Good Morning,
This has to be very brief, apologies.
There's some speculation doing the rounds validated (for once) in part by what other analysts (decent ones) have noticed regarding Allana Potash (TSX: AAA) who's currently had a bid from ICL Chemicals (owners of Cleveland Potash down the road from SXX's).
The 'word' is that ICL Chemical are likely to see a higher bid for Allana Potash from China Communications Construction Company (CCCC), or CCCC is on the hunt for other 'assets.' CCCC have the cash to develop, admittedly their alleged MOU terms with AAA was ssuspect, but CCCC are now scoping out other prospects, as well as considering a higher 'outright' offer for AAA.
The break-fee payable to ICL if AAA changes their mind is paltry (around £3m BGP) means will more than likely become competitive. ICL have the option to pull out, and go after Highland Resources (ASX: HFR) if CCCC come in with a higher bid. The curve ball being if CCCC are 'really' in the mood there's a possibility of them taking SXX private before approvals. Something shareholders, pending the size of any offer, would perhaps welcome? The later is a little stretched but not impossible.
Rio's Q1 results are better than expected, allowing for derailment that impacted the iron ore numbers, copper, bauxite and believe it or not, coking coal came in half decent. Higher first quarter coal production was primarily driven by improved production rates at Kestrel South following the longwall ramp-up, increased semi-soft production at Mount Thorley and Warkworth and higher thermal production at Hail Creek. With Rio/Kestrel moving into APF's royalty area, and today's update guidance at Narrabri, APF is certainly looking more favourable.
Atb Fraser
Fraser- Hi- yes, some movements within the potash world, with Allana Potash under offer and in play (at a 50% premium) which they currently seem to be happy with but which is by no means a knockout blow. The Ethiopian project has a nice IRR of 39% but the capex of $642m was always too much for a company of Allanas size. ICL owned 17% or so so they were well placed to pounce. If CCCC want to move in now, they need to get their ducks lined up quickly as the norm with Chinese bids is to dither and then walk after 2 years. AAA would have to bear this in mind if they trump ICL now. Re SXX, I would see them as most vulnerable after the Park Auth have made their decision- if its a Yes, especially. They will need to serious partners to get $2.1bn or so raised and be quite inventive, hopefully having read the WLFE playbook over the last few months in this respect, albeit with one zero less needed.
ReplyDeleteRe RIO- yes, mainly in line for me apart from the Pilbara shipping which must see RIO with a vast stockpile. The copper grades were good, unlike most copper grades over the last year, which was starting to look like some dubious practice in the copper market.
Cheers. The Leggie