charlie aitken on ozl something may be up

Southern Cross Equity's Charlie Aitken talks about OZL in his latest set of notes, which the Eureka Report carry:


A couple of people I speak to think the sudden burst of announcements from OZ Minerals is either a sign it has received some sort of tentative approach from another company, thought it was about to receive such an approach or simply woke from "hibernation".

Look at this comment from chief executive Andrew Michelmore in his recent letter to shareholders:

"We remind shareholders that the indicated valuation of $3.80–4.40 per share determined by Grant Samuel & Associates in May 2008 is substantially higher than the current share price. We can assure shareholders that nothing detrimental has happened to those assets over the past four months and we implore you not to lose sight of this fact."

This letter came out when OZ Minerals shares were about $1.50. In these uncertain times it's pretty aggressive to point shareholders to a "valuation" more than double the current share price. The letter was followed by a series of operational and resource upgrade announcements, which are often the hallmark of a company that has either received some sort of approach or fears getting one.

OZ Minerals had been heavily shorted by hedge funds on a view against copper, zinc and Michelmore himself. Perhaps all we are watching is forced short-covering, but even on my numbers OZ Minerals is a cheap stock with a pile of cash on its balance sheet. It would make sense that its low share price would attract corporate interest. Watch this space.