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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: jrhana who wrote (31886)	10/28/2004 1:29:39 PM
From: Stephen O	Respond to of 39344

Takeover of a big mining producer WMC. The pricing of this deal says there is a lot more to come for all producers in terms of earnings and cash flows. Xstrata is controlled by Glencore. The following comment is from Deutsche Bank. Xstrata has announced a fully debt funded bid of US$5.55bn for WMC Resources, timed and priced for success. If successful this acquisition would propel Xstrata to major league status, add to its asset quality and introduce significant optionality. The timing suggests Xstrata has a stronger for longer view of the commodity cycle, hence the premium, and we expect timed to reduce the risk of an interloper making a counter bid, a risk we see see as moderate given WMC's status as one of the best targets globally for the majors. Maintain Hold and 910p price target. The deal - The bid is at A$6.35/share valuing the company at US$5.55bn and is expected to be fully debt funded. The bid represents a 25% and 29% premium to 3 and 6 month average share price for WMC Resources and >50% premium to our valuation. Transformational - WMC Resources produces copper, nickel, uranium, and fertilizers as its key products. Success would take Xstrata to a Top 6 copper position globally and Top 4 in nickel. WMC has had operational problems at its Olympic Dam copper operation preventing it from optimising on high copper prices. A medium term operational turnaround at this operation and then the ultimate expansion of Olympic Dam from 230-250kt of copper (current) to 600kt plus is the key value proposition, for any bidder. Financials - The bid puts WMC on a 13.5x PER and 5x PCF on 2005 versus Xstrata at 6.7x and 4.5x respectively but with the deal debt funded it should be accretive. This bid is not about next year earnings with value in the deal cashflow and NPV derived. Synergy options are limited for any party given WMC's modest overheads and the stand-alone nature of the assets.

To: jrhana who wrote (31886)	10/28/2004 1:44:42 PM
From: loantech	Read Replies (1) \| Respond to of 39344

Well it is a good thing to always check with CC on what I am saying. I did miss on GYD but it is back to .20 even though I sold most of mine at .165 at a healthy loss. So far I can pump ABS and CKG as Claude is somewhat behind them just not as heavy as I am. <g> Besides it is not a pump if you believe what you say and they have something to back it up. I think that is true in both ABS and CKG cases. I need to add to DAE. Do you own that one?