ABY - Aditya Birla Minerals

[shasta]

I've mentioned ABY a few times on various threads, so thought i'd start a thread, & share it with the masses. ;)

Aditya Birla Minerals is a Copper producer with two main projects in Western Australia ("Nifty") & Queensland ("Mt Gordon").

Total 2007/08 production was 87,195T

Also effectively paid off debt during the year ($119m), so the balance sheet is very clean, & will have more available cashflows :D

For more on the projects:

http://www.adityabirlaminerals.com.au/birlaniftyoperation.asp

http://www.adityabirlaminerals.com.au/birlamtgordonoperation.asp

Shares on Issue: 313,372,551

Current SP: $1.53 (12 month high - $4.30, low - $1.41)

Market Cap: $479,460,003

Top 20 Shareholders: Holding 85.2% (little free float!)

Substantial Shareholders:

- Hindalco Industries Limited* - 51% - 159,820,001 shares
- Barclays Group - 5.04% - 15,630,668

* Hindalco is Asia’s largest integrated aluminium producer and a growing producer of copper metal from copper in concentrate. Hindalco is a member of the Aditya Birla Group, which is one of India’s largest conglomerates. For more info refer link below.

http://www.hindalco.com/

From ASB Securities:

FY08 - EPS 33.5, P/E 4.6, DIV 10C, YIELD, 6.5% = Actual figures!
FY09 - EPS 34.3, P/E 4.5, DIV 16.1C, YIELD, 10.5%
FY10 - EPS 50.1, P/E 3.1, DIV 24C, YIELD 15.7%

Recent presentation:

http://www.adityabirlaminerals.com.au/media/investors_presentation_2008.pdf

2007/08 Annual Report:

http://www.adityabirlaminerals.com.au/media/Final_Annual_Report07-08.pdf

I haven't bought in yet as the chart is not the best, although i do consider ABY to be one of the most undervalued "base metal" producers on the ASX.

I expect Copper to remain robust for at least another 2 years, although there may be some short term weakness :confused:

When the tide turns i shall be accummulating... :)

Company website: http://www.adityabirlaminerals.com.au/aboutusoverview.asp

[shasta]

nice work Shasta, and good spotting

very underpriced based on the PE and look at that debt repayment

free cashflow looks set to be huge next report since they paid the debt - something like $190m?

Thanks Underdog. :o

With the debt gone & large cashflows, its easy to see why they can pay out a bigger dividend going forward.

With having a large supportive shareholder (as part of the Aditya Group), they clearly want "above average" returns by way of dividends.

ABY's SP could double in 2009 (to $3) & still only be on a P/E of 8 -9 & yield ~5%.

ABY @ $5 in 2010 is still on a P/E of 10, with an approx 5% yield

Very cheap, plenty of upside as further exploration is in the area surrounding there immediate projects.

They must have that Gold Mine mentality go back to where its been found before!

[shasta]

Business Description
Aditya Birla Minerals Limited (ABY) is a copper mining, development and exploration company with operations in Western Australia and Queensland. Following ABYs listing on the ASX in May 2006, companys previously sole owner, Indian aluminium and copper producer Hindalco, will retain 51% interest.

Company Strategy
ABYs strategy is to maximise total shareholder returns. Growth is seen though ongoing development of existing operations, as well as through acquisitions that satisfy the selection criteria of adding value and providing excess return.In order to implement this strategy Aditya Birla intends to focus on:1. Scale efficiency: to pursue expansion opportunities that generate additional economies of scale at its existing operations.2. Operational productivity: to continue existing operation productivity programmes at both the Nifty and Mt Gordon mines.3. Commodity price exposure consisted with the companys policy of minimal commodity and currency hedging in order to leverage the A$ market price for copper.4. Resource renewal: seek to extend the economic life of existing mines and leverage existing infrastructure through exploration in the vicinity of current operations.5. An in-house technical acquisitions group has been established to proactively identify advanced copper projects and existing operations world wide for potential acquisition.

Aditya Birla Minerals reported NPAT of $104.94m for the year ended 31 March 2008. Revenues from ordinary activities were $664.24m. Diluted EPS was $33.50 compared to $(0.25) last year. The net operating cash inflow was $198.83m compared to an outflow of $16.84m in the pcp.

