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Gresham "Group 150" - July 2010
1. JULY 2010
Group 150
July 2010
Darren Martin
Gresham Advisory Partners
dmartin@gresham.com.au
+61 8 9486 7077
+61 412 144 719
ASX RESOURCES - GROUP 150
We are pleased to present the July edition of ‘Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and
gas), by market capitalisation.
If a week is a long time in politics, a year is surely an eternity in the stockmarket. In this edition of the Group 150, we consider developments
over what has been a tumultuous year in the history of the ASX, including the “winners and losers” for the past 12 months by both
market value and share price performance.
The market value of the Group 150 at the end of June was $467 billion, down 0.8% from May. The entry point into the Group 150 for June
was $65.6 million versus $69.8 million for May. The ASX/S&P 200 Resources Index fell 1.2% in the month, while the ASX All Ordinaries
and ASX/S&P 200 Index both decreased 2.9%. June was another quiet month for M&A, with only two transactions being announced.
With so much happening domestically, it is easy to lose sight of some of the bigger picture issues which have the potential to significantly
affect world trade and with it, the fortunes of our commodities focussed economy.
Significant among these is the announcement during the month of June (just before the G20 Summit in Toronto, which can hardly be
a coincidence), that China would return to a form of “managed float” of the Yuan, following a period of nearly two years pegged to
the (usually weak) US dollar. Although the Bank of China steadfastly refused to alter the official reference rate, no doubt to muddy the
waters slightly for the speculators, the markets clearly interpreted the announcement as a signal that the Yuan would appreciate, albeit
slowly, over time.
Other things being equal, this could bring benefits for the commodities outlook, by increasing the purchasing power of China’s
consumers and industrial sector. The former, in particular, will need to do much of the heavy lifting in terms of global growth, with
President Obama unofficially declaring the US consumer to be on a spending strike for the indefinite future, and Europe, after a decade
bathing in the cheap money glow of the Euro, now in the grip of new-found austerity.
While the return to a managed float of the Yuan is a necessary and positive signal, at least at present, it is competing with a lot of other
noise – most of it negative – on the health of the global economy. After a period treading water, markets appear poised for significant
movement, although trying the direction of that movement seems fraught with danger.
The updated “RSPT-impact” chart from last edition supports a further marked and divergent move between the domestic and
international focussed companies and hence continued cost of capital pressures for domestic focussed companies. The average
market value of domestic focussed companies since the proposed RSPT was announced has declined 13.6% (vs 12.2% at end of May).
International focused companies increased 1.1% (vs a decline of 0.9% at end of May). Globally diversified companies (including BHP
Billiton down 7.6% and Rio Tinto down 7.5%) have declined on average 15.5% (vs a decline of 10.0% at end of May).
Gresham Advisory Partners Limited
Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisory
Edition 4 business and one of Australia’s largest and highest ranking independent corporate advisors.
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4. Group 150
Group 150 mArkeT cApiTALiSATion ASX indeX performAnce - June
Group 150 SecTor mArkeT cApiTALiSATion - June
Market Capitalisation (A$b)
merGer & AcquiSiTionS - Announced in June
Percent Premium - Premium -
Date Value Consideration
Target Acquirer Sought 1 Day Prior 1 Month Prior
Announced (A$m) Offered
(%) (%) (%)
3-Jun-10 North Queensland Metals Limited Conquest Mining Limited 57.9 100 28.9 34.9 Combination
30-Jun-10 Shield Mining Limited Gryphon Minerals Ltd 24.5 100 35.8 29.4 Equity
Source: Capital IQ
Announced Australian Resources (excluding oil and gas) Mergers and Acquisitions >A$10m
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5. JULY 2010
Group 150 - “rSpT impAcT” - BASed on proJecT/S LocATion
The “RSPT-Impact” chart in Edition 3, received wide coverage and supported the clear conclusion of the adverse impact of the proposed
RSPT on the domestic focused resource companies.
The assessment has since been updated for a further month of trading and the conclusions have not changed and if anything, support
a more marked and divergent gap between the domestic and international miners. Hence the cost of capital implications remain as
companies compete globally for funding – the quantum of the impairment on Australia’s competitiveness is not a settled matter and
will depend on not only the final tax regime agreed, but also on how the new regime is communicated and implemented.
The average market value of domestic focussed companies since the proposed RSPT was announced has declined 13.6% (vs 12.2%
at end of May). International focused companies increased 1.1% (vs a decline of 0.9% at end of May). Globally diversified companies
(including BHP Billiton down 7.6% and Rio Tinto down 7.5%) have declined on average 15.5% (vs a decline of 10.0% at end of May).
