NFE - Northern Iron

[moneymajix]

www.northerniron.com.au


Listed today.

http://www.asx.com.au/asx/floats/Upc...sp?asxcode=NFE


Current price - $2.65

[BraceFace]

Was recommended this one early on and manged to obtain some in the initial placement at $2.15.
Thought about selling when they opened at $2.65, but missed the boat - now trading at $2.43
Will be interesting to review this one again in about 4-6 weeks when some broker reports start coming out. Early suggestions from Macquarie have it valued at around $3.00.
I'm holding

[catman]

You still holding this one braceface? I am also on board after the crash.

Maquaries Feb. valuation of $3.90 with more to come I'd say. Reports posted in NFE's website. NFE to start mining 67% FE and shipping byy mid 2009. DYOR. Low mc compared to its peers

http://www.bby.com.au/internet/resea...DF/ironore.pdf

[BraceFace]

yep, still holding, and will be for a while I reckon.
With more brokers looking at this one and more healthy valuations coming through over the next few months, it is possible this will continue to run.
After a few nervous days post-listing, it's now looking the goods.
Dropped 14c today to close at $3.55.
Given recent performance in a shaky market, Macquarie's $3.90 doesn't seem that far off.
DYOR on this one please everyone

[56gsa]

Useful report catman - I've been looking at GBG and GRR as magnetite options to invest in for a while - both seem to be reaching something of a bottom... but then take a look at NFE... presentation out yesterday

http://imagesignal.comsec.com.au/asx...f/00822536.pdf

Through the Board NFE have strong links with MGX, a former GM of PMM operations and the CEO of MRI Resources AG, a raw materials trading company with annual turnover of approximately $4 billion (Ashwath Mehra who also owns 6% of NFE).

ABNs like it because:

Our interest in NFE is piqued by a number of its competitive advantages. Namely;
1) Millions not billions (US$ Capex) –
a dramatically lower capital intensity per annual production capacity against comparable WA based magnetite developers. NFE require US$155m for 2.9Mt of annual production;
2) Hundreds not thousands (km) –
rail from mine to port is an undemanding 8km and the project is on the doorstep of the major iron markets of Europe resulting in much lower freight costs compared with those from Australia and Brazil E.g. Malmberget A Fines from Sweden are currently priced at an average premium of 19% to the Hamersley Fines benchmark;
3) Infrastructure challenges? Not here –
Most of the mining, concentrating, rail and port infrastructure is already in place, albeit in need of refurbishment; and
4) People and Power
access to relatively cheap hydro-electric power and an experienced labour force nearby in Kirkenes, home to many ex-employees.

JORC Resources estimated for four of the 23 prospects,
Bjørnevatn 279Mt @ 31% Fe (total)
Kjellmannsåsen 22Mt @ 33% Fe (total)
Fisketind Øst 29Mt @ 31% Fe (total)
Tverrdalen 43Mt @ 32 % Fe (total)
Total 373Mt @ 31% Fe (total)

But what is really interesting and not mentioned in the broker reports is that NFE is backed by the Norwegian Tschudi Group (51% ownership of NFE) who own the port infrastructure and have much bigger plans for the area that go beyond magnetite....

Sydvaranger AS (www.sydvaranger.no)
Tschudi Shipping Company bought Sydvaranger AS in June 2006.
Sydvaranger AS was established in 1906 as a mining Company. The large mines were closed in 1997.
Today, Sydvaranger AS, through the establishment of Sydvaranger Maritime Industrial Park (SMIP), aims to facilitate the creation of an international cluster serving the oil and gas industry and the maritime transport in the Barents Sea. Based on the close proximity to Russia, the potential oil and gas deposits in the Barents Sea and the infrastructure available close to the sea, a new industrial era is anticipated.

The deep water quay, approx. 400 metres long, is available for import and export operations. A refuelling quay is operated by Norske Shell AS.

This then is the keystone industry for what they hope will be a major industrial park. MIS and MMX have similar intentions for Oakajee (which would benefit GBG), but the big difference here is this is not a greenfields site with all the infrastructure already there (and owned) - Imo NFE has a much higher chance of succeeding ...

Not without risks though (from ABN)

Naturally the project carries construction and commissioning risks common to the industry. The most pertinent relates to government approval required for the submarine disposal of tailings in Bjørkfjorden. The disposal method is consistent with historic practice at the project, however, alternative above ground disposal would require a longer approvals process thus risking a delay to the recommissioning of production. Operating risks will be comparatively low given the historical operational data available from in excess of 70 years of production.

DYOR and let us know what you think...