Commsec offer 50% margin loans over ABY

Anyone from Commsec reading this, i'm happy to come onboard your research team :D

I also note ASB Sec has 50% margin loan on ABY.

[SEC]

A few words of caution. Aditya Birla's management is not regarded highly (a bean counter as CEO of a mining company is not a good look) and the board is stacked. It does not provide adequate information to the market on its operations (take a look at their quarterly reports as an example) and the one time it did provide any meaningful information it showed that production was below expectations and production costs were high (above $2/lb copper). They didn't make that mistake again to provide cost information. Taking a look at 06 results ABY is historically a high cost operation and struggles to make money if copper is below $3/lb.

The combination of perceived poor management, tightly held stock and high cost operations is why ABY trades at a discount to its peers.

If you're a copper fan and believe that copper will remain above $3/lb then ABY will do well, particularly since it has paid off a large portion of debt. However in this environment it is preferable to look at low cost producers ($1.30/lb or less production cost) since they have been punished too despite the resilient copper price and will be more recession proof than the likes of ABY if the price of copper plunges.

SEC

[shasta]

A few words of caution. Aditya Birla's management is not regarded highly (a bean counter as CEO of a mining company is not a good look) and the board is stacked. It does not provide adequate information to the market on its operations (take a look at their quarterly reports as an example) and the one time it did provide any meaningful information it showed that production was below expectations and production costs were high (above $2/lb copper). They didn't make that mistake again to provide cost information. Taking a look at 06 results ABY is historically a high cost operation and struggles to make money if copper is below $3/lb.

The combination of perceived poor management, tightly held stock and high cost operations is why ABY trades at a discount to its peers.

If you're a copper fan and believe that copper will remain above $3/lb then ABY will do well, particularly since it has paid off a large portion of debt. However in this environment it is preferable to look at low cost producers ($1.30/lb or less production cost) since they have been punished too despite the resilient copper price and will be more recession proof than the likes of ABY if the price of copper plunges.

SEC

Thanks for a "balanced" caution SEC, appreciate your thoughts.

I see PNA as quoting "life of mine" cash costs of $US0.91/lb, sounds almost too good?

They also have gold & silver credits, perhaps they have been offset?

Who else can i compare ABY to?

EQN arent producing yet, we have PNA, OZL, SRL, CDU?

[Huang Chung]

Some other copper plays in the producer/project catagory you might want to have a look at include Copperco, Exco and Havilah. Don't know too much about any of them, but have heard good things about Havilah.

Of course, if you're looking for excitement, there's always Cudeco. :eek:

SEC.....don't keep us guessing, who are the $1.30 a lb copper producers??

[SEC]

Thanks for a "balanced" caution SEC, appreciate your thoughts.

I see PNA as quoting "life of mine" cash costs of $US0.91/lb, sounds almost too good?

They also have gold & silver credits, perhaps they have been offset?

Who else can i compare ABY to?

EQN arent producing yet, we have PNA, OZL, SRL, CDU?

You can't compare CDU to ABY, it's still in exploration stage.

ASX copper producers to compare with ABY include PNA, OZL, SRL, CUO and KZL.

It is important not only to look at cash costs, but how the nature of the copper and how it is processed. There are two methods - froth flotation for sulphides and solvent extraction-electrowinning (SX-EW) for oxides. If its SX-EW, costs will be trending upwards due to spiralling costs of sulphuric acid.

The lower cost mines are:
Sepon (OZL), cash costs last quarter $US1.13/lb, uses SX-EW process.
Mt Garnet and Thalanga (KZL), weighted average cash cost $1.32/lb, both use flotation process.
Lady Annie (CUO), $1.15/lb, SX-EW.

Potential low cost mines:
Tritton (SRL), $1.60/lb but trending downwards, flotation process.
Phu Kham (PNA), flotation process, $???/lb (I await their HY report with interest).

I'm interested in CUO and PNA (in particular) to add to my copper exposure. Both (like ABY) are trading on 09PE of 3 - 4 but have better potential than ABY and are more likely to ride out any copper price plunge. However Lady Annie has a limited mine life which makes me prefer PNA if they can meet early production and cost targets.

SEC

[shasta]

You can't compare CDU to ABY, it's still in exploration stage.

ASX copper producers to compare with ABY include PNA, OZL, SRL, CUO and KZL.

