ZFX - Zinifex Ltd

[thekiwi]

Zinifex Limited (ZFX) is one of the largest integrated zinc and lead producers in the world. The company's operations include the mining and processing of zinc and lead ores and the smelting of zinc and lead concentrates. ZFX also produces significant amounts of silver and lesser amounts of copper and gold.

++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++

It reported yesterday that forecast net profit in its prospectus for the June quarter would be an estimated $30 million greater than the forecast of $13.6 million contained in the prospectus.

It floated recently at 1.85 where it was to earn $13.6 million ... what if it is now to earn an additional $30 million [?]

Does this mean it is heading for an EPS of 24c, putting it on a future p/e of around 7

http://home.infobahn.co.nz/images/asx/zfx/20030701_daily.png

[thekiwi]

PS
Looks like approx 70% of the stock is held by overseas hedge funds?

[slam]

This one looks interesting at a glance tk
Might do some digging in it over the weekend.
Let you know if I find anything interesting.

Cheers
Slam

[clearasmud]

I bgt some mainly on the profit upgrade.Also own OTI.There is quite a bit of negativeity surrounding this stock on HC ,Huntleys.I,m bullish on especially lead and base metals in general
cheers

[slam]

clearasmud
I own OTI as well;)
Hence my interest in ZFX

Cheers
Slam

[thekiwi]

quote:Originally posted by clearasmud

I bgt some mainly on the profit upgrade.Also own OTI.There is quite a bit of negativeity surrounding this stock on HC ,Huntleys.I,m bullish on especially lead and base metals in general
cheers

HC= ?

Any reason for the negativity? ie is it based on where the profit upgrade came from?

[thekiwi]

Ahhhh its the old Pasminco which went under apparently due to hedge contracts and the low price of zinc.

[Long Strangle]

Hot Copper - that's where Gerry spends most of his time. LS.

[slam]

A bit of knowledge on this one from another site.

http://www.sharescene.com/index.php?showtopic=1217

looks a bit much of a gamble for me[:I]

Cheers
Slam

[thekiwi]

quote:Originally posted by slam

A bit of knowledge on this one from another site.

http://www.sharescene.com/index.php?showtopic=1217

looks a bit much of a gamble for me[:I]

Cheers
Slam

He he ;)
Quite happy to sit on the sidelines with this one for a while

[younga]

This one caught my eye too - I'm trying to find it's half year result - dows anyone have any idea where I can find this?
I'm looking at BHP or this outsider :-)

[younga]

PAS is the old code - it made over 200 mill. loss - I'm steering clear of this one :-)

[clearasmud]

Younga,
go to their wedsite http://www.zinifex.com/index.aspx?link_id=19.737
they claim in a presitatation that they arn't the old PAS .
They are also bullish on zinc
One broker has them on a prospective PE of 5.5 and a BUY.see Sharescene.com.au ZFX
I hold.

[Long Strangle]

Profit after tax for the June 2004 quarter is an estimated $30 million higher than the $13.6 million forecast. The rise reflects lower charges and an additional $23 million from higher prices obtained by the company during the last 3 months. While the deferred tax liability has been lowered, Zinifex retains its tax losses of $330 milion as stated in the IPO and should not pay cash flow tax for a number of years. Earnings estimates for 2005 have been raised to $153 million or 30.6c per share.

Buying calls on the open tomorrow. Good luck LS. :)

[moimoi]

won't touch it either...there should be an inquiry into this puppy.

it is the dead pasminco....shareholders got totally shafted on this one....placed the company into receivorship then hello a year later pops back up in an renamed IPO. Previous shareholders didn't get a brass razzoo....but the banks and the previous managers were all nicely looked after....

[clearasmud]

My gut is telling me this one will go higher as soon as the huge overhang is sorted out.Remember low PE
My opinion only and i hold

[TRENCH]

The coy purchased key performing assets from pasminco. I recently picked up a fair few of these for the mid term portfolio. Next year should be debt free. pe is low.. great exploration oportunities and zinc prices expected to rise and keep coy in profits. Like the look of the chart, and like the look of the directors. This stock will run to $3 very soon... the eps fpor 2005 makes her undervalued. Lots of liquidity in the stock which is waht i am coming to see is an important part of the market. Keeps people feeling safe.

