LIM - Lionore Mining International - Aussie Stock Forums

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  1. #1

    Post LIM - Lionore Mining International

    LIM is a Canadian headquartered nickel miner with listings in Toronto, London, Botswana and Australia. Its major projects are in Australia, Botswana (a country with the same assessed political risk as Australia) and South Africa. Their reporting currency is USD.

    They have little nickel hedging 12% in 2007, 15% in 2008 (company announcement, 9th Jan 07). They were recently able to borrow 250m USD at LIBOR + 1% which is pretty cheap. The remaining 370m needed for the expansion project they are borrowing to fund will be financed from cashflow and internal resources (announced 9th Jan 07) showing the strong cash-generating nature of this company.

    Production & Product Mix
    In 2007 They are expecting to produce 44,300t Nickel (+30% on 2006) at a cash cost of $3.52/lb (2006: 34,100t at $3.25/lb). EPS for 2006 Qtr. 1-3 look like this: 6c, 28c, 68c, showing the impact of higher nickel prices and to a lesser extent, greater production through the year. Resources are 2.8Mt nickel. From 2010-11 they expect to produce 85Kt Nickel/year, comparable to the former WMC before its takeover by BHP (company presentation of 13th Dec 06). Currently they are the 10th largest nickel producer worldwide. Their product mix is 77% nickel, 12% gold, 6% copper, 5% platinum+palladium (2005 ann. rep.).

    Production Expansion
    A lot of this is supposed to come from LIM's proprietary nickel extraction technology "Activox". This uses a mild acid leach (compared to the high pressure and temperature acid leach of Murrin Murrin, Bulong etc) and fine grind to extract metals directly from sulphide ores, eliminating the need for a smelter. Therefore it's more environmentally friendly. Another benefit is that "dirty" ores that might be rejected by a conventional smelter due to impurities -as happened to Titan with their Armstrong debacle - can be processed easily. LIM have had a 1/200th scale refinery operating for 2 years in Botswana proving that:

    1) In-specification metals can be produced (LME grade Ni & Cu)
    2) The technology works, and works in a remote location.

    However, this dependence on new technology for part of the production increase might put off prospective bidders for the company, until a full-scale plant has been built and seen to work. The 250m USD LIM recently borrowed is destined to build this full-scale plant in Botswana.

    Investment Case
    Currently they are trading on a forward 2007 P/E of 7.6. Assuming nickel prices and production remained the same as the Q3 number then EPS of 2.72USD for the year (0.68 USD * 4) becomes 3.18 CAD. At the current CAD share price of $13.00 this gives a P/E of 4. Really depends on your views on commodity prices, especially nickel and gold whether you put any faith in this number. There are not many WMC-sized nickel companies left in the world as takeover targets, so I'd imagine it would be on somebody's radar somewhere.

    My UK broker who keeps track of analyst recommendations of this stocks has a 1.36 on it currently based on the research of 11 analysts (5 is the worst, 1 is the best). Please view the attached file for more information.
    Attached Files
    Last edited by exgeo; 13th-January-2007 at 08:12 PM.

  2. #2

    Default Re: LIM - Lionore Mining International

    Spot nickel prices averaged $US10.96 a pound in London last year. Current price is $US15.25

  3. #3

    Default Re: LIM - Lionore Mining International

    Increase in analyst estimates for EPS from CAD $1.65 to $2.21. LIM is listed on the ASX via CDI's. The trend shows the EPS increasing as analysts plug higher nickel prices into their models.

    Analysts Estimates

    Figures trend 2007 last 3 months (Last 3 months, Last month, Current)

    Earnings per share (EPS) (in CAD)
    P/E ratio (Based on SP of $13.33)
    Cash flow per share (in CAD)
    Earnings growth (in %)

  4. #4

    Default Re: LIM - Lionore Mining International

    Wonder if the Red Kite Hedge Fund fiasco has caused Lionore
    and other Nickel stocks this small correction.

    If not I have no idea, as nickel prices are at highs

    Information in the USA is limited on Lionore, and any insights are appreciated

    Thank you

  5. #5

    Default Re: LIM - Lionore Mining International

    Go to the ASX site and you should be able to access all the company announcements by LIM over the last few months. They do a lot of presentations so there is a lot of information on reserves and the Activox process - www.asx.com.au.
    You will notice a lot of the announcements are to do with the directors selling down stock - keeps a pretty effective ceiling on any price rises. Given that, they are I think making bucket loads given the current nickel price and I certainly do not intend selling.

