Murchison United Nl Share Discussion Threads

[yogro] 15/6/2002 14:40

Thats it.. kiss of death, tipped in a shares magazine... i am getting out of this one.

[skipster] 14/6/2002 08:28

Shares – 13th June 2002

BUY MURCHISON UNITED (MUU) - 18.75P

Vital stats:

Market capitalisation: £48.5 million
Historic PE: loss-making
Prospective PE for 2002: 18
Prospective PE for 2003: 6
No dividend
Business: copper mining

First a word of warning about Murchison's shares. They have a lot of history and plenty of unhappy punters sucked in by earlier tips.

Those people have seen big losses and were excluded from last week's £25 million placing (via Beeson Gregory) at A$0.39 (15.1p).

Murchison is run by English mining engineer Paul Atherley. His strategy is to buy mines which have seen heavy investment but lousy cost control.

His first purchase was the Renison Bell tin mine in Tasmania. This went well until last year, when the tin price plunged 30% because the new Indonesian government allowed a mining free-for-all.

Murchison compounded its problems with a currency hedge which is costing £8 million to unwind. It has sold Renison for £4 million plus 15% of the purchaser's shares.

In April 2001 Murchison was selected by Rio Tinto to buy its 49% stake in the Neves Corvo copper mine in Portugal. The price was $78 million (£53 million). A change of government in Lisbon delayed talks to buy the state's 51%. The new government is centre-right, so Murchison is likely to gain 100% eventually.

The mine produces 80,000 tonnes of copper concentrate and has measured reserves of 23.3 million tonnes. Cash production costs are about $1160 per tonne, while the market price is $1670 and rising.

Atherley predicts it will top $2,100 within three years as the world economy revives.

Capital spending at Neves is a fraction of the reported depreciation charge. So the mine looks marginally profitable, when it is throwing off cash. Atherley has already reduced the work force from 950 to 850. Expect more 'outsourcing'.

Why did Rio sell? By world standards Neves Corvo is small. Rio may also have tired of being a minority investor. Murchison has full management control and first refusal on the 51% stake. At around six times earnings in 2003, these shares look a great punt.

[buying] 13/6/2002 12:24

Tipped in today's shares magazine. Anyone know what it says.

[foofighter100] 11/6/2002 12:57

When will the dust settle, will we see 15.4p before we start climbiung?

[jda] 10/6/2002 21:23

Thanks for the article Skipster.It backs up why I think there is plenty of pottential in Murchison once the dust has settled.

[skipster] 10/6/2002 12:14

Minesite – 10th June 2002

Murchison United Takes Major Step Towards Ambition of Becoming A Mid-Tier European Miner.

The steely determination with which AIM and ASX listed Murchison United has pursued its purchase of the Neves Corvo copper mine in Portugal has to be applauded. The deal has taken well over a year and every conceivable obstacle was thrown in its way during this period. Originally it involved the purchase not only of Rio Tinto's 49 per cent stake in Somincor, which is the operating company for Neves Corvo, but also the 51 per cent stake held by EDM which was the Portuguese state privatising arm. It was a big deal by any standards so Paul Atherley, managing director of Murchison , persuaded the Finnish mining conglomerate Outokumpu to come alongside as a partner so that the bids would be taken seriously.

After a few months it became apparent that the purchase of EDM's stake would not go ahead as it was held up by massive bureaucracy and changes on the Portuguese political scene. Rio Tinto, to its credit, stuck with the agreement to sell its interest for a price of US$78 million to be satisfied by an initial cash payment of US$57million and the remaining US$21 million by a vendor loan from Rio Tinto. This was still a lot of money for Murchison bearing in mind that while all this had been going on the tin price had fallen and affected profitability at its Renison tin mine, and it had sustained a hefty loss on its hedging of Australian currency. It did not help when Outokumpu withdrew from its partnership on the grounds that the original plan to buy 100 per cent of Somincor had changed.

