Consolidated Minerals Share Discussion Threads

[sandpipers] 04/4/2007 10:35

Tuesday 4 April CNM up 3.6% in Aus.
Numis Securities

CONSOLIDATED MINERALS 103p buy 126p (from 117p) Earnings takeoff on higher
Manganese & Chromite ore prices

Manganese ore prices jump a further 20% to $3.10 – 3.30 / mtu

Further evidence is emerging of higher manganese ore and chromite ore prices in China

Manganese ore prices: have jumped to $3.10 - 3.30/mtu according to the Metal
Bulletin this week from $2.50 – 2.70 / mtu last week.

Analysts are likely to upgrade forecasts further as the market begins to
appreciate the impact of the rise in manganese and chromite ore prices.
Consolidated Minerals management should have been aware of the strength of the
manganese and chromite ore markets in China in recent months. We believe that the
Metal Bulletin published manganese ore price is beginning to catch up with
domestic Chinese price levels which may have been at higher levels for some time.

Steel demand: for raw materials continues to rise generating further demand for
imports of manganese and chrome ores for local ferromanganese and ferrochrome
production.

Manganese ore: demand in China rose by 19% last year to 5.1mt representing nearly
half total global consumption. Chinese steel production is forecast to grow by a
further 10% this year with month-on-month production growth of 20% for February.
We expect a similar rise in manganese ore demand.

Valuation : our valuation rises to US$622m for the group from US$564m as the value
of the manganese business rises with increasing ore prices. Further valuation
gains appear likely as the company works through its nickel hedge book and begins
to realise more of the nickel price. We have yet to raise our valuation for the
chromite business as we are awaiting confirmation of the new level for chromite
prices in Europe and in China . We believe that Chromite ore prices in china may
be around 80% higher than some transactions seen in South Africa .

Target price: we are raising our target price to 126p from 117p. This includes a
15% discount to our net present value calculation to account for the normal market
which we expect companies to have against our forecast valuations.

New estimates
Year to Sales PBT EPS Tax DPS Div. Yield FCF Yield Net Cash P/E
June ($m) ($m) (¢) (%) (¢) (%) (%) ($m) (x)
2006A 188.0 17.6 5.9 26.2 3.0 1.5 3.5 18.4 34.7
2007F 235.2 68.4 22.4 26.2 11.2 5.5 11.3 55.0 9.1
2008F 290.5 93.5 31.1 26.2 15.6 7.6 16.2 77.8 6.5
2009F 314.4 115.4 31.6 26.2 15.7 7.7 15.7 75.1 6.4

[pecker1] 04/4/2007 07:49

I doubt whether the deal will go through as shareholders realise they are being shafted while the directors and senior management will hold their jobs in the new company.

[sandpipers] 04/4/2007 07:36

Rocketing metal prices
Chrome ore prices rocket up in Southeast Asia 2007-4-3
Rocketing up Cr and Ni prices attract more smelters 2007-4-3
Manganese ore enjoys a booming market in China 2007-4-3
Mn alloys market still prosperous in India 2007-4-3

CNM does not wish to upgrade its profit forecasts at this point in time. I wonder why?

[nickgrant2] 02/4/2007 20:51

Perhaps someone should write and ask how much of their output they have hedged. Its was 85% in current year and 75% in next year as a apolicy I recall.

[pecker1] 02/4/2007 19:55

According to Metals Place, manganese prices have boomed in 2007 and are at their highest levels since the early 1990's. As long as CNM haven't done the usual daft Aussie trick of selling forward their production when prices were much lower (last year) their profitability should be transformed. Agree with other posters that the bid price for CNM is derisory.

[nickgrant2] 30/3/2007 21:06

After the announcement of Michael Keirnan's 'retirement' I wrote to him expressing concern at what would happen now he was not at the helm. He wrote back expressing hism complete faith in the new board.

I think it was hideously misplaced now.

[sandpipers] 30/3/2007 15:03

But why the price rise in the UK when nearly all of today's transactions are sells?

[phillis] 30/3/2007 11:59

On futher thoughts Caz are there to present the case better to existing shareholders.
Doesn't stop anyone else joining in though!

[cwa1] 30/3/2007 09:34

Very interesting to see Caz recruited, now why do that at this stage of the game?? Good sign I reckon.

[phillis] 30/3/2007 08:16

Cazenove recruited.
Is this to bash investors' heads or is something else afoot?

[phillis] 29/3/2007 12:13

Well the business is up for sale - anybody is free to enter the auction and pay a higher price

All we have to do is sit tight and let nature run its course

[sandpipers] 29/3/2007 11:16

CNM up in Australia and the UK today and above the offer price. The rumour is that there is unrest amongst the directors over the offer. Manganese and chrome ore prices are up in China that an informed source say will add an extra AUD$50 million profit for the half year. Suggestions are that US institutional investors will not accept the offer.

