Takeout Values For Miners Listed By Desjardins

In the wake of Rio Tinto's (RTP) massive C$38.1-billion bid for Alcan Inc. (AL), Desjardins analysts John Redstone, and John Hughes have released a list of potential takeout values for some of the mining companies still standing in the rapidly consolidating industry.

The two analysts took several financial valuation metrics from Rio Tinto's bid including price earnings ratio, cash flow per share and book value and applied them to other producing mining companies that they currently cover in order to come up with a price tag should a takeout arise.

According to their calculations, Alcoa Inc., (AA) the loser in the Alcan sweepstakes and widely believed to be the next to go, has a low to mid US$50's takeout value, representing upside of roughly 15% on the current shares.

Teck Cominco Inc.'s (TCK) takeover value ranges from $60 to $70, an approximate 25% premium on its current valuation. That said, Mr. Redstone and Mr. Hughes noted that Teck's capital structure of class A and B shares, is a deterrent to larger international mining suitors.

Lundin Mining Corp. (LMC) and Quadra Mining Ltd., who are both noted as acquirers rather than takeover targets, have takeover values of $25, and $25-$30 respectively, which, for both, represents more than 60% upside.

Mr. Redstone and Mr. Hughes also calculated takeover values for molybdenum miner, Thompson Creek Metals Company Inc. (TCMRF.PK) at $25 to $30 per share, Sherritt International Corp. (SHERF.PK) at mid-$20's per share, FNX Mining Company Inc.(FNXMF.PK) at $25 to $30 per share, and HudBay Minerals Inc., (HBMFF.PK) whose $45 to $50 per share takeout value represents a possible 60% upside for investors.

Comments

[sliman:]

Hudbay minerals is the cheapest and best run of the bunch. I have been long since $5. Great zinc play.

2007 Jul 18 09:54 AM

[dowjoe:]

Just found this site-- very usefull info Looking forward to more ideas about minin takeovers -especially the moly mines!

[e-mail]

2007 Jul 18 04:07 PM

[wakerunner5:]

Did anybody see the "Trade on this" today on MSNBC? While they were talking to somebody from Citi it said in writing below the following: "Citi: RIO Tinto bid for Alcoa values it at $52 a share"

Has anybody seen anything about a RIO bid for Alcoa? If you go to MSN.com then click on Money, enter AA in the quote, the video will be displayed at the bottom of the page.

2007 Jul 18 06:34 PM

[wakerunner5:]

The Australian using their paper to play the market??

July 16th The Australian paper reported the following:

Citing unidentified sources in the United States, The Australian newspaper reported that BHP had briefed investment bank Merrill Lynch on its interest in Pittsburgh-based Alcoa.

The newspaper said speculation increased over the weekend that Melbourne-based BHP Billiton could offer around $55 a share for Alcoa.

Then today July 19th the report:

Citing unnamed sources, the newspaper says Alcoa is no longer a target of interest for the miner.
"But BHP never even got close to making a pitch for Pittsburgh's king of the light metal," The Australian says.
The paper says BHP is considering other takeover targets.

Anybody else a little suspicious about what this paper is doing? They seem to have a lot of conflicting unidentified sources.

2007 Jul 19 03:37 PM

[Sufiy:]

End of Empire and USD - PGM as store of Ultimate Value, Rising of New Powers and Leap Frog into consumption of basic Necessities.
sufiy.blogspot.com/200...

2007 Jul 22 08:08 AM