[TRENCH]

keep an eye on this one.. ready to run again.. once we break 2.20 we are sky high for a while. yesterdays volume recovery tells me we have a spring ahead.. up or down we will have to wait and c. i m o the stock truly has a way to go yet.

[TRENCH]

ANYONE ELSE INTERESTED IN THIS ONE. ANY CHARTIST CARE TO SHED THERE LIGHT

[skinny]

Hi leverage guru, I've over 50k on a more narrowly focused lead mining play (IVW.TO) but if I didn't would be throwing some at ZFX for sure based on the fundamentals (no hedges, fwd p/e of about 10 on current prices and upside surprise for them given the scary looking inventory trends for lead and zinc on the LME.) Main risk well know, China, but IMO thats over discounted into the current price.

Bon chance!

[SEC]

Are you still in this, O Leveraged One? The ghosts of Pasminco are slowly being put to rest and the hedge funds which were net sellers ever since the IPO look to be buyers now. Medium sized Australian mining companies are ripe takeover options (WMR, PMM imminent) and ZFX may be another. ZFX's price used to be discounted due to its past, now it might be acquiring a takeover 'premium'.

SEC (PMM, ZFX)

[SEC]

The Pasminco ghosts have finally been exorcised after the latest profit announcement - up 25% in a month. But no posts - any others here still holding?

SEC

[Westie]

SEC, never held but always watched this one closely. Good on you for your "fortitude" if you made $ off this one. I became alerted when i noticed a US value fund specializing in distressed companies, usually in the States, showed a large holding in a quarterly report of their international fund. I think they bought in when ZFX floated out of the pasminco ashes. Their logic was that ZFX had the best assets of pasminco, no debt and plenty of upside on the zinc price. The game was also weighted in their favor as most investors wouldn't touch it with a barge pole after its association with pasminco. I looked at about $2.10 and again around 2.00 - 1.90 but didn't have the funds available to buy.....win some, fail to win some I guess. Take a look at the shareholder letters at www.thirdavenuefunds.com. I'd move on when these guys sell.

[lewinsky]

Hi Sec,
Refer my earlier post. I like this story and the way zinc prices are looking for 2005. I'm holding and watching the price move ahead nicely.

[SEC]

ZFX now around the $4 mark and up 70% in 2005. If zinc stays around current prices ($1410/tonne), UBS predicts ZFX will be on a forward PE of 4 for FY06 and 07. The following article from Mining Weekly states GFMS is predicting an average $1400 for 2006. If so, ZFX and other zinc stocks (KZL CBH PEM) are in for some serious rerating over the next few months.

SEC (ZFX)

[i]Demand puts price pressure on zinc

During the early part of the summer, the high, albeit declining, stock levels left the zinc market exposed to the uncertainty about the global economic prospects, the specific weakness in the galvanised steel market and the strength of the dollar.

These factors combine to reduce the zinc cash quote from its recent high of $1 430/ton to $1 175/ton, said GFMS in a release yesterday.

However, many of the more recent economic indicators have assuaged concerns about the rate of economic growth going forward, while the rebound in the dollar has gone temporarily into reverse.

As such the cash quote has rallied from $1 175/t on July 7 to close to $1 400/ in early September.

The rally has been supported by two “one-off” factors - the on-going strike at Teck Cominco's Trail plant, which has 290 000 tpy capacity and the Gulf coast flooding following Hurricane Katrina, which will temporarily halt shipments from the New Orleans' warehouses, which account for around 50% of LME stocks.

The increase in zinc prices has come against a background of lower LME stocks. In August, they fell by 21 375 t following a 29 650 t decline in July.

LME stocks now stand 68 475 t below where they started the year.

Hidden stocks will have little impact on the market There has been renewed speculation concerning the existence of hidden zinc stocks with some estimates suggesting that a further 150 000 t are held off warrant.

In terms of the impact on zinc pricing, a number of factors need to be borne in mind.

First, the existence of hidden stocks does not preclude a sharp rally in prices. For example, zinc cash prices peaked at $1 430/t on March 16 when hidden inventories were far higher than they are today, before over 100 000 t of off-warrant material was delivered into LME warehouses in early June.

In addition the market's reaction to the inventory surge was muted in the extreme.

Accurately quantifying, the remaining level of hidden inventory is nigh on impossible given that inventory data does not exist for China, the world's largest producer and consumer.

