|Why the Norwegian Krone Is the World's Safest Currency
By Adam Smith / London Monday, Mar. 23, 2009
Investors keen to protect their precious cash have sought security in all the usual places in recent months. The U.S. dollar, the Swiss franc and the Japanese yen - each with a history as a safe haven - have all provided homes for nervous depositors' cash. But as the economies of those three countries flounder, it's time to look around, and smart investors think they've discovered a new harbor to protect them from the choppy economic seas. "The best safe haven currency," analysts at banking giant HSBC wrote in a research note this month, is Norway's. According to HSBC's reading, right now the Norwegian krone is "probably the best currency in the world."
That's quite some claim. Currently at its strongest against the dollar and euro since last fall, the krone is set for a "sustained appreciation" over the next year and a half, according to HSBC. The main reason: Norway's budget and current-account surpluses are the biggest among nations with the 10 most traded currencies. Factor in the country's $350 billion sovereign wealth fund pumped full of the country's oil revenues, and the cost of insuring against government default in Norway - a key measure of a currency's safety - is the lowest of those countries. With Norway's output expected to shrink by a modest 1.2% this year, far less than in most of the world's leading economies, the krone, HSBC said, represents "the ultimate safe haven." (See pictures of the Top 10 scared traders.)
There's little doubt the coin is in good shape. A series of interest rate cuts in recent months "are starting to work in a way they aren't in other economies," says Dale Thomas, head of currency management at London's Insight Investment Management. That makes it unlikely Norway's central bank will need to revert to quantitative easing, the modern-day equivalent of printing money that's currently in fashion from the U.S. to the U.K. (See pictures of the printing of money.)
But the krone's strengths also reflect the current weaknesses of rival currencies. The yen and the Swiss franc had been doing pretty well amid the chaos. The Japanese currency, for instance, rose more than a fifth against the dollar in the last four months of 2008, as previously big-spending investors cashed in risky assets overseas and brought their earnings home. But that's changing. Japan's economy is in freefall. In its latest assessment of the global economy published March 19, the International Monetary Fund forecast the country's output shrinking by 5.8% this year, much more than in the U.S. or eurozone. With interest rates close to zero for months now, there's speculation Japan could intervene to weaken the yen in order to help stoke its all-important export sector.
Switzerland's one step further along. In an effort to fend off the threat of deflation, the Swiss National Bank announced March 12 it would dump francs in the first such move by a major central bank for years. The move was enough to cut 3% off the currency's value against the euro; since then, the franc's fallen further still. Even the greenback, which rallied in recent months, stands at its lowest level against the euro since early January following the Fed's announcement last week that it would spend some $1.2 trillion on government and mortgage bonds, flooding the markets with dollars.
So while the krone looks attractive in comparison, it's worth remembering that "at the moment, the currency markets are an ugly contest," says Thomas. "Pretty much everywhere looks not great." Moreover, he says, while Switzerland boasts a powerful banking sector with experience of taking in floods of cash, "Norway doesn't have that financial infrastructure. And there's no bond market to speak of." That means that while "it's a nice currency to be invested in, from a practical perspective, of someone who has a huge pot of money and wants a safe haven, they just couldn't put it all in Norway," according to Thomas. "The economy's not set up to be a safe haven." Perhaps it's back to stashing cash under the mattress.
Read more: http://www.time.com/time/business/article/0,8599,1887090,00.html#ixzz1U7rPJwhY|
|katanga (nikanor)in TSX at $15.80 today.|
|Few more lines from their (nikanor and katanga)merger notes, hope it will help those whoneed it
The Merger will be effected by way of the Offer and Cash Return to Nikanor Shareholders. Under the terms of the Merger Nikanor Shareholders will be entitled to receive for each Nikanor Share:
0.613 New Katanga Shares, and
US$2.16 in cash by way of the Cash Return.
Following the Merger, Nikanor Shareholders will hold 60 per cent. and Katanga Shareholders 40 per cent. of the Merged Company, calculated on a fully diluted basis, excluding the recently announced convertible loan from Glencore Finance. Based on the closing share prices of Katanga (on the TSX) and Nikanor (on AIM) on 5 November 2007, the Merged Company would have a combined market capitalisation of US$3.3 billion after the proposed Cash Return, calculated on the fully diluted number of shares for both companies. The cash element of the Merger will be paid by way of the Cash Return of US$452 million from Nikanor's existing cash resources.
Katanga and Nikanor have entered into an Implementation Agreement in relation to the Merger, which contains provisions regarding the implementation of the Merger and certain assurances and confirmations between the parties.
