northparkes sale, page-16

Difficulty is in reconciling the short term view of the market (6-12 months at best) with the long term mining (5 -10 years+), combined with the need to impairment test assets, and the mechanism used for impairment testing.

For example, Lihir is a world class gold asset and will form the core of Newcrest (in conjunction with NSW assets) for many years to come.

OZL are in a difficult place - on one hand they know that they cannot overpay for assets (market reaction would be negative) yet they are competing with bidders who have a radically different view of the world (commodity price, FX etc) enabling them to outbid OZL.

PH is coming to the end of its open pit life, and there will
likely be a gap before C starts (if C starts) - and the capital cost for C will be material (at a guess, perhaps A$2bn, deep UG mine plus mill - and it depends on mining method), then you also factor in technical risk (mining, metallurgy etc).

So what should OZL do?

One must assume that all the obvious candidates have already been pitched to OZL (all ASX listed copper plays, plus OZL will have been through all the data rooms (both for known public processes and private)) and OZL have (as yet)not moved.

Personally, I think it is disappointing that OZL has not conducted a more aggressive program of junior JVs (for example Antofagasta is JVing with Sipa and Encounter in WA - this should be OZLs backyard - and if Anto find these targets/companies attractive - OZL should have got there first)

As for big ticket M&A - as previous posters have said, majority of M&S is and has been value destructive - so where are OZL going to go?

Pressure is definitely on. They cannot sit with cash on their balance sheet (A$660m as at 31 Dec 2012 plus the lazy 19.9% in SFR) indefinitely.

Return cash to shareholders? (doubtful)
Material M&A - where are the targets
Smaller ASX M&A (RXM, IVA etc) - potentially so - but a solution?

OZL need to find a project/operation that can diversify their exposure from C (technical/financial) and give them another leg to the business when the production from PH open pit ceases.