An analysis of the difference between the market balance and changes in reported inventory since the beginning of decade suggests that the current hidden stock level, post the 100 000 t jump in LME stocks, is below rather than above 100 000 t.

In terms of GFMS's revised price forecasts for 2005/06, it does not believe that the existence of hidden stock levels will have a negative impact on pricing.

Galvanising cuts impact zinc demand

The latest ILZSG data highlights the consumption weakness that has begun to emerge.

Its initial estimates for the second quarter show a 4,3% year-on-year decline to 1,831-million tons.

The decline is from an inflated 2004 base of 1,913-million tons.

Given the cuts in place at galvanising mills, it expects that the ILZSG data for the third quarter will show a similar lacklustre demand environment.

However there are already some signs that the corrective action taken by the galvanisers is beginning to have an impact on prices that might allow higher output (and stronger zinc demand) in quarter four.

Mine supply remains tight

Both the current level of spot treatment charges (around $70/ton) and the latest data from ILZSG confirm the tight supply position.

According to initial estimates, Western World mine production in the first half was up just 1,8% year-on-year at 3,318-million tons, while global output was 1,9% higher at 4,819-million tons.

Refined production has increased more quickly at an estimated 3,8% and 4,2% respectively; however given the tight concentrate position and further smelter

[TRENCH]

I WAS SPOT ON WITH THIS ONE..
HAVE SINCE SOLD MY STAKE INT THIS GREAT COY ONLY TO SEE THE PRICE RAPILY RUN HIGHER BY ANOTHER 70 CENTS. I MAY EVEN BUY IN AGAIN ON ANY RETRACEMENT BELOW 3.50

[Skol]

I agree LG, I like this company,no debt, have been in and out twice, last at 3.48. Any retracement and I will buy.

[SEC]

Leveraged One I have found through experience in this bull market to buy and hold and let profits run rather than trade in and out, particularly if the stock price long term trend is upwards. Sure I grimaced at ZFX's preformance during April-May this year but since I bought ZFX in Dec 04 I was still well up when ZFX plunged back below $3. Now I am reaping the rewards of being patient as ZFX blasted through $4 today - with more rises to come if the zinc price remains anywhere near current levels.

SEC

[davidrob]

Zinifex ZFX

Agree in entiterty SEC...

Coz a lot of folk got Burned with pasminco, the PE is still way Too low presently for ZFX -- IMO....

I took a position in ZFX 2 weeks ago, and again added 1 week ago...

After reviewing their Adjusted Pre tax Profit Increase for The Year, following a goodish preceding year, ZFX, on that statistic are, on my reckoning, in the Top 5 ... or so Adjusted Profit/EBIT Increase - from previous financial year, in terms of: substantitive companies on the ASX 200 .... and in the top 10 or so overall ....

We are talking from memory, a 'number' approaching 200% increase.??

(Inter State today Sec, so not near my all may ASX Co. Earnings Annual Company Reports now, but will double check that actual number on the morrow....when I fly back into Sydney....)

Revenue Increase, Profit margins and Return on Capital (Equity) nubers from previous year were all also mighty impressive..

Again working from Memory, the PE is less than 10... is that right ??!!

Anyway, I feel, at this stage that, Zinifex, ZFX has at least another 30% minimum share price increase in her, over the next 5-7 months....

Very Good Call Sec [^]:)

Kind regards

Robbo:)









Profted

[SEC]

quote:Originally posted by SEC

Zinc won't stink in 2005, it should shine.


Ho ho ho.

Today's surge was due to Macquarie Bank now predicting zinc will reach 75c/lb in 2007.

SEC

[tracker]

gotta tell you after bhp this stock would have to be the best "trader" on the market, just when you think its done its dash, it just surprises again
any charty thoughts out there, ARCO , your thoughts would be greatly appreciated, as uncharted territory, fibs have to become relevant
BHP and ZFX as well as LHG happen to be the only CONSTANTS on my watchlists

goodd luck to holders, and well done
tracker
trailing stops as always

[TRENCH]

shes in a perfect chanel at the moment... sooner or later this ones going to test $5 on a blow off day i reckon..she seems to stall then consolidate and run again.,, strange share price. I think this ones a no brainer.. buy and hold

LHG is simply amazing..