This summary should be read in connection with the attached Announcement and Appendices. Appendix I of this Announcement sets out the conditions and principal further terms of the Offer. Appendix II of this Announcement contains information on sources and bases used in this summary and the following Announcement. Certain terms used in this summary are defined in Appendix IV of this Announcement
New company katanga mining is listed at TSX in Canadian stock exchange with epic KAT|
|Many thanks chelseapaul.|
|Its did both, it now only trades on the TSX in Canada.
Your have to search Katanga (the new name)|
|What happened to nikanor. Has it changed its epic symbol or what . Please help|
|Cobalt price soars as stockpiles run low
By Iain Dey
Last Updated: 1:37am GMT 11/01/2008
The slew of gadgets and gizmos unveiled at this week's Consumer Electronics Show in Las Vegas could soon become much more expensive to run than anyone had previously imagined.
The latest news from the oil, mining and gas industries
Cobalt, the key mineral used to make electric batteries, has soars to a new record high.
Strong demand and scarce supply pushed prices in Europe to $46 a pound.
BHP Billiton, the London-listed mining giant, was only willing to sell stock at $47.50 by the close of trade, according to traders.
The price has soared by about $5 in the past week and is 70 per cent above the levels seen a year ago.
With stockpiles being run down, the price looks set to climb further.
"There's no metal around, producers are sold out," said one European trader.
Cobalt is a key component in manufacturing lithium-ion batteries, one of the most common types of rechargeable battery used in consumer electronics.
Radioactive versions of cobalt are used in the treatment of cancer as a tracer that can monitor drugs passing through the body.
It is widely used in the defence industry. The US Defense Logistics Agency has historically kept a large stockpile of the mineral to help secure the US military's needs.
One London-based trader said the DLA held about 52m pounds of cobalt in 1993, but this has been whittled down to little more than 1.5m pounds. "The average rate of annual sales in those 14 years has been 1,650 tonnes per annum," the trader said.
"At this rate of sales the DLA will have exhausted its cobalt stocks by June of this year."|
|Well at £6 this has been a fair buy but I expect this stock to realy get moving now.
There is still heaps of upside as the political risk now is reduced and the world is waking up to a shortage of cobalt (check its recent price rise) in addition to the enormous value that lie in these copper deposits - the richest in the world.
Whilst this will remain a tad volatile (political risk) I am still in for the ride over the next year or so. Greater liquidity will obviously be a good thing too...|
|I was due to attend the EGM at JPMorgan Cazenove on 10 January to cast the votes for my very few pennyworth of shares in favour of the proposed merger with Katanga Mining.
Unexpectedly I will be abroad taking part in a mine valuation so I will not be able to attend.
If anyone does attend the EGM could they please post their impressions from the meeting.
Thanks and best wishes to all Nikanor holders for a healthy new year.|
Many thanks for the Jennings report - I may comment after studying it .|
Many thanks for the feedback. I have not been in touch with the company but I can offer you a research report from Jennings Capital:
Also as I am sure you are aware. Kat have started the Luita plant, hot commissioning should be any time now. On the merger, NKR are tracking KAT so not much chance of arb'ing them.
I will be interested to know if they intend listing on LSE at the same time as the merger.I have ISA's with both selftrade and TD Waterhouse. KAT is off limits with selftrade as they do not settle through crest (not a problem with my TD Waterhouse account). I am assuming the will simultaneously list but I will contact IR in near future to confirm.|
|This board isn't the most active so I thought I would update the few readers on some recent correspondence with Richard Boorman( Investor Relations) of Nikanor.
In response to my query he said the offer document on the merger should go out during the week of 4th December.
I asked if concentrate production from the KTK operations had been increased to the 8000 t/month planned for the end of 2007 - he said that output is being ramped up but couldn't say if it had reached the target level.
In reply to my query on progress on implementation of the KOV project he answered that they aim to completely dewater the KOV pit by the end of 2008 and that the decanation and silt dams were largely complete and pumping was due to begin in 2008.
Earthworks on the process plant has continued but piling and foundation works have not started as the merger could result in changes to the plant layout.
I would have preferred more robust replies with more facts and figures but I suppose everything is being overshadowed by the merger.
Has anyone else beein in contact with the company ?|
Interesting you mention Dan Gertler. First the merger with Katanga yesterday and today a MOU with Camec for their cobalt projects. I think the Chinese money may have galvanised his thoughts a little. He may no longer have the influence he once had. I wonder if someone has whispered in his ear "use it or lose it"?
