The Zinifex scenario?ZFX-no debt,cranking out cashflow, if...

The Zinifex scenario?

ZFX-no debt,cranking out cashflow, if smelters get taken of the books cuts a major long term liability and turns it into an asset in the form of cash/stock in a new vehicle without recourse to ZFX, small exploration team, non-existent development team, major asset has comparatively short shelf life (Century), replacement asset has questionable recovery characteristics (Dugald River).

OXR-debt but still below industry averages and capable of taking on more debt, cranking out cashflow, Sepon being upgraded and Prominent Hill comes on line within two years, missing a medium term development project at this stage, expanded exploration team, proven development teams, assets have long shelf lives.

Management-more depth at OXR. MD egos-Gailey's contract has a further 12 months and may be renewed. Market rumour is that he wants to leave soon as the undeniable hero and liquidate his ZFX portfolio at the supposed 'top'. (Also note his share sale late last year). OH recently signed up for another 3 years-he remains committed.

Market caps=2-1 in favour of ZFX. But-the ZFX balance sheet contains so much cash and is well and trully undergeared, an OXR move on ZFX should not be ruled out, particularly if the smelter deal gets more traction.

The converse is also easily considered given the ZFX balance sheet. Downside here is the undeniable loyalty factor in OXR-it almost makes any plausible bid way too high in terms of potential takeover premium for a reasonable board to consider IMO.

Eackon a 3rd party event would be required to get the two dancing-which is always on the cards.

Bit of a shame actually-the combined group looks very attractive and would give Melbourne yet another trully world class mining house (once the smelters are gone!).

Cheers,TAS