[SEC]

quote:Originally posted by SEC

Leveraged One I have found through experience in this bull market to buy and hold and let profits run rather than trade in and out, particularly if the stock price long term trend is upwards. Sure I grimaced at ZFX's preformance during April-May this year but since I bought ZFX in Dec 04 I was still well up when ZFX plunged back below $3. Now I am reaping the rewards of being patient as ZFX blasted through $4 today - with more rises to come if the zinc price remains anywhere near current levels.

SEC


Now $6+ up 200% in a year and I still hold. Can't see much upside in ZFX, KZL or any other zinco now but will most likely continue to hold (unless the cardinal rule is broken).

SEC

[SEC]

And it's official. Zinifex is the best performing stock in the ASX100 for 2005. I'm just chuffed I held all year and decided not to sell in May or trade in and out. A big THANK YOU to the hedge funds that bailed out of 'Pasminco II' suppressing the share price to under $2 for most of 2004 and made ZFX artificially cheap. Now with the price nearing $7 and concensus eps for 06/07 now $1.41 they'll be kicking themselves (again).

SEC

From The Age:

Zinifex turns in a stellar performance

By Barry FitzGerald
December 28, 2005

Resource companies were the best-performed stocks in 2005 by a long way. The China-led boom in commodity prices made sure of that.

But who would have thought the title of the best-performed stock in the S&P/ASX 100 Index would have gone to Zinifex, the base metals group that rose from the ashes of the $3 billion Pasminco collapse in 2001?

Zinifex's share price performance in 2005 has been stellar, surging from $2.37 to $6.68 for a 181 per cent return.

It left the rest of the S&P/ASX 100 in its wake, with Papua New Guinean oil and gas producer Oil Search a distant second, returning 101 per cent.

The biggest winner from the Zinifex run has been San Francisco-based "value" fund Farallon Capital, which holds 11.17 per cent and would be sitting on more than $275 million paper profit on an investment not yet two years old.

Take the starting point for Zinifex back to its $1.95-a-share float price on April 5, 2004, and the stock's performance is an amazing 242 per cent gain - all that from a company that, initially at least, was cast in investors' minds as little more than Pasminco II.

Investors had good reason for their initial wariness. Those that held Pasminco shares before it went into administration on September 19, 2001, were to get nothing.

The group's financier creditors - including Australia's big four trading banks - did worse.

They were owed $2.1 billion before the Zinifex float under CEO Greig Gailey but had to take a $900 million "haircut" to see through the debt-for-equity swap that formed the basis of Zinifex's birth.

The stock they sold into the float process fetched $975 million but is now worth more than $3 billion. If only they had held on.

While Zinifex rose from Pasminco's ashes, it came to the market carrying none of the baggage that killed off its ancestor. Zinifex took only the best (six) assets from Pasminco, carried only minimal debt and had no hedging woes when it hit the lists in 2004.

This meant that when the zinc price took off, Zinifex would be fully leveraged to the upside.

Zinc was something of a laggard among the base metals in response to the China-led boom. But zinc roared ahead in 2005, rising from $US1174 a tonne to $US1870 a tonne.

When Pasminco went under, zinc was friendless at $US733 a tonne.

The group's next most important metal, lead, has also been doing the right thing, moving from $US480 a tonne when Pasminco went under to $US1135 a tonne this week.

The metal prices' moves have put a rocket under Zinifex's earning capability. Broker CSFB forecasts profit of $234.7 million for 2005 to surge to $432 million in 2006 and to $500 million in 2007.

The latter result would represent $1.01 earnings per share and, according to CSFB, allow the annual dividend to be cranked up to more than 35 ¢ a share (4 ¢ in 2005).

The burning question for Zinifex is how long will the good times last. Most metals analysts believe that the "fundamentals" for zinc look good for another year or two.

Demand for the metal - its main use is to protect steel from corrosion - is forecast to continue to outstrip production.

Higher prices will encourage investment in new supply.

National Australia Bank's economic forecasters recently tipped zinc to remain strong. The bank forecast that the zinc price would rise 21 per cent in 2006 to average $US1644 a tonne.

[SEC]

quote:Originally posted by SEC

Now $6+ up 200% in a year and I still hold. Can't see much upside in ZFX, KZL or any other zinco now but will most likely continue to hold (unless the cardinal rule is broken).

SEC


OK I got that one wrong, I never ever thought the Zn price would reach 90c/lb, and some of the smaller zincos have caught up with Zinifex's % gains accordingly.

