Daily Brief Energy/Materials: SK Innovation, Ssangyong Cement Industrial, Silver Lake Resources, Haynes International, Fortuna Silver Mines, Freeport Mcmoran, Advanced Emissions Solutions I, Gold, W&T Offshore, Lithium Americas Argentina Cor and more

• On 5 February, SK Innovation (096770 KS) announced a large-scale shares cancellation of 4.92 million shares, representing 4.9% of outstanding shares. 
• This is the first ever large scale shares cancellation for SK Innovation since it was first established in 2011.
• All in all, despite the company’s disappointing results in 2023, the large scale share cancellation should help to support SK Innovation’s share price in the coming weeks. 

• Today, 5 February, PE-outfit Hahn & Co commenced its Tender Offer for the 20.1% of shares not held in cement manufacturer Ssangyong C&E (003410 KS).
• The Tender Offer price is ₩7,000/share, a 9.2% premium to last close; although shares did gain ~12.2% just prior to the Offer.
• There is no minimum acceptance condition. Hahn & Co will purchase all shares tendered. Payment is the 8 March. This will trade tight. 

• Silver Lake Resources (SLR AU) and Red 5 Ltd (RED AU) will merge. SLR shareholders receive 3.434 RED shares per SLR share, implying A$1.133, a 10.4% discount to the undisturbed price. 
• The merger is strategically sensible as the combined entity should re-rate due to scale, diversification and better cash flow generation.
• The merger terms are more favourable for RED shareholders than SLR shareholders, posing a risk for the vote. The merger may draw out rival suitors.  

• On 5 February, Acerinox SA (ACX SM) announced a friendly $61/share all-cash offer to acquire Haynes International (HAYN US), implied equity value $798 million, implied EV $970 million and 8.7% premium.
• The offer represents 1.5x EV/24e Sales, 10.1x EV/24e EBITDA (5.8x including run-rate estimated synergies of c.$71 million, seemingly quite large). The acquisition amounts to approximately 33% of Acerinox’s market cap.
• Acerinox is paying higher multiples than those at which Acerinox itself is trading. The deal should close. The shares of Haynes are already up 2.7% pre-market after Q1 results. Long.

• Gold held flat in January following a big monthly gain of 13% and reaching all-time highs in December, while mining equities lagged.
• Besides gold, other precious metals, commodities, and battery metals had a mixed month, while uranium’s strong performance accelerated, up 16% in January and hitting its highest price in more than 16 years.
• We attended a busy Vancouver Resource Investment Conference in January.

• In FY 2023, Freeport-McMoRan reported solid operating results across its operations.
• A key highlight was its robust performance in Indonesia, where production levels improved for the fourth consecutive year and several new operating records were set.
• The company also reached several milestones, including achieving a target run rate for their leach production in the Americas and making significant progress on the Indonesian smelter project.

Key points (machine generated)

• The EPA will be implementing regulations to reduce levels of PFAS chemicals in municipalities, due to the health risks associated with them.
• Major retailers like Amazon, Lowe’s, and McDonald’s are adopting policies to eliminate and prohibit the use of PFAS chemicals in their products.
• 3M, a major supplier of PFAS, agreed to a $10 billion settlement in June 2023.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Last week the World Gold Council published its figures for the fourth quarter of 2023.

• Gold demand for technology, electronics and other industrial use cases continued to improve in nominal and YoY terms – pointing to an economic rebound.

• “Technology demand proved another surprising element in 2023, churning out stellar growth in Q4, albeit from a low base.

• W&T Offshore closed an acquisition of six operated oil & gas fields in the Gulf of Mexico on January 22, 2024, for $72 million.
• The acquisition, which was funded with cash on hand, fits management’s philosophy of investing capital in short- cycle opportunities capable of generating free cash flow.
• The acquired assets include 100% working interests (82% net revenue interests) in six producing fields adjacent to W&T’s existing asset footprint.

Key points (machine generated)

• US-based operations of Lithium Americas are separate from potential trade disputes.
• Lithium Americas (Argentina) Corp has an attractive valuation, strong cash flows, and a favorable mining jurisdiction in Argentina.
• The author believes the stock has the potential to double within 12 months, with a price target of $12.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.