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Gold/Mining/Energy : Inco-Voisey Bay Nickel [ T.N.V]
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To: reg who wrote (114)11/29/1997 8:27:00 PM
From: don wang  Read Replies (2) of 1615
 
We only consider "the trust busters not allowing the two big nickel players (Inco and Falconbridge (FL)) under the same umbrella" (quotation of Paul Bagnell from FP), but we forget that Naranda also can sell the 46% share of Falconbridge which they own now.

There is a life time of opportunity to takeover Inco at very undervalued price at the moment. It will never happen again if they miss the boat.The book value of INCO is $33.00. Right now it trades at 0.83 of book value, 4.3 of cash flow and 0.71 of sales. To compare to Falconbridge (FL) which trades at 1.55 of book value, 7.54 of cash flow and 1.52 of sales. The intrinsic value and potential gain (Voisey's Bay) is much bigger than FL. Perhaps Narandan only needs bit $38.00 per share (1.15 book value) can take over Inco and they may need pay $25.00 per share (2.04 book value)to have all of FL.

This time Naranda planned to get back to being a base metals mining company by selling its oil and gas and forest products holding. FL is not thier real target but Inco. They can sell its oil, gas and forest stake they also can sell FL. Even without takeover rumors. The intrinsic value of Inco is much higher than $38.00. In 1996 FL was willing to pay $4.1 billion for Voisey's Bay deposit and it was backed by Noranda. Today Noranda can easily spend nearly same amount of money not only getting Voisey's Bay deposit but also grabbing whole INCO property. I believe that Noranda management has the strategy in their cards.

Don
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