AUGUST 2010 1 ASX RESOURCES - GROUP 150 We are pleased to present the August edition of ‘Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation. During July, the RSPT went AWOL (much to the delight of a number of miners) and the MRRT was born (much to the despair of a (smaller) number of miners). In this edition of the Group 150, we have updated the “RSPT-impact” chart from the May edition to test once more the hypothesis that international focussed companies are outperforming their domestic peers. The average market value of domestic focussed companies since the proposed RSPT was announced has declined 3.8% (vs 13.6% and 12.2% at end of June and May respectively). International focused companies increased 3.9% (vs a decline of 1.1 and 0.9% at end of June and May respectively). Separately, we have introduced the “MRRT-impact” chart, to assess the impact on the market capitalisation of the Group 150 since the announcement of the proposed MRRT. The market value of the domestic focussed companies has increased on average 15.4% versus the international focussed companies only 7.6%, recapturing some of the ground lost during the 2 months the RSPT was on the table. Both charts affirm industry views that the MRRT is continuing to have negative impact on resource sector valuations. The market value of the Group 150 at the end of July was $494 billion, up 5.8% from June. The entry point into the Group 150 for July was $77.0 million versus $65.6 million for June. The ASX/S&P 200 Resources Index rose 4.6% in the month, while the ASX All Ordinaries and ASX/S&P 200 Index increased 4.2% and 4.5% respectively. While commentators continue to assess the influence of China on the global economy, two events during the month support the overriding impact China holds in determining economic prosperity. First, the strategic importance of rare earths has once again become a focus as the China Ministry of Commerce announced rare earths export quotas for the second half of 2010, representing a 70% reduction in volumes available for users outside of China. Additionally, the authorities announced that rare earth prices would be set and published by the central government on a monthly basis. ASX listed Arafura, Alkane and Lynas increased 69.0%, 51.1% and 39.4% respectively during July. Second, the International Energy Agency (IEA) announced that based on preliminary data China has now overtaken the United States to become the world’s largest energy consumer. China’s power consumption rose 14.14% year-on-year to 352 billion kilowatt-hours in June and consumption in the first half year reached 2.01 trillion kilowatt-hours, up 21.57% on a year-on-year basis. Since 2000, China’s energy demand has doubled, yet is only around one-third of the OECD average on a per capita basis. These developments point to continued growth in demand for energy commodities (oil, coal, uranium and natural gas) from the most populous nation on the planet. Notably, in mid-July Bloomberg reported that China has commenced purchasing yellowcake at the rate of about 5,000 tonnes per annum, roughly double current consumption. Several uranium focussed companies are among the biggest movers in the Group 150 this month, including Energy and Minerals - 104.5% and Deep Yellow – 57.7%. We start this month at Diggers and Dealers, which will provide a barometer for current market sentiment.....see you there! Gresham Advisory Partners Limited GROUP 150 August 2010 Edition 5 Darren Martin Gresham Advisory Partners [email protected]+61 8 9486 7077 +61 412 144 719 Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisory business and one of Australia’s largest and highest ranking independent corporate advisors.
Transcript
AUGUST 2010
1
ASX RESOURCES - GROUP 150We are pleased to present the August edition of ‘Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation. During July, the RSPT went AWOL (much to the delight of a number of miners) and the MRRT was born (much to the despair of a (smaller) number of miners). In this edition of the Group 150, we have updated the “RSPT-impact” chart from the May edition to test once more the hypothesis that international focussed companies are outperforming their domestic peers. The average market value of domestic focussed companies since the proposed RSPT was announced has declined 3.8% (vs 13.6% and 12.2% at end of June and May respectively). International focused companies increased 3.9% (vs a decline of 1.1 and 0.9% at end of June and May respectively).Separately, we have introduced the “MRRT-impact” chart, to assess the impact on the market capitalisation of the Group 150 since the announcement of the proposed MRRT. The market value of the domestic focussed companies has increased on average 15.4% versus the international focussed companies only 7.6%, recapturing some of the ground lost during the 2 months the RSPT was on the table.Both charts affirm industry views that the MRRT is continuing to have negative impact on resource sector valuations.The market value of the Group 150 at the end of July was $494 billion, up 5.8% from June. The entry point into the Group 150 for July was $77.0 million versus $65.6 million for June. The ASX/S&P 200 Resources Index rose 4.6% in the month, while the ASX All Ordinaries and ASX/S&P 200 Index increased 4.2% and 4.5% respectively. While commentators