[56gsa]

Can someone help me out with these calculations - from the investors presentation..

2.9 Mtpa planned concentrate
US$110/t contract price
US$33/t operations costs

Is it too simplistic to say US$60-70 profit / t?
which would be approx US$175m
or about US$1 a share
(165m shares issued although only 95m on ASX - presume others on Norwegian?)

With well over $100m in the bank and hardly any debt -this covers their estimated $100m capital investments...

Starting to talk myself into hitting that buy button - nice fat white candle today punching through the short-term downward trend line

Any thoughts?

[catman]

My thoughts are its undervalued at these prices considering they will be mining next year. All the intrastructure is there as is the wrokforce. 2 KEY ingredients with a very low capital outlay to get it up and running. The board is top shelf.

You may also want to check out MQG's very lengthy report on the NFE site. Good bed time reading.

[56gsa]

well bought into this and NFE is slowly building momentum - does not have the interest of the Oz-based magnetite hopefuls but I think is looking very solid for production in June09 - US investment house Fidelity just bought 5%, and they just had the last major permit issued by the norwegian govt

macquarie research made an estimate in Feb08 of 2010 EPS of 85cents...

chart is still early days but have tried putting in some trend lines... today broke through $4

[CoffeeKing]

Was anybody watching when this happened?


Huge buy at the last minutes, pushed it 30c higher, the most since listed as far as I can tell, (not that good with charts yet)

[56gsa]

Yep breaking into blue sky with strong volume looks good for monday...
My estimate above of US$1 EPS a share is about what comsec are saying for FY2010 based (i think) on macquarie equities - with all the infrastructure pretty much in place and approvals almost all provided this is in the running for the next aussie iron ore producer (even though its deposits are in norway!)

NFE (mkt cap $0.28 bn)
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS -4.6 0.1 30.3 99.0

some comparison with the mid-west iron ore producers...

this is GBG (mkt cap $0.85 bn) sp $1.65
Earnings Forecast (cents per share)
2007 2008 -- --
EPS -0.7 -0.8 -- 0.0

MIS (mkt cap $1.5bn) sp $7.06
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS 0.7 -3.0 16.3 21.6

MMX (mkt cap $1.7bn) sp $4.15
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS -13.7 10.0 3.2 3.2

MGX (mkt cap $2.6bn) sp $3.26
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS 7.1 14.1 38.0 56.8
DPS 0.0 3.8 21.2 36.1

[oldblue]

How is 2009 EPS of 30c pershare calculated? And whose estimate is it?
Company doesn't expect to start production until June, 2009.

[michael_selway]

Yep breaking into blue sky with strong volume looks good for monday...
My estimate above of US$1 EPS a share is about what comsec are saying for FY2010 based (i think) on macquarie equities - with all the infrastructure pretty much in place and approvals almost all provided this is in the running for the next aussie iron ore producer (even though its deposits are in norway!)

NFE (mkt cap $0.28 bn)
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS -4.6 0.1 30.3 99.0

some comparison with the mid-west iron ore producers...

this is GBG (mkt cap $0.85 bn) sp $1.65
Earnings Forecast (cents per share)
2007 2008 -- --
EPS -0.7 -0.8 -- 0.0

MIS (mkt cap $1.5bn) sp $7.06
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS 0.7 -3.0 16.3 21.6

MMX (mkt cap $1.7bn) sp $4.15
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS -13.7 10.0 3.2 3.2

MGX (mkt cap $2.6bn) sp $3.26
Earnings Forecast (cents per share)
2007 2008 2009 2010
EPS 7.1 14.1 38.0 56.8
DPS 0.0 3.8 21.2 36.1

I read the report 19 year mine life but but max production rate occurs for that 2010 EPS of $0.99, so.... Also their reporting year is Dec rather than Jun, so Dec09 etc

Expected iron ore production by mid 2009
Forecast production of 2.9 Mtpa magnetite concentrate over 19 year mine life
Low risk project
Simple, proven, processing of magnetite ore
Significant existing infrastructure
Short lead time to production at low capital cost intensity
Favourable project location
Close proximity for shipping to key European markets
Well credentialed major shareholder
Norwegian shipping company with roots dating back to 1883
Experienced management and board
Track record of financing, developing and operating mines
Delivering on IPO Prospectus schedule
Equipment ordered, approvals in place
Further growth opportunities
Potential to expand production from base case
Construction of a pellet plant

[56gsa]

How is 2009 EPS of 30c pershare calculated? And whose estimate is it?
Company doesn't expect to start production until June, 2009.

seems to stem from the macquaries equities report which may have been updated from the one on the nfe website? which you can find at:
http://www.northerniron.com.au/image...t_5_Feb_08.pdf

And correction to NFE mkt cap in message above - comsec forgets the Norwegian listed shares, so its actually 165*$4.30 = $709million

[Kremmen]

Looks like this one's been forgotten. After drifting down to about 60c, it's been recovering strongly to around $1 now.