Market Capitalisation - Performance Since Proposed RSPT Announced
Overseas/
Monthly Performance Overseas Domestic Total
Domestic
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%)
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
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6. Group 150
Group 150 winnerS And LoSerS - fY2010 ShAre price performAnce
Winners Losers
Group 150 winnerS And LoSerS - fY2010 mArkeT cApiTALiSATion
Winners Losers
Source: Capital IQ
Winners and Losers based on companies in the Group 150 as at 30 June 2010
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7. JULY 2010
BASe meTALS - SecTor performAnce
Share Price Performance - June 2010
Copper Nickel Zinc
Share Price Performance
Share Price Performance - Since 1 Jan 2010
Share Price Performance
Share Price Performance - Since 1 July 2009
Share Price Performance
7
8. Group 150
coAL - SecTor performAnce
Share Price Performance - June 2010
Share Price Performance
Share Price Performance - Since 1 Jan 2010
Share Price Performance
Share Price Performance - Since 1 July 2009
Share Price Performance
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9. JULY 2010
diverSified - SecTor performAnce induSTriAL minerALS - SecTor performAnce
Share Price Performance - June 2010
Share Price Performance
Share Price Performance
Share Price Performance - Since 1 Jan 2010
Share Price Performance
Share Price Performance
Share Price Performance - Since 1 July 2009
Share Price Performance
Share Price Performance
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10. Group 150
GoLd - SecTor performAnce
Share Price Performance - June 2010
Share Price Performance
Share Price Performance - Since 1 Jan 2010
Share Price Performance
Share Price Performance - Since 1 July 2009
Share Price Performance
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11. JULY 2010
iron ore - SecTor performAnce
Share Price Performance - June 2010
Share Price Performance
Share Price Performance - Since 1 Jan 2010
Share Price Performance
Share Price Performance - Since 1 July 2009
Share Price Performance
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12. Group 150
urAnium - SecTor performAnce
Share Price Performance - June 2010
Share Price Performance
Share Price Performance - Since 1 Jan 2010
Share Price Performance
Share Price Performance - Since 1 July 2009
Share Price Performance
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14. recenT reSourceS TrAnSAcTionS
Group 150
Mergers and Acquisitions
Mergers and Acquisitions
2010 2009
GRAM
2009 2009 2008 2008 2006
Advised BHP Advised BG Advised Guandong Advised Allied Gold Advised Kalahari Advised Gem Advised IAMGOLD
Billiton on its Group on its $1bn Rising on its $216m on its $54m Minerals on its Diamonds on its Corporation on its
$204m offer for takeover offer for cornerstone acquisition of $140m proposed $300m acquisition $265m acquisition
United Minerals Pure Energy investment in Pan Australian merger with of Kimberley of Gallery Gold.
Corporation. Resources Aust. Solomons Gold. Extract Resources. Diamonds.
Limited.
TakeoverDefence
Takeover Defence
2010 2010 2010 2009 2009 2007 2007
Advised Polaris Advised Indophil Advised Advised Energy Advised Brandrill Advised Summit Advised Tethyan on
Metals NL on on $545m Centaurus Metals on its $86m Limited on its Resources on its its $220m
$178m takeover recommended Resources on its proportional takeover $45m takeover A$1.2bn takeover competing takeover
offer by Mineral offer from Zijin $20m merger offer by China offer by Ausdrill by Paladin Energy. offer by Crosby and
Resources with Glengarry Guangdong Nuclear Limited. Antogafasta/Barrick.
Limited. Resources. Power Group.
Strategic Advisory, JointJoint Ventures and Capital Markets
Strategic Advisory, Ventures and Capital Markets
2010 2010 2009 2008 2009/08 2008 2008
Advised BHP Introduced Advised BHP Advised Advised Iluka on its Advised Advised Iluka
Billiton on its Denham Capital to Billiton on the Bannerman $114m Murchison Metals Resources on its
US$116bn iron Trans Tasman disposal of the Resources on its institutional on its joint venture $54m Narama coal
ore production Resources resulting Yabulu Nickel financing with placement and with Mitsubishi. divestment to
joint venture with in NZ iron sands refinery. Resource Capital $353m accelerated Xstrata.
Rio Tinto. investment. Funds. right issue.
Gresham Advisory Partners Limited
A.B.N. 97 003 344 269
Level 17, 167 Macquarie Street, Level 10, 1 Collins Street, Level 3, 28 The Esplanade,
Sydney NSW 2000 Melbourne VIC 3000 Perth WA 6000
Telephone: 61 2 9221 5133 Telephone: 61 3 9664 0300 Telephone: 61 8 9486 7077
Facsimile: 61 2 9221 6814 Facsimile: 61 3 9650 7722 Facsimile: 61 8 9486 7024
Website: www.gresham.com.au
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