None of this did any good for the rating of Murchison's shares which was also hampered by the decision of the AIM authorities to suspend the listing on the grounds that it amounted to a reverse deal and full documentation would have to be available before the share could be traded again. It was therefore a great relief for the long suffering shareholders of Murchison to hear last week that London stockbrokers Beeson Gregory and Australian brokers Euroz had completed an underwritten placing to raise approximately A$63.9 million (net of expenses) through the issue of 175,000,000 shares at an issue price of A$0.39 ( 15.3p) to fund part of the initial cash consideration. The price had to be dropped slightly during this exercise, but at least it was done.

Murchison has also arranged a mezzanine loan facility by entering into a term sheet with CIBC whereby CIBC will arrange that it and a group of lenders will provide a US$35 million non-revolving facility to Murchison. Various formalities still have to be ratified such as shareholder approval at a General Meeting next month, but at least the shares can be traded again on AIM and Murchison is now well on the way from being the owner of a modest sized tin mine in Tasmania to becoming the operator of the Neves Corvo mine which is described as the highest grade, major copper mine in the world. The tin mine is now being sold, so the sole focus will be on the Portuguese mine.

The Neves Corvo underground copper mine is one of the major base metal mines of Europe and is located on the Iberian Pyrite belt in the Alentejo region of Southern Portugal. It was constructed in 1989 by Rio Tinto and EDM at a capital cost in excess of US$550 million. It mines and produces approximately 1.8 million tonnes of ore per annum, producing 81,000 tonnes of copper concentrate for sale to international smelters. The mine has extensive copper and zinc resources and has exploration potential for additional resources.

When considering the purchase price it should be remembered that Neves Corvo has had approximately US$750 million of capital expenditure over the last 13 years and has generated in excess of US$1.2 billion in profit during that period. Atherley and his team built an excellent reputation for turning Renison into a highly profitable tin producer before the price turned against them and claim that they will be able to squeeze more out of Neves Corvo once they are in the driving seat.

The currency hedging demanded by Westpac in support of a loan at the time of its purchase of Renison is still a pain as currency was sold forward at a rate of 0.6705 A$/US$ compared with the present rate of 0.571. The loan has been repaid, but there are currently US$82.5 million in outstanding hedge settlements which have been rescheduled for payment over several years. A lesson has been learned and the future is now what matters.

Murchison is looking past Neves Corvo to acquiring other mining operations where it can inject fresh capital and apply innovative operating techniques in order to achieve lower overhead costs. These operations will typically have benefited from large capital expenditure programmes which in recent times may not be generating acceptable returns on capital invested. At last things are moving the right way with both copper and the Aussie dollar strengthening so Murchison may have moved into Europe at just the right moment.

[jda] 07/6/2002 21:26

It will rise next week but will be volatile until after AGM in mid July,then should start to rise.Only my opinion (I did make two purchases today so put my money where my mouth is!!!)

[kindl] 07/6/2002 09:49

The stock YoYo'd a bit today. Volatile or what? from 16%+ to 16%- .

Looks as if thre are more people happy to gt rid of the stock than buy this strangely managed company.

[willo] 07/6/2002 08:23

Fundraising at A$39 - this equates to 15.4 pence by my calculations.

[skipster] 06/6/2002 14:36

relisted at 3:30pm!!!!!!!!!!!!

[jda] 31/5/2002 21:33

They have been suspended in AUX. Understand fund raising was at 19p only.

[morrisminor] 31/5/2002 15:04

Yo

Dead right .The Directors obviously don't care a stuff about their shareholders.

[yogro] 30/5/2002 17:53

I'd like to get these shares on a slow boat to China, at least then there would be some possible end to the wait, what the...

[supersec] 24/5/2002 08:40

Current price is £0.297.

SS

[stewjames] 22/5/2002 21:35

Really? My apologies then yogro!

[jda] 22/5/2002 21:22

Yes you can sell them I believe but you need a broker who will trade them in Australia with higher costs as well.

[stewjames] 22/5/2002 17:36

yogro, nothing at all. 'Cos you can't. Sorry. :-)

[yogro] 22/5/2002 17:20

What will happen if I try to sell my Murchison shares?

[jda] 16/5/2002 21:36

No-I saw the trade too.
Could me a capital raising exercise with a institution? although price is a lot more than I would of expected even if I do believe the shares will reach this price my understanding is that they are around 28.5p currently.
Price may inadvertently been quoted in cents? 1.06c?