With the cobalt calculation; cobalt $30lb = $66000t * 40000tpa = $2640000000. Let me know if my maths needs a brush up as I am working on my mini s phone.
You are right about the $1bn. I have taken NKR's rough figures and removed the proposed savings to give me a very rough figure. As you say until the feasibility study is completed it is pure conjecture.
I was also surprised to see Jonathan Leslie no longer pat of the combined company. Does make you wonder if he was bought in as a bit of grey for the float by Cazenove, his job now done and off to pastures new. The Katanga board is abit more experienced that you think. Most of them were the original Kinross Gold board and I think a few managers moved over with them as well. The one thing I can praise the KAT board for is,they have delivered everything they said they would on time and on budget.
Sale wise we have Glencores sticky fingers in both companies projects. So XTA would be the obvious choice. When camecs bid failed Anglo American were the supposed favourites to bid. RIO & BlT would be not far away. Also don't forget the cash pile that ANTO is sitting on. Which ever it is I will be amazed we last 12 months as an independant.|
Yes the merger makes sense - it is a complicated web expecially wth Dan Gertler having substantial stakes in both NKR and KAT.
I share your enthusiasm and am delighted for the reasons given in my earlier message.
I wondered how you arrived at $2.6 bn for 40 kt cobalt - could you please clarify.
You also say that they may need to raise US$ 1 bn for completion of the projects - I don't think we can be sure of that until a new mine plan, production build up and financial model has been prepared. Not that they would have diffiuclty raising the money via debt finance - IMO.
I agree with your remark that they may be being prettied up for sale - have you noticed that Johnathan Leslie seems to have dissappeared from the picture as he is not on the board of the new company. IMO he was the one real industry heavy weight in NKR's organisation. In fact apart from Jim Gorman ( NKR's Project Manager) there seems to me a distinct lack on all sides of people capable of managing a copper/cobalt operation of the scale envisaged. Which all the more makes me think in terms of a sale to .. BLT, Xstrata ? Do you have any views on likely candidates and the timing ?
You asked about NKR's progress - from what is in NKR's Interim report the project seems to be on track although I would like to hear more about progress on dewatering of the pit.
The only little dissappointment is that the revenue from the Tilwezembe operation has built up slower than planned. NKR hoped to be producing around 8000 tonnes of copper/cobalt concentrate per month from the Kolwezi concentrator but so far were well short of the target ( the conc is worth US$ 2000 per tonne ; at 8000 t/month this amounts to a nice little earner ahead of the main project!). The interim report cited lack of bagging capacity and logistical problems.
We are joined up at last. I did say on tmf a while back that this merger was a logical one.
A quick run through the figures shows we have both got a bargain.
40kt cobalt is $2.6bn
400kt copper is $3bn
For simplicity. The cobalt pays all running cost, tax etc. Therefore we have $3bn copper going straight to the bottom line. At current $3.3bn mkt/cap we are valued at 1x cash flow in 3 years we have a 9/10 bagger. A outcome well worth waiting for.
The concentrator is on stream and first copper is due from Luita next month. I have not been keeping up to scratch on NKR's progress. So any views on project development would be welcome.
I estimate they will have to raise $1bn to finance the growth no doubt through a combination of debt/equity.
Looking at the bigger picture, I think we are being prettied up for a sale further down the line. Ditto,Forrest and Gertler will probably want their money out sometime in the future. If a bid comes it will be competitive, try finding a brownfield resource any where in the world with these reserves, resource and grades. In hindsight BLT got a bargain with the price they paid for WMC when you consider what olympic dam is worth alone. You can be sure with the above mentioned in charge that will not happen to Katanga/Nikanor.|
|rvsy38, Thankyou,for your answer.
I bought a small numbers of Nikanor shares on a recommendation for their project, I guess this is an extra good news.
I should continue to hold the shares and await further development.|
|A very good question Hasit but one that doesn't lend itself to an easy answer.
In my opinion the value / market capitalisation of the new company should be considerably higher than the sum of the market valuations of the individual companies.
As a Nikanor shareholder I see the following main benefits :
- earlier cash flow arising from Katanga Mining's operations which come onstream well ahead of Nikanor's original plans
- capex savings due to shared facilites and infrastructure
- operating cost savings due to shared facailities and infrastructure
- savings due to the opportunity to fund phased expansion of operations from cash flow
There will undoubtedly be similar benefits for Katanga Mining shareholders.
