OZ MINERALS (OZM) Update

Submitted by Jim Thesiger on 17 June, 2008 - 12:12

OZ MINERALS (OZM) is well placed to enter the ranks of the global diversified base metal miners from Australian Stockmarket analyst Macquarie Research Equities.

Oxiana (OXR)/Zinifex(ZFX) – Say Hello to OZ MINERALS (OZM)

Zinifex (ZFX) shareholders have now voted in favour of the proposed scheme of arrangement to merge with Oxiana (OXR) to create Australia’s fifth largest mining company. Renamed OZ Minerals (OZM) and with a market cap of circa A$8.4bn, the scheme was approved with by an astounding 97% of ZFX shareholders. Macquarie Research Equities (MRE) provide some very interesting analysis on the deal and deliberate their guidance on the new global diversified miner…

The Deal Drivers
MRE believe the real catalyst for the merger is the ability to leverage ZFX’s balance sheet into OXR’s growth pipeline. In addition to this, the deal will further facilitate an aggressive acquisition strategy. OZM will essentially become the second largest global zinc producer and following the commission of Prominent Hill will be close to the top fifteen global copper producers

Global “Targetting” or Global Target
MRE believe that OZM will be aggressive in their growth strategy underpinned by brownfield expansions – i.e the development at Prominent Hill and Greenfield projects incl. Dugald River and acquisitions. However MRE also indicate that the merger will likely position the firm as a target for even bigger suitors, namely Teck Cominco and Xstrata.

Recommendation
MRE state that OZM is well placed to enter the ranks of the global diversified base metal miners. And in line with a strong balance sheet, there is also the expectation of an aggressive organic and acquisition growth strategy.

The complexity of market activity over the last 12 months has certainly caused considerable investment uncertainty. With many investors feeling the pinch in their margin lending accounts, perhaps a protected lending strategy in the mining sector would provide some comfort for investors still looking for Australian equity exposure. If a leveraged and protected strategy appeals to your financial needs have a look at the MQ Listed Protected Loan – the next generation in protected lending:

MQ LPL Website: www.macquarie.com.au/lpl

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