[sandpipers] 28/3/2007 20:11

Leadersoffice,
My reply came from the following source [e-mail] who was asked to respond to me after I sent an indignant note about the lack of reply. Send him your thoughts as the more pressure they receive the better.

Further information: Consolidated Minerals: JP Morgan sees no reason to tender shares at current offer price, executive says
JP Morgan sees no reason to tender its shares to the bid for Consolidated Minerals at its current price, according to Ian Henderson, a portfolio manager at JP Morgan.
Brian Gilbertson's Pallinghurst Resources private equity fund and AMCI have launched an offer for Consolidated Minerals, offering shareholders AUD 1.38 per share as well as two shares in the new company for every five held. Although changes in the
ConsMins share price will translate into the value of the scrip portion of the offer, the bid has been criticised by some investors who claim that the cash component of the bid should be increased to as much as AUD 2 per share. JP Morgan, a minority shareholder in Consolidated Minerals, has now joined the ranks of investors who believe the offer price should be higher.
"Where we stand is that we have not voted one way or the other. We note that the board has recommended the offer and that the market is seemingly disappointed that there is no premium," Henderson said.
"It is going quite cheap and the deal does seemingly look a bit opportunistic in light of low manganese prices, but that said maybe Brian Gilbertson and his colleagues can make a great success of it.
"The stock is trading at a negative spread and we are not complete fools. We are not going to ignore the fact that in the open market you could get more for your shares – there would have to be a very special reason to do that and there doesn't seem to be here," he said.
"Brian Gilbertson clearly has great ability and he is very proactive. He has made a habit of taking over large operations and has managed the people working for him effectively and seen the wood for the trees quickly. But, the assets ConsMin has are fine and we like them and are not dying to part with our stake.
"The only way one would tender their shares at below the current trading price is if you honestly believed that there was a real possibility that in the absence of a bid the share-price would collapse and that is absolutely not the case at all. The price is low due to the fall in manganese prices, but the industry seems to be picking up. There are three operating assets generating good cash flow. ConsMin is far from a basket-case," Henderson said.
Henderson indicated that JP Morgan could consider tendering its shares if the bid were increased. Asked whether he thought Brian Gilbertson would improve the offer, Henderson said "It is a possibility, but there has been no effort to woo us." He added that it is surprising there had been no attempt from Gilbertson to convince the fund to tender its shares.

[leadersoffice] 28/3/2007 19:19

Dear Chief Executive.



With reference to your letter which I received this morning regarding the proposed take over and consolidation, I write to inform you that I will not be voting in favour of this deal. A terrible offer which has been hatched together and as you are the chief executive, you should be ashamed of yourself for even suggesting this is a fair deal and for treating your shareholders as complete idiots. This company is worth far more than is being proposed, you know it and I know it and so does just about every institutional investor.



Your predecessor worked very hard to improve this company's fortunes not for you to come along and sell us out at such a derisory price.

So I won't be voting for this current proposal, either an offer which reflects the true value of this company comes up or we remain as we are. An upturn in the companies accounts combined with higher metal prices copper prices etc suggests better times to come.



Yours faithfully






London E

[leadersoffice] 28/3/2007 19:18

Sand

At least you got a reply... u did better than me!

[rdpounder] 28/3/2007 18:04

Well, he WOULD say that wouldn't he! ;->

[sandpipers] 28/3/2007 08:09

I have been in contact with Rod Baxter about the derisory offer that values CNM at Aus$625m. He believes the offer on the table to be reasonable and he points out that the revised and current valuation by Numis is £1.26 per share valuing CNM at about Aus$863m, given an exchange rate of 2.5. My position remains the same. There is still greater value from this company as an independent unit as the terms of the bid are stacked heavily in favour of the offeror. The valuation by Numis is nearer the mark and I trust that the current bid will be revised or the new bid comes in at that level.

[rdpounder] 27/3/2007 20:20

Sandpipers, I welcome both!

[nickgrant2] 27/3/2007 18:53

I will be gobsmacked if there is not a rival bid from someone.

[sandpipers] 27/3/2007 13:29

Rumour: CONSOLIDATED Minerals' long-time trading ally Noble Metals may be considering a rival bid for the diversified miner, according to a Numis Securities analyst.
Numis also pointed to a newsletter report about recent improvements in the manganese price – in which manganese prices are reported to have increased 25% so far this year – as further supporting a higher price for CNM.

[gb904150] 18/3/2007 17:34

I would be genuinely interested to hear how the board and the "independent report" are trying to sell the merger.

Surely management aren't that stupid to believe this deal offers value to shareholders. I want to hear how they are able to argue the case for the deal.

[sandpipers] 18/3/2007 11:40

On 9 May 2006 Numis had a target price for CNM of £1.61. Given an exchange rate of approx Aus$2.5 to the £ and with 274m shares that looks like a valuation of Aus$1103m. The bid values the company at Aus$625m. That's why I'll vote no and that's probably why Numis resigned.

[joan of arc] 16/3/2007 19:32

Codroe - agreed it stinks. What has been agreed with the directors that we can't see!!