It is important not only to look at cash costs, but how the nature of the copper and how it is processed. There are two methods - froth flotation for sulphides and solvent extraction-electrowinning (SX-EW) for oxides. If its SX-EW, costs will be trending upwards due to spiralling costs of sulphuric acid.

The lower cost mines are:
Sepon (OZL), cash costs last quarter $US1.13/lb, uses SX-EW process.
Mt Garnet and Thalanga (KZL), weighted average cash cost $1.32/lb, both use flotation process.
Lady Annie (CUO), $1.15/lb, SX-EW.


Potential low cost mines:
Tritton (SRL), $1.60/lb but trending downwards, flotation process.
Phu Kham (PNA), flotation process, $???/lb (I await their HY report with interest).

I'm interested in CUO and PNA (in particular) to add to my copper exposure. Both (like ABY) are trading on 09PE of 3 - 4 but have better potential than ABY and are more likely to ride out any copper price plunge. However Lady Annie has a limited mine life which makes me prefer PNA if they can meet early production and cost targets.

SEC

Appreciate your comments SEC, am thinking PNA is the best copper producer, low cost & has very useful Gold & Silver to boot.

[shasta]

Appreciate your comments SEC, am thinking PNA is the best copper producer, low cost & has very useful Gold & Silver to boot.

TA meets FA?

http://www.directbroking.co.nz/cgi-bin/sparkle.dll/superchart?template=dblsuperchart&session=0&instrument=ABY&exchange=ASX&period=6M&adj=yes&vs=LINE&ct=LINE&compi=&ma1=30&ma2=90&bb=Y&ind=RSI&ra=2

[shasta]

ABY currently up 9c to $1.725...

http://www.directbroking.co.nz/cgi-bin/sparkle.dll/superchart?template=dblsuperchart&session=0&instrument=ABY&exchange=ASX&period=3M&adj=yes&vs=LINE&ct=CANDLE&compi=&ma1=10&ma2=30&bb=Y&ind=MACD&ra=2

[shasta]

ABY currently up 9c to $1.725...

http://www.directbroking.co.nz/cgi-bin/sparkle.dll/superchart?template=dblsuperchart&session=0&instrument=ABY&exchange=ASX&period=3M&adj=yes&vs=LINE&ct=CANDLE&compi=&ma1=10&ma2=30&bb=Y&ind=MACD&ra=2

Gas supply interuption at "Nifty"

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=418783

[shasta]

Gas supply interuption at "Nifty"

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=418783

AGM presentation:

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=419082

[shasta]

AGM presentation:

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=419082

Barclays (ABY's 2nd largest shareholder) have increased there holdings ;)

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=419908

[SEC]

Barclays (ABY's 2nd largest shareholder) have increased there holdings ;)

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=419908

Sorry Shasta, if Barclays are buying a particular resource stock then it's time to sell. Barclays are proven clowns in this area, refer to my comments on the PEM thread.

SEC

PS If you're into the 'cute female polly' avatar then how about Sarah Palin aka Miss Alaska?

http://www.usmagazine.com/files/palin-miss-alaska-b.jpg

[shasta]

Sorry Shasta, if Barclays are buying a particular resource stock then it's time to sell. Barclays are proven clowns in this area, refer to my comments on the PEM thread.

SEC

PS If you're into the 'cute female polly' avatar then how about Sarah Palin aka Miss Alaska?

http://www.usmagazine.com/files/palin-miss-alaska-b.jpg

Thanks SEC

I completely forgot about Barclays blind faith of PEM.

Thank god i hit the eject button at $3.56!

C'mon SEC fess up, your interest is in the younger Palin :p

[SEC]

C'mon SEC fess up, your interest is in the younger Palin :p

Palin at 20 phworr.... Gotta love the 80s look eh, all that's needed to complete that image is the Wonder Woman costume....

