in the morning notes from Ord Minnett....how things have changed...

in the morning notes from Ord Minnett....

how things have changed for the group over such a short space of time...lots of questions still to be answered...

hopefully they can work it all out...

"$125M Cash Burn in 8 days
Further developments at OZ, and again less cash, though this time with the announcement that the company is pursuing options to divest the Martabe gold project in Indonesia, and establish a JV partner for Prominent Hill. Add to this the statement that completion of refinancing facilities by 29 December 2008 is “highly unlikely”, and that risks have increased on the company not being able to satisfy conditions to extend its refinancing date to 31 January 2009. We can not recommend investing or holding stock in OZL at this time. As of 8 December 2008, OZL advised that their cash position has further deteriorated to $279.4M, down from $405M as of 30 November 2008. To put this into perspective, this equates to a cash burn of $125.6M in 8 days, or a cash burn rate of $15.7M per day. The company has a total debt of $1,082M with net debt of
A$802.6M excluding convertible bonds. We have not changed our end of CY08 cash position. Without data on DecQ08
production, or outstanding provisional pricing, or outstanding project deferments costs, we cannot accurately forecast the company’s end of year cash position. However, we believe significant downside exists to our current end of CY08 forecast of $278M. Our June 2009 price target is reduced to A$0.55/share, reflecting a 3 year average forward P/E of 4x. Key risks to our price target include movements in base and precious metals prices, and the company’s ability to re-finance debt."