continue to assess the influence of China on the global economy, two events during the month support the overriding impact China holds in determining economic prosperity.First, the strategic importance of rare earths has once again become a focus as the China Ministry of Commerce announced rare earths export quotas for the second half of 2010, representing a 70% reduction in volumes available for users outside of China. Additionally, the authorities announced that rare earth prices would be set and published by the central government on a monthly basis. ASX listed Arafura, Alkane and Lynas increased 69.0%, 51.1% and 39.4% respectively during July.Second, the International Energy Agency (IEA) announced that based on preliminary data China has now overtaken the United States to become the world’s largest energy consumer. China’s power consumption rose 14.14% year-on-year to 352 billion kilowatt-hours in June and consumption in the first half year reached 2.01 trillion kilowatt-hours, up 21.57% on a year-on-year basis. Since 2000, China’s energy demand has doubled, yet is only around one-third of the OECD average on a per capita basis. These developments point to continued growth in demand for energy commodities (oil, coal, uranium and natural gas) from the most populous nation on the planet. Notably, in mid-July Bloomberg reported that China has commenced purchasing yellowcake at the rate of about 5,000 tonnes per annum, roughly double current consumption. Several uranium focussed companies are among the biggest movers in the Group 150 this month, including Energy and Minerals - 104.5% and Deep Yellow – 57.7%.We start this month at Diggers and Dealers, which will provide a barometer for current market sentiment.....see you there!Gresham Advisory Partners Limited
Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisory business and one of Australia’s largest and highest ranking independent corporate advisors.
Top 150 ASX LiSTed reSource compAnieS - JuLyBy Market Capitalisation
Group 150
2
Mkt Cap (A$m) % Mkt Cap (A$m) %
Jul Jun Company 31-Jul-10 30-Jun-10 Change Jul Jun Company 31-Jul-10 30-Jun-10 Change
Includes ASX Resource companies excluding oil and gas
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new enTrAnTS - JuLy eXiTS - JuLy126 Talisman Mining Ltd (ASX:TLM)127 Toro Energy Ltd (ASX:TOE)139 Energy and Minerals Australia Limited (ASX:EMA)140 Alkane Resources Limited (ASX:ALK)143 Guildford Coal Limited (ASX:GUF)145 Stanmore Coal Limited (ASX:SMR)146 Aussie Q Resources Limited (ASX:AQR)148 Strike Resources Limited (ASX:SRK)149 Bannerman Resources Limited (ASX:BMN)150 North Australian Diamonds Limited (ASX:NAD)Based on market capitalisation as at 31 July 2010 vs 30 June 2010
Source: Capital IQ Announced Australian Resources (excluding oil and gas) Mergers and Acquisitions >A$10m
Group 150 mArkeT cApiTALiSATion
ASX indeX performAnce - JuLy
Mar
ket C
apit
alis
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$b)
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Monthly Performance Overseas Domestic Overseas/ Domestic Total
End of May
Spread of "Group 150" by Project/s Location 49 85 15 149
- Simple Average Return (0.9%) (12.2%) (10.0%)
End of June
Spread of "Group 150" by Project/s Location 50 83 15 148
- Simple Average Return 1.1% (13.6%) (15.5%)
End of July
Spread of "Group 150" by Project/s Location 49 83 16 148
- Simple Average Return 3.9% (3.8%) (6.9%)
Group 150 - “rSpT impAcT” - BASed on proJecT/S LocATion
Following the demise of the RSPT, we have updated the “RSPT-Impact” chart to assess the rebound impact on domestic focussed miners. Separately on page 6, we commenced tracking the “MRRT-Impact”.The average market value of domestic focussed companies since the proposed RSPT was announced has declined 3.8% (vs a decline of 13.6% in June and 12.2% at end of May). International focused companies increased 3.9% (vs an increase on 1.1% in June and a decline of 0.9% at end of May).
Mar
ket C
apit
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Perf
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ance
Sin
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ropo
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RSPT
Ann
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Only 149 companies in May data set as Vantage Goldfields was a new IPO during period, Only 148 companies in June data set as Vantage Goldfields and Mungana were new IPO’s during period, Only 148 companies in July data set as Mungana and Guildford Coal were new IPO’s during period
Group 150
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The “MRRT-Impact” chart below, assesses the impact on market capitalisation of the Group 150 companies since the announcement of the MRRT. A rebound in value has been witnessed by a number of domestically focussed companies who are not currently captured in the MRRT drag net.The average market value of domestic focussed companies since the proposed MRRT was announced has rebounded 15.4%, while international focussed peers increased only 7.6%. Global diversified companies have also recovered 14.3% during the same period. The bottom chart in each of the sector performance pages compares the performance of each company since the announcement of the RSPT versus the announcement of the MRRT, in most cases depicting a recapture of value.
