strategies, page-4

FMG is 4.5 times bigger that OZL in market cap, so it would need to be t/o of OZL by FMG. (The two are too far apart for a merger of equals.) That then get's into t/o premiums etc etc etc.

Certainly to even out the volatility in commodity prices for both companies, it does have some merit. I cannot see any synergies or cost savings.

Also, OZL has not debt and more than $750m in cash. FMG has significant debt ($4.5b). The other thing is that FMG is very exposed to a downturn in I Ore prices. Currently 50% of the price received for the I Ore goes into the cost of production. When admin and interest is removed, they are operating on a margin of less than 25%. So if I Ore prices go south by $45/t, FMG could be in trouble. For OZL, we know that the copper price can go to a much lower price (by my reckoning less than $2) and OZL is still OK. OZL's "moat" to protect it is much larger and wider than FMG's.

Would it be good for OZL shareholders? If it was a cash offer with a t/o premium, probably - if it was a script offer - I would sell my FMG shares.

Sorry to be a bit of wet blanket Redgum, but it was a good idea.

This idea would also go for PDN. They are losing money every qtr due to high C1 cash costs. They have a lot of debt and their bal sheet is poor.

HT1