mim insights

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    From AFR today.

    MIM insights

    MIM Holdings managing director Vince Gauci gave a pretty clear taste yesterday of what's on the menu in his discussions with Swiss-based miner Xstrata.

    He told the Brisbane Mining Club that analysts valued the company between $1.80 and $1.90.

    "In that valuation there is no value for any of the growth projects we have on our plate," Gauci said.

    The question is whether MIM can deliver on those projects fast enough to please impatient investors.

    "Of all the directors and management teams at the moment, they're probably the ones that are best placed to do it," says ABN Amro analyst Warren Edney.

    That credibility of Gauci's team, won over more than six years of hard work, means that Xstrata will "have to build in some of the upside" if they make a bid, he says.

    But the rising Australian dollar is working against Xstrata. At yesterday's market close of $1.51, down 1¢, MIM's capitalisation was $3 billion. Xstrata is currently valued on the London Stock Exchange at £1.4 billion, equivalent to $3.8 billion.

    MIM's market value would equal Xstrata's at an MIM share price of $1.91.

    Xstrata, which is desperate to find ways to dilute its exposure to South Africa, faces a big risk if it waits to bid until after Iraq has been settled.

    MIM is highly leveraged to the copper price and a post-Iraq surge in the price of the metal could put the company out of reach.
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