The broker is currently valuing WMC’s former nickel assets at $US7.6 billion ($A10 billion), compared to BHPB’s successful $A9.2 billion bid in 2005. The net present value of the assets has risen a whopping $US4 billion in the past six months on the rise and rise of the nickel price.
GSJBW’s positive valuation of BHPB’s nickel business comes “despite all the problems, risks and significant unknowns”
These include the major cost overruns at the Ravensthorpe laterite development, “Leinster below the 11 level, Mt Keith production, etc”
GSJBW, however, was scathing about the lack of detail provided by BHPB about its nickel business.
“Rio Tinto’s industrial minerals led the way over the years in terms of poor disclosure and BHP’s nickel operations are now following this lead,” the broker said.
“While Rio came up with commercial reasons why its Industrial Minerals Division should remain opaque, we believe its lack of accountability in terms of reporting contributed to its underperformance and eventual restructure.”
