company should appeal. Or buy in London and get an instant 19% free. All this assumes the merger closes, which I expect it will. If it doesn't, and you bought MXX direct, then you just own an astoundingly cheap mining house.

I have an interest - I own a lot of this (for a small investor like myself) - because I think the numbers are compelling. This is, in my view, worth a serious look for any copper enthusiast or value investor (especially one who wants to buy a copper producer on a forward P/E of under 3, which effectively comes with platinum production, zinc development and a gold landbank for free).

The company websites are quite useful:




And the following article may be of interest (although it does contain errors):



This crowd have written on MXX before. The comments on management experience and the quality of the team being assembled are worth noting. They also wrote up Platmin (PPN) a few days later:

[utwiq] 28/3/2008 08:17

We've ticked up to $0.99 in Australia, and CUO is at $0.51, which makes the effective merger price $1.122. The £ equivalent is 45.33p and 51.28p respectively, so a 17.9% advance is likely on the merger closing, assuming no further advance in CUO, which is unlikely given the placement (no warrants!) at $0.54 and the continual advance towards 30kt/yr production.

[utwiq] 27/3/2008 07:51

pillion - I'm afraid I don't know definitively one way or the other (I may email management as well, I've had useful replies from them in the past, although one often has to wait [busy men, which I appreciate]). My working assumption however is that we are to delist from AIM and be exclusive to ASX. I say this from the stated terms of the merger (which I'd initially just assumed extended to a continued AIM listing) and from the fact that HSBC has indicated that the shares will have to be listed in my own name (rather than in a nominee account) because they cannot hold Australian shares for me.

macca42 - not quite sure what you mean? MXX management suspended the deal on PPN because the market sentiment shifted (so that PPN's price stayed too low) and debt wasn't available in that context, or worth spending. CUO is not at all the same. It will spit out cash at an impressive rate and the merged business, per my analysis above, will be very strong indeed. Both sets of shareholders get a very attractive package of assets out of this merger, and for once I think it's fair to say this is a genuinely value-adding proposal for all concerned.

Incidentally, CUO closed last night at A$0.505. The merger equivalent is $1.111 or 51.04p. MXX actually ticked down very modestly (although the closing bid/ask was much higher) to $0.95 (43.64p). This gives a nice value gap, into an already startlingly cheap proposal. Invest £1 into MXX now and it buys £1.18 in the New CopperCo (this is just 51.04/43.25). Obviously I'm biased - I own a lot of this (for a small investor like myself) - but value will out!

[macca42] 26/3/2008 22:22

they might change their minds like they did with ppn, ;-)

[pillion] 26/3/2008 22:20

utwiq

D'yer think the new combined Co will be on AIM too ?

I have emailed them twice -- no reply

[utwiq] 26/3/2008 08:36

the last transaction yesterday (5500 at 43.23p) registered as a sell (because it was below mid-price) but was in fact a buy: one more buy for me!

here is my breakdown of New CopperCo:

761.7m shares (after having taken out MXX's 97m holding)
365.62A$m Mcap at $0.480 (current CUO price)
209.37A$m liquid assets (setting aside CUO cash/debt)
156.25A$m enterprise value (ignore CUO cash/debt)

82.60A$m (post-tax profit at current 19kt production)
112.23A$m (post-tax profit at 25kt production [mid 2008])
136.93A$m (post-tax profit at aimed for 30kt production [end of the year])

Oh and then there is Sappes (if the Greek govt. ever allows development) and Lady Loretta, which is very valuable:

13.7mt content of each ton at 90% recoveries
17.0% Zn 374.0 lb/t 336.6 lb/t
5.8% Pb 127.6 lb/t 114.8 lb/t
96.0g/t Ag 3.1 oz/t 2.8 oz/t

0.75$/lb Zn 252.45 $/t 343.32 $/t value
0.50$/lb Pb 57.42 $/t 50.00 $/t opex
12.00$/oz Ag 33.45 $/t 293.32 $/t margin

So if one assumes $50/t opex, then the margin per ton is $293, at quite conservative metal prices. Assume:

2kt/day (19.6yr mine life)
700kt/annum (350 days)

205.32$m operating profit
51.33$m (MXX [pre-tax] share)

I haven't estimated capex for a 2kt/day operation. The Snowdens report from April last year set out some alternatives (one of which was toll milling through Xstrata's Mt Isa operation: higher opex [although my $50/t was a high stipulation] but much lower capex). I wouldn't think it would exceed $200m, of which MXX's share would be $50m, so pay-back in less than one year.

Increase the production rate (which is very possible) or up the metal prices and the annual profit leaps accordingly. Very latest metal prices: $1.04 zn, $1.24 pb, $17.79 ag. The value per ton (at 90% recovery, as above) is $542 and the margin $492. MXX's pre-tax annual profit would be $86m. Or increase production to 3kt/day or 4kt/day - pre-tax profit leaps to $77m and then $102.6m.

A nice kicker for the New CopperCo.

[pillion] 19/3/2008 15:52

Chortle !!

[scribbler101] 19/3/2008 15:21

So that's the MSX?

I understand they specialise in cross trades.

[pillion] 19/3/2008 00:03

I know that Halifax don't deal down there
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Scrib
This is my new broker doing deals in Malta