Now some analysts are calling the Zn price to AVERAGE ~90c/lb for 2006. If so, there's still more upside in the likes of zinc miners ZFX, KZL, PEM and CBH (have I missed any??).

SEC

[SEC]

Does no-one else hold zinc stocks on this site? ZFX now up 300% since Dec 04 and Perilya up 80% in a month. Forget gold!!!

SEC

[ASXIOU]

KZL Kagara Zinc another good performer. I hold, looking at about 130% gains since August. In hindsight ZFX would have been the better choice but such is life. ZFX on an unstopable path and likely to hit $10 in the not too distant future. Zinc production is totally unhedged and as long as the zinc price keeps rising so will it.

disc: hold KZL, please do your own research before deciding whether to buy, sell or hold stocks.

[SEC]

I've been watching KZL for a while, it took longer to take off but has run harder than ZFX since November. Good choice, unhedged production (I think), nice 130% gain with more to come.

SEC

[SEC]

Teck Cominco has produced this graph showing how chronic the zinc deficiency may be within the next few years. There needs to be some significant new discoveries and production soon!

http://www.sharescene.com/uploads/post-16-1139732267.gif

SEC

[moimoi]

The group's financier creditors - including Australia's big four trading banks - did worse.

They were owed $2.1 billion before the Zinifex float under CEO Greig Gailey but had to take a $900 million "haircut" to see through the debt-for-equity swap that formed the basis of Zinifex's birth.

The stock they sold into the float process fetched $975 million

Am i reading this correctly in....that in fact, pasminco's bankers didn't lose anything....?[:0]

ie: forgo 900mill and get 975mill back.??

moi.

[SEC]

Wow - the zinc price looks set to overtake aluminium for the first time since 1992. Given where the respective stockpiles are heading it might stay above aluminium for a while too.

SEC

[SEC]

1. Zinc price reached an all time high on Friday.
2. The price curve is now in backwardation.
3. There is speculation Xstrata will have to close its Macarthur River mine (representing 2% of global Zn production) due to regulatory constraints.
4. Forecast PEs for ZFX are less than 6 for the next three years.

If these forces don't get ZFX over a strong $8 resistance line tomorrow and into blue sky territory I don't know what will!

SEC

[SEC]

There we have it.... Zinc is now more expensive than Aluminium for the first time in 14 years, and ZFX finally broke that $8 resistance to reach an all time high.

SEC

[wns]

quote:Originally posted by SEC
If these forces don't get ZFX over a strong $8 resistance line tomorrow and into blue sky territory I don't know what will!

SEC


Good call. Despite its stellar rise, it still looks to be reasonable value.

[SEC]

Zinc stocks have been crazily oversold over the past week. I bought KZL this afternoon. I should still console myself in noting that ZFX is still up 15% over the past two months.

SEC

[crisstoff]

Fantastic result - $1.079B and a 70 cent dividend. PE of 5.

This is undervalued in my opinion, especially with this great dividend and the near term look af metals.

Zinifex forecast zinc to remain in short supply for the next year, with it increasing in 2008. This seems to be a general consensus in the market.

With the near term forecast for metals and this result it should retest the highs of $14, possibly before the record daye of 20 October.

[Dazza]

WOW!! so it did beat the 1 billion mark schweeeeeet

mm 70cent divi, conservative i must say, 50 cent would be minimum, ppl were saying $1

but at 70cents im a happy chappy

tahst what mmm 7.7% divi yield for me!! im happy keep up the zinc going muahaha

[crisstoff]

Yep, great result. I am on a 10% yeild - brought at 8.00, plus already had a 10c dividend earlier.


I thought it may have gone up closer to $12 today, but I suppose we are lucky that it is still in the green considering the rest of the market is down.

Will be interesting to watch what is going to happen closer to the record date.

[SEC]

When I bought ZFX for $2 nearly 2 years ago I never thought it would trade on an 2005-06 PE ratio of LESS THAN 1 !!!!!!!

SEC

[moimoi]

wow...$1bill.......perhaps management could see fit to remedy the situation of pasminco shareholders.!!

amazing how a "supposedly" valueless company can create such an enormous profit in such a short space of time.

Enjoy your divies boys and girls...they have come from the pain of small investors before you.


YUCK....those sour grapes taste awful..!!! ;);)

cheers
Moi.

[soulman]

Yes, more generous than BHP and the generosity tells a tale in the share price.