[shasta]

Palin at 20 phworr.... Gotta love the 80s look eh, all that's needed to complete that image is the Wonder Woman costume....

http://tbn0.google.com/images?q=tbn:5IjheNLpxmsQcM:http://bp2.blogger.com/_uExTzMIDd1Y/R2O5nKq9_tI/AAAAAAAAATE/At2bb_K_3ao/s400/Sarah-Palin-Vogue.jpg (http://images.google.co.nz/imgres?imgurl=http://bp2.blogger.com/_uExTzMIDd1Y/R2O5nKq9_tI/AAAAAAAAATE/At2bb_K_3ao/s400/Sarah-Palin-Vogue.jpg&imgrefurl=http://www.mydd.com/story/2008/8/29/21917/3213&h=395&w=288&sz=35&hl=en&start=1&um=1&usg=__th-PdLH55miQTln-FGiaCMksfn0=&tbnid=5IjheNLpxmsQcM:&tbnh=124&tbnw=90&prev=/images%3Fq%3Dsarah%2Bpalin%26um%3D1%26hl%3Den%26sa %3DN) http://media.apn.co.nz/webcontent/image/jpg/bristol.jpg

SEC

Just for you, here's the "hockey mum" & pregnant daughter...

Mum's the word ;):p

[SEC]

Sorry Shasta, if Barclays are buying a particular resource stock then it's time to sell. Barclays are proven clowns in this area, refer to my comments on the PEM thread.

SEC


ADY closed at a record low today. Yep looks like Barclays overbrought yet another high cost miner.

SEC

[shasta]

ADY closed at a record low today. Yep looks like Barclays overbrought yet another high cost miner.

SEC

SEC

Our "favourite" company has dropped again, a new low of $1.325 :confused:

With Copper prices fairly stable over $US3/lb, ABY should still be making some good coin.

Forward P/E for 2010 now about 2 :eek:

[SEC]

SEC

Our "favourite" company has dropped again, a new low of $1.325 :confused:

With Copper prices fairly stable over $US3/lb, ABY should still be making some good coin.

Forward P/E for 2010 now about 2 :eek:

Many of the listed high cost miners got trashed today regardless of the 4% rise in the ASX200.

Beware of the dated forward PE analysis. ABY's consensus forward PEs haven't been updated since their production report, and forward Cu price predictions have been downgraded since then. Also bear in mind that ABY is far more sensitive in Cu price fluctuations than lower cost miners (as PNA is starting to prove) and that ABY has a track record in struggling to make money when the Cu price falls below $3/lb - and it's not far from there at the moment. ABY also hedges currency and would have lost over $7M mark to market in USD hedges over the past few weeks.

SEC

[shasta]

Many of the listed high cost miners got trashed today regardless of the 4% rise in the ASX200.

Beware of the dated forward PE analysis. ABY's consensus forward PEs haven't been updated since their production report, and forward Cu price predictions have been downgraded since then. Also bear in mind that ABY is far more sensitive in Cu price fluctuations than lower cost miners (as PNA is starting to prove) and that ABY has a track record in struggling to make money when the Cu price falls below $3/lb - and it's not far from there at the moment. ABY also hedges currency and would have lost over $7M mark to market in USD hedges over the past few weeks.

SEC

My watchlist of producers resembles more of a bloodbath the last few trading days :eek:

Was talking the "mick" in my previous post, ABY with Barclays onboard is another PEM in the making...

For copper exposure i'll stick with PNA ;)

[shasta]

My watchlist of producers resembles more of a bloodbath the last few trading days :eek:

Was talking the "mick" in my previous post, ABY with Barclays onboard is another PEM in the making...

For copper exposure i'll stick with PNA ;)

SEC - With Copper holding up over $US3/lb surely ABY @ $1.07 is getting a bit ridiculous, i mean it's on a forward P/E of about 2 :eek:

[shasta]

SEC - With Copper holding up over $US3/lb surely ABY @ $1.07 is getting a bit ridiculous, i mean it's on a forward P/E of about 2 :eek:

ABY - Investor Visit - Nifty Copper Mine (still no real details from them!)

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=421479

[shasta]

ABY - Investor Visit - Nifty Copper Mine (still no real details from them!)

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=421479

ABY - Suspension of operations at Mount Gordon

http://www.stocknessmonster.com/news-item?S=ABY&E=ASX&N=429906

With Copper well under $US2/lb (currently ~$US1.60/lb), ABY will be losing money, as it is a high cost Copper Producer.

SEC was right, Copper above $US3/lb & all is well in the sector, but under $2, & really only PNA & EQN have the size & scale low cost operations to survive.

[AMR]

Hi is anyone still watching this?

Big volume and big rise today.

[Hoop]

ABY got a speeding ticket from the ASX yesterday with its +16.2% jump