Group 150 - “mrrT impAcT” - BASed on proJecT/S LocATion
Only 149 companies in July data set as Guildford Coal was new IPO’s during period
Greater proportion ofDomestic focussed companies
Monthly Performance Overseas Domestic Overseas/ Domestic Total
End of July
Spread of "Group 150" by Project/s Location 49 84 16 149
- Simple Average Return 7.6% 15.4% 14.3%
Mar
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Perf
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Sin
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ropo
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MRR
T A
nnou
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Share Price Performance - July 2010
Share Price Performance - Since 1 Jan 2010
RSPT vs MRRT - Change in Market Value
BASe meTALS - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Copper Nickel Zinc
MRRT
RSPT
Group 150
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Share Price Performance - July 2010
Share Price Performance - Since 1 Jan 2010
RSPT vs MRRT - Change in Market Value
coAL - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
MRRT
RSPT
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Share Price Performance - July 2010
Share Price Performance - Since 1 Jan 2010
RSPT vs MRRT - Change in Market Value
diverSified - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
induSTriAL minerALS - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
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e Per
form
ance
MRRT
RSPT
MRRT
RSPT
Group 150
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Share Price Performance - July 2010
Share Price Performance - Since 1 Jan 2010
RSPT vs MRRT - Change in Market Value
GoLd - SecTor performAnce
Shar
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form
ance
Shar
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e Per
form
ance
Shar
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form
ance
MRRT
RSPT
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Share Price Performance - July 2010
Share Price Performance - Since 1 Jan 2010
RSPT vs MRRT - Change in Market Value
iron ore - SecTor performAnce
Shar
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form
ance
Shar
e Pric
e Per
form
ance
Shar
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e Per
form
ance
MRRT
RSPT
Group 150
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Share Price Performance - July 2010
Share Price Performance - Since 1 Jan 2010
RSPT vs MRRT - Change in Market Value
urAnium - SecTor performAnce
Shar
e Pric
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form
ance
Shar
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e Per
form
ance
Shar
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e Per
form
ance
MRRT
RSPT
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conSenSuS commodiTy price forecASTS - July
Source: Bloomberg Consensus Estimates - Median / High / Low
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Advised BHP Billiton on its
$204m offer for United Minerals
Corporation.
Advised BG Group on its $1bn takeover offer for
Pure Energy Resources Limited.
Advised IAMGOLD Corporation on its $265m acquisition
of Gallery Gold.
Advised Gem Diamonds on its
$300m acquisition of Kimberley Diamonds.
Advised Polaris Metals NL on
$178m takeover offer by Mineral
Resources Limited.
Advised Tethyan on its $220m
competing takeover offer by Crosby and Antogafasta/Barrick.
Advised Iluka on its $114m
institutional placement and
$353m accelerated right issue.
Advised Bannerman
Resources on its financing with
Resource Capital Funds.
Advised Iluka Resources on its
$54m Narama coal divestment to
Xstrata.
Advised Murchison Metals
on its joint venture with Mitsubishi.
2010
2010
Advised BHP Billiton on its
US$116bn iron ore production
joint venture with Rio Tinto.
2010
Introduced Denham Capital to
Trans Tasman Resources resulting
in NZ iron sands investment.
2010
2009
Advised Indophil on $545m
recommended offer from Zijin
2010
Advised BHP Billiton on the disposal of the Yabulu Nickel
refinery.
2009
Advised Allied Gold on its $54m
acquisition of Australian
Solomons Gold.
2009
Advised Brandrill Limited on its
$45m takeover offer by Ausdrill
Limited.
2009
2008
Advised Kalahari Minerals on its
$140m proposed merger with
Extract Resources.
2008
Advised Centaurus
Resources on its $20m merger
with Glengarry Resources.
2010
2009/08
2008
Advised Summit Resources on its
A$1.2bn takeover by Paladin Energy.
2007
2008
2006
2007
2008
Advised Guandong Rising on its $216m
cornerstone investment in Pan
Aust.
GRAM2009
Advised Energy Metals on its $86m
proportional takeover offer by China
Guangdong Nuclear Power Group.
2009
Mergers and Acquisitions
Takeover Defence
Strategic Advisory, Joint Ventures and Capital Markets
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Takeover Defence
Strategic Advisory, Joint Ventures and Capital Markets