A long wait still for the divy and I might have a dip if the SP takes a dip before that. Great buy at $2 SEC. If I have a good memery ZFX trades below it's issue price for a while at about $1.75 (IPO was $1.95?) when it first floated. This is one of the great investment.

[lone wolf]

Only 6 days to divvy date, zinc up 7.9% from Friday, stocks at LME down to 134500 tonnes,(from 393000 at start of year) is Zinc the new gold?!!!!!!!

[soulman]

Talk about a hole in one. Ex div of 70 cents today and ZFX manage a 2 cents rise. You lucky holder.

[Dazza]

thank u , thank u very much

but its usually next day soulman ...

so we will see how next day goes

[lone wolf]

Absolutely gobsmacked with todays action, escpecially as it went ex-divi! Didn't expect that to happen! Zinc price seems to be at the top of its cycle, so I am guessing a small correction could be on the cards soon.

[SEC]

quote:Originally posted by soulman

Talk about a hole in one. Ex div of 70 cents today and ZFX manage a 2 cents rise. You lucky holder.


I enjoy a free dividend, particularly one of this magnitude.

[tricha]

Well potential. poential, potential.

Here comes $20 on the quarterly result, my partner bought some a week ago. None for me, sticking with what I have, but really, another takeover target and a fantastic quarterly to be announced.

Boom, boom, boom!

[soulman]

Not sure about today Dazza. It was up 40 plus cents in the morning. But like you say, down she went after that. Still, big percentage move in the last 2 weeks.

[Dazza]

omg

so its gone ex all this time and umm its still over $13?

dayam man collecting my nice divis :D

my other Zinc play is :

CBH - im up 20% so far

[SEC]

LME zinc stockpile levels have now fallen below copper for the first time since mid 2003. At the rate of drawdown that has been occurring consistently for the past two years, the stockpile will be depleted in 5 months. If the stockpile is allowed to dwindle down to <60000 tonnes, that'll be less than two days global consumption, and that'll be when the fun really starts (nickel went ballistic at about the same stage). Might happen just in time for Xmas!

SEC

[tricha]

Separate market speculation of an $18 per share bid for Zinifex sent its stock up 68¢ to $14.10.

$18 is to cheap, price needs to double to reflect fair P.E ratio, especially to block a take over.

Zinc October 26,08:26
Bid/Ask 1.8767 - 1.8812
Change +0.0181 +0.98%
Low/High 1.8494 - 1.8948

[tricha]

Ziniflex is far to cheap!

Part of an excellent article from Denpal "Base Metals - A Gold Alternative?" (on supercycle)

The first company is Zinifex (ZFX on the Australian Stock Exchange). ZFX is the largest zinc producer in Australia, producing 6% of the world's demand for zinc. In addition, ZFX supplies 4% of the global demand for lead, a metal also making new highs at this time. Here are a few brief facts about ZFX:

Trades more than 5m shares per day; market capitalisation exceeds US$5 billion.
Current ZFX share price (30 October 2006) approximately A$15.00.
Earnings for year to June 2006 - A$2.20 per share and dividend 80c per share.
Historic PE ratio 6.8; historic dividend yield 5.3%.
Average zinc price received in the 2006 year was 96cUS.
Current zinc price has just made a new all time high above US$1.90c.
If current zinc and lead prices are maintained, 2007 earnings will be at least double 2006 earnings - perhaps A$4.00 per share or more, and the 2007 dividend say A$1.60.
Thus ZFX is trading at a forward PE of 3.8 and a dividend yield of 10.6%.
If zinc goes to $2.50, which is what I expect in the near future as a result of the continuing decline in LME zinc stocks, ZFX earnings and dividends will obviously be even higher.

The point I am making is that ZFX is not trading at wildly optimistic, unsupportable "bubble" valuations. ZFX is trading at the sort of valuation one expects at the start of bull markets. As Richard Russell is wont to say, "Bull markets climb a Wall of Worry". This is what we have in base metals. The overwhelming emotion is fear whereas in bubbles the prevailing emotion is greed. ZFX share price can be justified on historic earnings and dividends. The current ZFX market price takes no account of the bullish numbers emerging in zinc and lead prices

[SEC]

Went to the AGM today. Perhaps 250 people attended, more than what the management planned for given the lack of seats and refreshments!

