Forum Archive Index - August 2001

[K & A Frankum <frankum@xtra.co.nz>]

Several Reasons John.

1/..I consider the stock seriously oversold.... the major asset is the Century Mine which could realise between $1.5 to $2 billion which would go a fair way to reducing debt of $2.5 billion.

Pasminco also has other major assets which include Rosebury in Tasmania, and Elura and Broken Hill in NSW.

2/..The sale of these assets would leave the company with its smelting assets with their annual earnings of approx. $90 to $110 million before interest and tax to service any remaining debt.

3/..The Board has decided to bite the bullet...the exploration division will be sold.. and Pasminco will refocus on zinc and lead smelting which should engender more stable earnings.

4/..Greg Gailey ex  Fletcher Energy will take over as CEO from August 6th.

5/... I note  Jim Rogers has recently been buying shares.( I am sure you would agree most avid contrarians have at least one shrine in their home devoted to Jim Rogers)

Obviously a lot rides on asset sales, support from their financiers, and ongoing quality of management, but this stock has all the factors which make it a classic contrarian play.
It is not easy being a contrarian, but hopefully the bad news is all on the table. The assets are real assets and irreplaceable, and the board has a viable restructuring plan.
Being a cynic I have also noted that some of the Aussie Financial journalists that have been most vociferous in their condemnation of Pasminco, happened to be the most laudatory of One Tel.. Telemedia etc etc. that on its own is a good enough reason for me to buy.
cheers Keith