Tag: metals

Universal Stainless & Alloy Products to Be Acquired by Aperam for $45 Per Share in All-Cash Deal

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Aperam will acquire Universal Stainless for $45.00 per share in cash.
– The deal offers a 19% premium to the 3-month average stock price.
– Universal will maintain its U.S. identity and operations post-acquisition.

Universal Stainless & Alloy Products, Inc. (Nasdaq: USAP) has announced a definitive agreement to be acquired by Aperam, a global leader in stainless and specialty steel, in an all-cash deal valued at $45.00 per share. This acquisition represents a 19% premium to the company’s three-month volume-weighted average stock price, marking a significant milestone for Universal. The total value of the deal is expected to provide liquidity to shareholders while integrating Universal into Aperam’s global footprint.

The $45.00 per share cash offer reflects a valuation of 10.6x Universal’s trailing 12-month Adjusted EBITDA as of June 30, 2024. Upon completion, Universal will become a wholly-owned subsidiary of Aperam, furthering Aperam’s expansion into the U.S. market by providing its first domestic manufacturing presence. Universal will continue to operate under its existing name and maintain its headquarters in Bridgeville, PA, ensuring a seamless transition for employees and customers.

Christopher M. Zimmer, President and CEO of Universal, expressed optimism about the acquisition: “This is an exciting opportunity to become part of a respected leader with complementary capabilities. It’s a significant step forward that will accelerate our growth and offer tangible benefits to our stakeholders, including our stockholders, employees, and customers.”

Aperam sees this acquisition as a strategic move to strengthen its position in the stainless and specialty steel sector, particularly in aerospace and industrial applications. Timoteo Di Maulo, CEO of Aperam, stated, “Universal’s capabilities and vision align with our strategy for sustainable growth and innovation. This acquisition enhances our ability to provide superior solutions to high-quality, sustainable sectors.”

The deal has been unanimously approved by the boards of both companies and is expected to close in the first quarter of 2025, pending regulatory approvals and shareholder consent. Following the close, Universal’s shares will cease trading on the Nasdaq stock exchange, and the company will continue to operate as Universal Stainless under the umbrella of Aperam.

For investors, this acquisition provides liquidity and a premium return on their investments, while Universal employees can expect to maintain their roles, with extended access to resources and innovations from Aperam’s global research centers. Customers will benefit from increased product offerings and improved manufacturing capabilities, ensuring that the combined entity continues to lead in the specialty steel market.

Cleveland-Cliffs Set to Acquire Stelco in Landmark C$3.4 Billion Deal

Posted on by slightbourne@noblecapitalmarkets.com

In a move that’s set to reshape the North American steel industry, Cleveland-Cliffs Inc. (NYSE: CLF) has announced plans to acquire Canadian steelmaker Stelco Holdings Inc. (TSX: STLC) in a deal valued at approximately C$3.4 billion. The transaction, announced on July 15, 2024, marks a significant milestone in the consolidation of the steel sector and underscores Cleveland-Cliffs’ commitment to expanding its footprint in Canada.

Under the terms of the agreement, Cleveland-Cliffs will pay C$70.00 per Stelco share, consisting of C$60.00 in cash and 0.454 shares of Cliffs common stock. This offer represents a substantial 87% premium to Stelco’s closing share price of C$37.36 on July 12, 2024, and a 37% premium to its 52-week high, highlighting the value Cleveland-Cliffs sees in the Canadian steelmaker.

Lourenco Goncalves, Chairman of the Board, President and CEO of Cleveland-Cliffs, expressed enthusiasm about the acquisition, praising Stelco’s recent turnaround and cost-efficient operations. “Stelco is a company that respects the Union, treats their employees well, and leans into their cost advantages. With that, they are a perfect fit for Cleveland-Cliffs and our culture,” Goncalves stated.

The deal has received strong support from key stakeholders. Major Stelco shareholders, including Fairfax Financial Holdings, an affiliate of Lindsay Goldberg LLC, and Alan Kestenbaum, collectively holding approximately 45% of Stelco’s outstanding shares, have agreed to vote in favor of the transaction. This early backing significantly increases the likelihood of the deal’s approval.

Alan Kestenbaum, Executive Chairman of the Board and CEO of Stelco, highlighted the value creation for shareholders, noting a 32% CAGR on Stelco common share investment since its 2017 IPO. Kestenbaum also expressed confidence in Cleveland-Cliffs’ ability to build upon Stelco’s achievements and maintain its iconic status in Canada.

The acquisition is expected to bring several benefits to Canada and Stelco’s stakeholders. Cleveland-Cliffs has committed to preserving Stelco’s name and legacy, maintaining its headquarters in Hamilton, and continuing significant operations in Hamilton and Nanticoke. The company has also pledged to invest at least C$60 million over the next three years and aims to increase steel production from current levels.