Euroz is recommending NFE as one of its six "best buys" for March.

[springhill]

Kremmen, do you have a piece of this?

Northern Iron Update on Strategic Review

On 15-May-2012, NFE confirmed that it had received an indicative, highly conditional, non-binding stage one
proposal from a subsidiary of Aditya Birla Group (“Aditya Birla Group”). After careful consideration of the
indicative, non-binding and conditional proposal from Aditya Birla Group, the NFE Board concluded that the
proposal did not properly reflect the value of NFE and its prospects in the context of a change of control
transaction. Nevertheless, as announced on 15-May-2012, the NFE Board allowed access to certain limited due
diligence information so that Aditya Birla Group could consider making a higher indicative, non-binding proposal.
After close of market on 23 July 2012, Aditya Birla Group submitted a revised indicative, non-binding stage one
proposal. The proposal supersedes Aditya Birla Group’s earlier proposal dated 1 May 2012 in respect of the
following information:
 The revised non-binding, indicative offer per share is A$1.40 (implied equity value of A$518m) for all
NFE shares outstanding; and
 Net debt is assumed at US$90m and the proposal assumes that no dividend has been declared since 1
May 2012.
The proposal is subject to a number of conditions including satisfactory due diligence, management meetings and
site visits and is valid for a period of 30 days, subject to extension at the election of Aditya Birla Group.
The Board of Directors will consider the revised proposal and whether to facilitate detailed stage two due
diligence as requested by Aditya Birla and expects to announce its decision within a week.

Trading Halt Follows Soon After
http://www.asx.com.au/asxpdf/2012072...kyy0r8xcgk.pdf

[Kremmen]

Kremmen, do you have a piece of this?

Wow. Another post here! Thought it was just me.

Yes, it's looking good. I bought some when they were drifting around 80c and topped up a few days ago at $1.035, just before they announced a second potential bidder at $1.42.

[springhill]

I am not involved in NFE mate, just casting my eye over as many specs as I can lately. Well done to you, hope you get stuck right bang in the middle of a bidding war and that SP climbs towards that $1.40 mentioned.

Northern Iron Considers Indicative Proposals from Two Parties

We refer to the company’s announcements of 15-May-2012 and 24-Jul-2012 regarding the conditional, indicative, non-binding stage one proposals from a subsidiary of Aditya Birla Group (“Aditya Birla Group”).
The revised proposal announced on 24-Jul-2012 referred to an indicative cash offer per share of A$1.40 (implied equity value of A$518m) for all NFE outstanding shares (“Revised Proposal”). The Revised Proposal is non-binding and subject to a number of conditions including satisfactory due diligence, management meetings and site visits.
The Board of Directors has now considered the Revised Proposal and will offer Aditya Birla Group detailed stage two due diligence including management meetings and site visits subject to agreement with Aditya Birla Group on appropriate terms to govern the process.
NFE also advises that before market open on 27 July 2012, Prominvest AG (a Swiss-based trading company) (“Prominvest”), submitted a highly conditional, indicative, non-binding stage one proposal at an indicative cash price of A$1.42 per share (implied equity value of A$525m) for all NFE outstanding shares (“Prominvest Proposal”). The Prominvest Proposal is subject to a number of conditions, including satisfactory due diligence, management meetings and site visits and assumes NFE net debt of USD 90 million. The Prominvest Proposal is valid for a period of 30 days, subject to extension at the election of Prominvest. The Prominvest Proposal also includes a request for exclusivity which the Board of Directors will not agree to at this stage.
Having engaged with Prominvest representatives to further understand their indicative proposal and financial capacity, the Board of Directors has now also considered the Prominvest Proposal. Subject to Prominvest withdrawing its request for exclusivity as well as agreement with Prominvest on appropriate terms to govern the process, the Board of Directors will offer Prominvest detailed stage two due diligence.
Subject to one or both of Aditya Birla Group and Prominvest participating in the due diligence process, NFE will engage with each relevant party to determine whether a binding proposal can be agreed that is capable of being put to NFE shareholders with the recommendation of the NFE Board. Such engagement will be undertaken having reference to the guiding principle of equal treatment for both Aditya Birla Group and Prominvest as stage two participants.
NFE will continue to update shareholders in relation to this process as appropriate.