Daily Brief Energy/Materials: Cosmo Energy Holdings, Origin Energy, Aag Energy Holdings, Liontown Resources, TMC the metals co, Pan American Silver, Gold and more

• In mid-January, things between activist Yoshiaki Murakami and Cosmo Energy Holdings (5021 JP) came to a head. Cosmo announced a large buyback and possible takeover defence measures.
• The buyback was a beefy chunk of the float because of the expected profit payout. On 9 February, Cosmo lowered its NP guidance by 40%. FY22 div stays at ¥150/share.
• Last Thursday, Cosmo presented its NEW Mid-Term Management Plan. ROE targets similar. Profit targets up. Minimum div goes up; payout ratio goes up. More comes if financial health targets met.

• Origin Energy (ORG AU) has entered into a binding proposal with Brookfield/EIG. The offer terms are changed to A$5.78 and US$2.19 per share. The offer is worth A$8.912 excluding dividends.
• Since the announcement of the first indicative offer on 10 November 2022, the average implied value of the revised offer is A$8.97 per share vs A$9.00 for the previous offer.
• ACCC approval will be the key overhang and is expected to take around six months. At the last close, the gross spread to the offer is 9.1%.

• Aag Energy Holdings (2686 HK) noted that the pre-condition for Xinjiang Xintai Natural Gas (603393 CH) privatisation offer at HK$1.85 per share has been satisfied (which was expected). 
• The gross spread has widened to 16.4% due to concerns that the recent solid FY22 results, lack of dividends and the skinny premium would nudge minorities to vote NO.
• It remains unclear if the dissatisfied retail minorities have enough votes to block the scheme. The downside remains low as the shares are trading 5% below the undisturbed price. 

• In the wake of the Aussie government’s gas price intervention, the Brookfield/MidOcean consortium reduced its Offer for Origin Energy (ORG AU) to ~A$8.90/share, down from A$9.00/share, on the 22 Feb. 
• At the time, Origin appeared supportive.  Origin and Brookfield/MidOcean have now entered into a Scheme Implementation Deed.
• Some subtle – and more favourable to all investors – changes have been made to terms. Pricing is attractive. ACCC is the big question mark.

• Liontown Resources (LTR AU) has turned down an unsolicited, conditional and non-binding offer from Albemarle Corp (ALB US) to acquire all outstanding shares at A$2.50/share.
• There is huge short interest on Liontown Resources (LTR AU) and the short covering could take the stock close to the A$2.50/share mark.
• Liontown Resources (LTR AU) is up nearly 50% today and if the price stays around this level, the stock could be added to the S&P/ASX 100 Index in September.

• Pilot costs drive higher losses. TMC reported 4Q22 results that included a net loss of $109.6 million, compared with a net loss of $19.6 million in 4Q21.
• Higher Y/Y losses were driven largely by the $70 million fair value of the Allseas warrant exercisable post successful collection test, valued at $7 per share based on the grant date of March 2021, partially offset by lower G&A expenses.
• TMC ended 2022 with $46.8 million in cash, which along with the $25 million unsecured credit facility, management believes will be sufficient to meet its WC and capex needs through 1Q24.

Pan American Silver (PAAS) has reported that the Mexican Federal Economic Competition Commission approved the company’s plan of arrangement with Yamana and Agnico Eagle. This is the final regulatory approval that paves the way for the completion of the transaction, which is guided to occur by end March, in line with management’s expectations. In other news, PAAS recommended a Q123 cash dividend of US$0.10 per share, implying a 2.2% yield on an annualised basis.

• Goldman Sachs jumps back into the supercycle boat Goldman Sachs expects a commodities supercycle driven by China and the capital flight from energy markets and investment this month after concerns triggered by the banking sector, the U.S. bank’s head of commodities said.
• “Historically, when you have this kind of scarring event, it takes months to get capital back … We will still get a deficit by June and it will drive oil prices higher.”
• Jeff Currie, global head of commodities for Goldman Sachs, told the Financial Times Commodities Global Summit on Tuesday.