[yogro] 16/5/2002 16:55

I'm afraid so, please pick up a copy of the daily newspaper as you leave the corridor, the doctors office is just outside with the little light on.

[skipster] 09/5/2002 23:27

Minesite – 9th May 2002

Murchison United Moves Closer To Its Goal Of Becoming A Mid-Tier European Mining Company.

At last Murchison United seems to be squeezing itself out from the position between a rock and a hard place in which it has found itself in recent months. On one side it had the price of tin which was doing damage to profitability at its Renison Bell mine in Tasmania, and on the other the long drawn out tender process which delayed its purchase of the Neves Corvo mine. To make its position even more uncomfortable, pressures developed on its hedging programmes and the AIM people suspended trading in the shares.

These two last events were not connected. Hedging is great when it works, but most Australian mining companies split the bet between product and currency and got the latter comprehensively wrong. They just could not visualise the Aussie dollar falling below an exchange rate of US$0.60 cents, but it did, and still is. Presumably the banking advisers to these companies agreed, took commission for the currency hedging deals, and are now giving them a hard time. And poor old Murchison seems to have had a similar experience over the share suspension. Its advisors pushed on with the Neves Corvo deal but everyone seemed to have been caught flat footed when the shares were suspended by AIM, but not the ASX, until an Information Memorandum containing full details of the acquisition and the funding arrangements had been forwarded to shareholders for their consideration and approval at a General Meeting.

Not a happy time for Paul Atherley, its managing director, who was riding high on his achievement in driving costs at Renison down to levels where it was one of the lowest cost tin producers in the world. Nevertheless he maintained very close contact with shareholders and other supporters and raised £1.65 million via a placing during the last quarter. He is now on the point of buying Rio Tinto's 49 per cent stake in Neves Corvo, the highest grade, large copper mine in the world which he describes as the crown jewel of the Iberian pyrite belt. This deal is no longer conditional on the purchase of the interest held by EDM, which is the Portuguese privatisation body, though this may follow.

At the same time Renison is to be sold to another Australian company Sirocco Resources for A$15 million in shares and cash. Thus Murchison's shareholders will have an ongoing interest in Renison through a 15 per cent stake in Sirocco and will also get a
revenue related royalty payable after the first 12,500 tonnes of tin is produced in the event that the realised tin price exceeds the greater of A$7,000 or US$4,000 per tonne. Sirocco is currently switching back from technology to mining where it has interests in the Quest 29, Tom's Gully and Mount Bundey gold mining and exploration projects in the Northern Territory and Renison will be its main asset.


The A$10 million in cash from this deal will be used to close out Murchison's existing currency hedge position which amounted to A$/US$ contracts outstanding for a total of US$82.5 million (A$123 million) at a rate of 67.05 cents at the end of March. This will clean up Murchison's balance sheet and the next event will be the pathfinder document to raise US$35 million for the purchase of Neves Corvo. Bank loans for a similar amount have already been agreed and, as these are unhedged, Murchison's shareholders will get full exposure to a rising copper price. A road show has already taken place in Australia with encouraging results and there will be one in London next week following a visit to Neves Corvo by fund managers and analysts.

The Information Memorandum includes a full AIM admission document and once this is published the share suspension should be lifted. It has been a long hard road, but Murchison is moving closer to achieving its ambition of becoming a mid-tier European mining company. The underground mine at Neves Corvo in southern Portugal was constructed eleven years ago by Rio Tinto and EDM at a capital cost in excess of US$550 million. It mines and processes 1.8 million tonnes per annum producing 81,000 tonnes of copper in concentrate for sale to international smelters. The mine has extensive copper and zinc resources and has significant exploration potential for more. This is a very different kettle of fish from a modest tin mine in Tasmania, but Atherley and his team will use the experience gained there to unlock the full potential of Neves Corvo.

[tibrahim] 27/4/2002 02:12

Just been to Murchison's website, shows share price as $A0.86 that converted is 34p

[jda] 26/4/2002 21:38

Can not work out if this is good or not? What has it done for the share price in AUX?

[tibrahim] 26/4/2002 15:34

26/04/2002 07:00 RNSREG Mur to Sell Renison Bell Mine MUU Murchison United NL