  6. #6

    Default Re: LIM - Lionore Mining International

    Today's full-year accounts. Current SP AU$18.20. Current earnings of AU$2.49 (US$1.97) gives P/E of 7.3 Today's spot nickel price is US$20.00/Lb. LME warehouse nickel stocks at 5 year lows and trending downwards (from kitcometals.com). Spot nickels prices averaged $US10.96/Lb in the 2006 calendar year. Presumably most of last year's earnings will have been based on 10 dollar nickel, not 20.

  7. #7

    Default Re: LIM - Lionore Mining International

    LIM plan to increase attributable nickel production from 30 (2006) > 40Kt (2007) nickel.
    The increase in net mineral sales is attributable to higher nickel prices, which averaged $11.02/lb for the year (2005 = $6.69/lb) and from increased metal sales volumes. A total of 30,933 tonnes of payable nickel were sold during 2006, compared to 28,454 tonnes in 2005.

    Nickel sales: $894.7 million (2005 = $400.7 million)
    Copper sales: $77.0million (2005 = $32.4 million)
    Gold sales: $91.7 million (2005 = $62.5 million)
    Other metals sales: $53.0 million (2005 = $22.7 million)

    Sensitivity................Change in.........Effect on Net Income..Effect on EPS
    .............................Sensitivity.......... ..(NPAT)......................(US$)

    ....................Price of nickel $0.25/lb.......$17.6m....................$0.08
    ..US$:A$ exchange rate 10% movement ...$12.5m................ ...$0.06
    ..US$:BP exchange rate 10% movement ...$10.1m................... $0.05
    ..US$:R exchange rate.. 10% movement ....$3.8m................... $0.02

    The Company intends to grow annual nickel production, targeting 80,000 tonnes of payable nickel by 2012, through a combination of conventional mining expansions and the implementation of LionOre’s vertical integration strategy including Activox®

    .................................................. ...2006.............2005
    Basic earnings (loss) per share.(US$)... $1.97 ..........$(0.35)
    Diluted earnings (loss) per share......... $1.80 ..........$(0.35)
    Wtd. Av. common shares outstanding ...217m ............216m
    Diluted Wtd. Av. common shs outst ......243m ............216m

  8. #8

    Default Re: Imminent Delisting of LIM - Lionore Mining International

    LIM holders need to be aware that LIM shares will not be tradeable on the ASX after Monday MAY 28th!! Just received the mailed advice from LIM today (MAY 24th) with confirmation of this, and first details of the Share Sale Facility (SSF) offered by LIM via the TSX.
    Gee that's a lot of notice....particularly for non-internet shareholders.....and given that details of the latest Norilisk takeover offer (and settlement details) have not even be publicised.
    I had assumed the SSF would be share-holder friendly...but it appears suss...a poor alternative to selling via ASX....ie, minimum brokerage of $100 (or1&#37 plus potential tax complications AND virtually no control over when the shares are sold, or the price sold, or when money received.
    So if you want to liquidate relatively quickly and remain in control...then 2 days to try to offload on the ASX or be forced to hold off & find your own TSX broker, or just trust the Russians latest offer (or the next from Xstrata) wont take 2 years to get the cash to you.
    Last edited by Col Lector; 25th-May-2007 at 02:23 AM. Reason: Drivel needed excising

  9. #9

    Default Re: LIM - Lionore Mining International

    Any further developments on this one? Not much information available. Any information would be appreciated.

  10. #10

    Default Re: LIM - Lionore Mining International

    Unfortunately LIM has expired....delisted from ASX & takeover by Norilisk Nickel completed this month via Toronto exchange.
    LIM CDI's price in 2007 went from about $7 to $31 in FY2007 making it a top 5 performer along with MCR & IGO.
    Finally received $CAD cheque after many phone calls & waiting over a month....only now to find it will take 1 MONTH to clear!! Will be interesting to see how the Russians proceed in Oz, how Honeymoon Well shapes up & how the Activox process works at full scale.

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