Zinifex Sale Of Smelters Expected To Raise Up To $2.2 Billion

Sydney Morning Herald

Tuesday October 16, 2007

Jamie Freed

ZINIFEX expects to receive between $1.2 billion and $2.2 billion from the sale of its smelters by the end of the month, depending on the success of the Nyrstar public offering in Belgium.

Nyrstar, a joint venture between Zinifex and Belgium's Umicore, yesterday released a prospectus including an indicative offer size and price. The partners expect to sell at least 70 per cent of their holding to outside investors and have retained the option of selling all 100 million shares, depending on investor demand.

Zinifex owns 60 per cent of Nyrstar, which will sell shares through a bookbuild for EUR18 ($28.21) to EUR23 a share.

At the lower end -70 per cent of its shares sold for EUR18 apiece - Zinifex would earn $1.2 billion from the float. If Zinifex managed to sell all of its shares in Nyrstar for EUR23 each, it would earn $2.2 billion.

Zinifex wants to put the money toward growth and is looking to purchase advanced copper projects or copper mines. It expects to return any remaining proceeds to its shareholders.

BT Financial's Tim Barker said the Nyrstar bookbuild price range was at the lower end of expectations. "It certainly looks like it's priced so this gets off and is successful," he said. "You'd think if the market remains buoyant for the next few weeks, there's every chance it will do."

Nyrstar shares are being offered only to institutional investors outside of Belgium. The offer, which opened yesterday, will close on October 26. The final price is expected to be announced at the time of listing on or around October 29.

Although zinc prices have fallen from a high of $US4500 ($4976) a tonne last December to about $US3000, UBS said the short-term outlook for the metal might not be as bleak as the price suggested. "Further falls in already critically low London Metal Exchange stocks and slower-than-expected mine production might trigger some positive movement in the metal's price," UBS analysts said.

The investment bank predicted the zinc price would average $US3500 a tonne this year and $US3300 a tonne next year.

Zinifex shares closed 36c lower at $18.23 yesterday.

© 2007 Sydney Morning Herald

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