I reckon BOC is worth accumulating at these (late 20’s)...

I reckon BOC is worth accumulating at these (late 20’s) levels.

The response to ASX speeding ticket tells us absolutely nothing. It has been the stated intention to sell Panguna for 2 years, and not to recommence mining.

There’s simply too much bad blood between the Bougainvillians and the company to reopen. Also, the company would need to raise too much cash assuming everything has been trashed.

Conspicuous was no mention of the sale of the mine at all. (Or the rapidly rising copper price). Interesting was mention of rumours of the mine reopening. There’s been no posting on gossip forums like Hotcopper or Ozestock, since November last year. I've heard nothing of this anywhere.

The Preliminary final report for Year End 31 Dec is due out soon. Last year it was announced 4th Feb. The AGM was held 9th April in Port Moresby.

I’d say the market is simply re-rating BOC as an investment company and determining what discount or premium to NTA it should be accorded. As they were an early mover into Lihir et al; I reckon it will come in at roughly 60 Oz cents. Due to the movement of funds from high yield PNG bonds (15% p.a. odd) to equities, EPS will likely not greatly improve unless capital gains have been taken. Also, Kina weakness will be somewhat mitigated by investments in AUD.

It’s unlikely the run was a mistake such as short covering. Obviously speculation regarding the mine. To my mind this stock should trade as an investment company. The mine side is free and may (or may not!) create a windfall.

Last year, they suspended the 2 cent (AUD) dividend as 2500 (mainly PNG) lost shareholders didn’t cash their cheques. I’d say there’s a fair chance of a share buyback coming up at the AGM. For Australian and foreign investors, this would be far more tax advantaged than a dividend as the withholding tax rate in PNG is 15%.

Another thing that comes to mind is the change of direction. If BOC is indeed an investment holding co, why does it not have to comply with regular reporting of NTA like trusts or utilities?

Could the Chinese be potential buyers of Panguna?

Already they they import over a third of the worlds copper output. (Same for Zinc & Iron ore and fully half of the worlds cement)

From www.postcourier.com.pg 23/1/04


PNG to make offer to China on Ramu
MINING Minister Sam Akoitai leaves for China on Sunday for a too-good-to-ignore proposal by the Chinese Government who want to finance, construct, manage and buy nickel from the Ramu Nickel project.
Construction costs for the Ramu Nickel project located in Madang will cost US$600 million. The Special Mining Lease is owned by Highlands Pacific Ltd. It has been on the backburner due to a drop in cost of nickel and the loss of a major financier to New Caledonia.
“It’s a deal that no one has ever offered to Papua New Guinea,” Mr Akoitai said.
“We might have a deal that might be for 40 years with a guaranteed market.”
Mr Akoitai said yesterday that equity participation in the Ramu nickel/cobalt project will be the centre of discussions as mining officials including Highlands Pacific Ltd visit China this weekend.
He said the position of the mainland China State-owned Chinese Metallurgical Construction Company (CMCC) is that they want to “finance the whole project, manage the whole project and also buy the whole project”.
PNG’s position will be to offer at most 65 per cent to CMCC, as Highlands Pacific Ltd and Mineral Resources Development Company are prepared to come down to 15 per cent which will give landowners five per cent.
Mr Akoitai said that this was all subject to negotiation in Beijing.
He said that the Chinese are after a Government-to-Government arrangement but with Highlands Pacific Ltd owning the SML, if the Chinese maintain their primary position the negotiation would have to move to a “commercial arrangement” situation.
Mr Akoitai’s delegation will include Ramu project operator Highlands Pacific Limited and shareholder Mineral Resource Development Company.
This is a return visit following an eight-member CMCC delegation led by President Ma for two weeks in early November where they did a site visit as well as study geological data that Highlands Pacific Ltd had on the project.
“Everything will depend on the negotiation and if all goes well we will come up with an agreement,” Mr Akoitai said.
“The agreement will then be signed by the Prime Minister Sir Michael Somare and the Chinese Government when the Prime Minister goes on his State visit to China next month.”
He said CMCC’s interest to take on the Ramu project was a welcome sign for the mining industry in Papua New Guinea and also for PNG’s economy as a whole.
Highlands Pacific Limited managing director Ian Holzberger said last week that both HPL and MRDC were in constant negotiation to offload certain percentages of their shares in the project to another participant.
HPL owns 68.5 per cent of the Ramu project while the State through MRDC owns 31.5 per cent.
Mr Holzberger said Ramu had been the flagship of HPL and it remained an extremely attractive development proposition.
If there is a positive outcome from the Beijing negotiation, the agreement will await Sir Michael’s signature of approval which may be given in the upcoming state visit to China before the multi-million kina project gets off the ground.

21/1/04

Law and order is ‘vastly improved’
THE law and order situation has vastly improved in Bougainville over the last couple of months.
And with the first batch of the 100 new recruits from Bougainville already flown to Port Moresby for training, there is a positive sign that the policing system will be better served.
Acting Provincial Police Commander for Bougainville Peter Nasatt said yesterday that over the Christmas and New Year periods, police in Buka, Arawa and Buin fully implemented the process of the law.
He said special attention was given to the general law and order operations taking place at smaller stations by the auxiliary police and the community leaders in the past couple of months.
“We have carried out foot beat patrols and mobile patrols and there have been more community policing awareness being carried out in the villages by both the police and the village elders,” Mr Nasatt said.
He said that the weapons disposal program has also contributed to the improving law and order situation which has contributed greatly to the peace process.
“The weapons disposal has played a very important part and it has provided the foundation for people to find peace within themselves,” he said. Mr Nasatt said that the 30 Bougainvillean police officers who arrived in Bougainville last month have already been posted to various locations in the province.
He said that the community has shown great appreciation for the police who will stay up to six months in these areas.
The first batch of 50 police recruits are now training in Bomana. Mr Nasatt said that they (the recruits) would have the mandate to effectively enforce law and order strategies.
“I believe that they will effectively carry the work they would be tasked to do and I am hoping we get many more for police training,” he said.

See my earlier posts on BOC for other ideas.
Cheers