Realistically I don't see how anyone can make a good estimate of the value of Nikanor's shares without knowing what the mining plan / production buildup / capex profile will be for the new entity. I say this having a background of over 40 years in the non ferrous metals mining industry.
The Nikanor website has the presentation made yesterday to analysts and investors - one of the slides shows the " current market valuation " of the new entity at US$ 3.3 billion and compares this with the valuations of other major copper producers ( Kazakhmys, First Quantum etc) and their production outputs. I think that gives the best indication of what the ultimate value of our shares will be.
I hope that is helpful.|
|Excuse my ignorance - but what value does today's offer place on a Nikanor share?|
|16 minutes ago!
The Democratic Republic of Congo, which has a 10th of the world`s copper reserves, will give China a majority stake in a mining joint-venture as well as mineral rights in return for a loan currently being negotiated.
Four Chinese state enterprises will take a 68% stake in a joint venture with Gecamines, DRC`s state-mining company, Managing Director Paul Fortin said in an interview on November 1 in Kinshasa. China, which wants to extract copper, cobalt, gold, lead and tin from the DRC, will also receive rights to metal deposits.
"The Chinese want to go into production," Fortin said. "They`ll go very fast. They`re here to get the metal."
China will lend the DRC US$5 billion to pursue mining and infrastructure projects in the country, Infrastructure Minister Pierre Lumbi said September 18.
The bulk of China`s loan to Congo will be used to repair roads, railways and electricity supply, Fortin said. Most of the funds will be "disbursed upfront".
The government and Gecamines will send delegations to China`s capital, Beijing, next week to hammer out the details of the agreement, Fortin said.
A government panel in the Democratic Republic of Congo will recommend 61 of the nation`s agreements with mining companies, including Freeport-McMoRan Copper & Gold Inc, be renegotiated or cancelled, the group`s chairman said.
The commission will recommend that 38 contracts be changed, including those of Freeport and Nikanor plc, Alexis Mikandji, chairman of the commission for the review of mining contracts, said on November 2 in a telephone interview from Kinshasa. The panel will say 23 contracts should be cancelled, he said.
Nikanor plc, the company developing the DRC`s largest copper mine, hasn`t received word from a government panel proposing to renegotiate or cancel mining licences in the country.
First Quantum Minerals Ltd and Katanga Mining Ltd, which also operate in the DRC, said they haven`t been given notice of any changes to their licences.
"Nikanor has received no official notification of the recommendations of the commission," said Richard Boorman, the company`s Johannesburg-based spokesman, said in a statement on November 2. "When that changes, we will inform the market."
Nikanor, First Quantum and Katanga are seeking to develop copper projects in the country, after production slumped at the start of the decade because of civil war. The commission, set up by DRC President Joseph Kabila, is investigating whether licences previously awarded to mining companies are fair to the country.|
|why stock up, any news? looks like chart breaker, and may retrace to all time high.|
|Thank you rvsy38; very informative.|
|To the best of my knowledge the house broker (JP Morgan Cazenove)have not issued a note. Ypu probably realise that the 82% of the shares are held by the three founding shareholders , Glencore and a group of US and UK banks. I guess the bulk of the balance is held by institutions. I suppose that there is little need for a broker's note.
I am keen on this company and attended the EGM in May to consider the offer by the 3 founding shareholders to buy all the company shares for £6.00 per share. I believe I was the only private investor at the EGM ; the offer was rejected by the independent directors and those at the meeting.
Since May, Glencore have become a major equity partner (invested about £ 150 million, entered into an offtake agreement for all product and will provide working capital).
I noted last week that one of the founding shareholders bought an additional 1.24 million shares increasing his holding to 26.43 % of the company.
Furthermore while the KOV project is being constructed, the revenue from the small re started mining operations at Kananga and Tilwezembe is not to be sneezed at. In response to a query to the company I was recently informed that concentrate output by year end should be 8 - 10 000 tonnes per month with the concentrate being valued at around US$ 2000 / tonnes. This equates to annual revenue of around US$ 200 million a year ( operating costs will be very low from these operations).
The KOV project copper/cobalt resources are the richest in the world and the company will be at the very bottom of the cost curve. The company is going to use well proven technology so the technical risk should be low. The company has tied up the marketing of the output with probably the best metal traders in the world. The existence of the off take agreement should facilitate raising the additional funding required.
So the one outstanding risk ( the political/ country risk in the DRC ) is the one that could wreck the project and the company and has to be very carefully considered by anyone contemplating making even a modest investment.
|This is beginning to look interesting. Does anyone have a link to a broker's note?|