The main theme was their exploration efforts - spending millions to extend their mine lives and bringing Dugald River into production by 2010. Also looking at securing exploration rights elsewhere in the world, perhaps in some JVs. No mention of acquiring/merging with any zinc miners.

I am increasingly confident that production at Dugald River will be a formality (problems with high manganese content can be dealt with in smelting by blending with concentrates from other mines) and this will extend ZFX zinc reserves to beyond 2020. Greig mentioned that the market was not taking any of this exploration into account when valuing ZFX.

Another interesting comment was the forecast of global zinc supply for the next couple years - further deficit in 2007, small (120Kt) surplus in 2008 - not enough to replenish the stockpiles to any meaningful level.

Most of the AGM info has been posted on the ASX.

SEC

[soulman]

Nice article Tricha. Wished I followed it at that time although I had so many chance to buy ZFX at about $11.50 a few monts ago with cum div.

SEC, ZFX did signal significant cost increases, how optimistic are they about increasing their $1 billion profits.

[SEC]

quote:Originally posted by soulman

SEC, ZFX did signal significant cost increases, how optimistic are they about increasing their $1 billion profits.


Prediction of 10% cost increase for FY07 but not surprising given extra royalties, materials and employee expenses (I read somewhere there was an average 11% pay rise for QLD miners this year) and flagged accelerated pre-strip program for Century Mine (although I think this is capitalised and amortised). Greig mentioned their cost pressures were perhaps slightly less than what is standard across the mining industry. Also concern for power costs at Budel - linked to oil price.

Greig gave no indication of 07 profits (not surprising given the volatility in zinc price) but reading between the lines an increase in profits is pretty likely if zinc prices stay anywhere near current levels.

SEC

[SEC]

quote:Originally posted by SEC in Dec 2005


Now $6+ up 200% in a year and I still hold. Can't see much upside in ZFX, KZL or any other zinco now but will most likely continue to hold (unless the cardinal rule is broken).


Now $18+ up 200% in a year and I still hold. Can't see much upside in ZFX, KZL or any other zinco now but will most likely continue to hold (unless the cardinal rule is broken).

SEC

[cookiemannz]

Zinifex and Umicore to create worlds leading producer of Zinc.

http://www.asx.com.au/asxpdf/20061212/pdf/31027fmd0cy22j.pdf

[SEC]

This sounds like a good deal for ZFX. At the moment the market is valuing the smelting and recycling operations at virtually zero, despite their 30% contribution to ZFX's bottom line for FY06. Zinifex is priced at less than half the forward PE of Umicore and the market should realise how cheap ZFX is with this deal. Not to mention the increased takeover potential.

There is a recent precedent here - BHP spinning off BHP Steel (now Bluescope). Worked well for all concerned, BHP was able to maximise the return from an undervalued asset and Bluescope has more than doubled in value since its IPO.

SEC

[SEC]

Zinifex is making a C$358M takeover bid for Wolfden. On the face of it, it soulds like a really good deal, with the Wolfden mines scheduled to come online when Century Mine reserves are depleted in 2016 allowing Zinifex to continue current zinc and lead production rates for a further 7 years.

On the other hand there are long lead times to develop the mines and get the resources upgraded to reserves. Not to mention the locality of the mines - in Arctic Canada, with the associated climate and transport issues. So the production costs will probably be relatively expensive compared to Century.

Overall, it looks a good fit. Will this acquisition reduce the discount ZFX currently trades at because of perceived mine life problems[?] Broker upgrades might be forthcoming since the NPV calculations will be increased.

SEC

[Skol]

This one has a bit of potential at the moment and technically looks good.
Price has spiked up in the last couple of days and volume thurday highest one day volume since Aug. 06.
Zinc price up from 3200 to as high as 3800 in the last couple of weeks.
PEM also benefitting from the increase as well.

[soulman]

Yes, I was lucky to get PEM cheaply last week but sold out way too quick. It was my first foray into PEM. Now, I am looking at ZFX. Looks good on dividend yield and I think they are sustainable in the near future.

[Skol]

Another (3rd) day of big volume and ZFX up 20c or so despite crap market down 55. Gotta mean something.

[Viking]

AXA has increase their holding in ZFX by 1% helped today's increase.
Will this be a good boost further?

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[SEC]

$20 GO ZINNIE!!!!!!!

My second 10-bagger in two months.

SEC