Moreover, Cleveland-Cliffs has promised to maintain significant employment levels in Canada and ensure Canadian representation on the management team. The company will also continue Stelco’s collaborations with local institutions, including McMaster University and CanmetMATERIALS, and increase charitable support by C$2 million per year.

The United Steelworkers union has expressed support for the deal. David McCall, International President of the United Steelworkers, stated, “We are delighted to further expand our already great partnership between Cliffs and the USW.”

From a regulatory standpoint, the transaction still faces several hurdles. It requires approval under the Investment Canada Act, the Competition Act (Canada), and the U.S. Hart-Scott-Rodino Antitrust Improvements Act. Additionally, approval is needed under Stelco’s funding agreement with Canada’s Strategic Innovation Fund.

The deal is expected to close in the fourth quarter of 2024, subject to these regulatory approvals and the support of two-thirds of Stelco shareholders at a special meeting to be held this fall.

This acquisition represents a significant step in the consolidation of the North American steel industry. It allows Cleveland-Cliffs to strengthen its position in Canada while potentially realizing synergies across its expanded operations. For Stelco, it offers shareholders a substantial premium and the opportunity to participate in the combined company’s future growth through the stock component of the offer.

As the steel industry continues to evolve in response to global economic shifts and environmental pressures, this deal positions the combined entity to better compete on the international stage while maintaining a strong commitment to local communities and stakeholders in both the United States and Canada.

Gold Shines Bright, Miners See Green as Bullion Surges Past $2,400

Posted on by slightbourne@noblecapitalmarkets.com

The unrelenting surge in gold prices has shown no signs of abating, with the precious metal blasting through the $2,400 an ounce level to set fresh all-time highs. Propelled by a combination of geopolitical turmoil, stubborn inflation, and prospects for more dovish U.S. monetary policy, bullion’s blistering rally has lifted the fortunes of mining companies along with it.

On Monday, gold futures settled at a record $2,383 per ounce after Iran fired missiles at Israel, amplifying safe-haven demand. While the imminent threat was neutralized, the escalation underscored bullion’s appeal as a hedge against geopolitical instability.

But it’s not just tensions abroad fueling gold’s ascent. The anchoring factor has been the prospect of easier monetary conditions from the Federal Reserve to tame hot inflation. Hotter-than-expected price data has raised odds of two rate cuts by year-end, buffering non-yielding bullion’s appeal relative to other asset classes like bonds.

The stellar gains have unsurprisingly turbocharged mining stocks. The VanEck Gold Miners ETF (GDX) has skyrocketed over 20% year-to-date, far outperforming the metal itself. Industry titans like Newmont Corp (NEM) have risen nearly 20% as the merger with Newcrest has fattened production levels and profit margins at current lofty gold prices.

While big miners are prospering, it’s the juniors and smaller explorers that have seen the most spectacular returns. Fueled by improved economics at higher bullion levels, higher prices breathed new life into marginal projects long-shelved during the bear cycle, while re-ratings sent neglected equities rocketing higher.

According to Citi analysts, the minimum “price floor” at which mines can profitably produce has risen from around $1,000 previously to $2,000 currently. This bodes extremely well for industry profitability and increased capital spending to bring on additional supply.

In fact, Citi sees no stopping gold’s rally, projecting a push towards $3,000 an ounce over the next 6-18 months on potential stagflation risks. Goldman Sachs has also jumped on the bullish bandwagon, revising their gold target up to $2,700 by year-end. Lofty forecasts like these imply juniors may have plenty of room to run if realized.

For investors, the juniors offer a high beta play on higher gold pricing but come with elevated risks compared to the senior miners. Many are single-asset companies with higher costs, making them more susceptible to operational snags and gold price fluctuations.

However, their outsize returns in a bull market are also apparent. Juniors like Equinox (EQX) have delivered nearly triple the gains of the major producers. Their improved ability to raise capital for growth also enhances the upside potential. If the $3,000 an ounce forecast is achieved, the re-rating and bull market in juniors could be just beginning.

With a potent combination of easy money policies, inflation risks, and simmering geopolitical flashpoints buoying bullion, gold’s uptrend shows no signs of abating. As the rally rages on, the mining industry from large to small is prospering – but it’s the high-risk, high-reward juniors that have emerged as the most compelling opportunity to capitalize on gold’s unstoppable ascent.

Take a moment to take a look at Noble Capital Markets’ Senior Research Analyst Mark Reichman’s coverage list.

Defense Metals Corp. (DFMTF) – Observations from the Phase II Pit Geotechnical Drilling Program

Posted on by cpatches


Friday, December 08, 2023

Defense Metals Corp. is a mineral exploration and development company focused on the acquisition, exploration and development of mineral deposits containing metals and elements commonly used in the electric power market, defense industry, national security sector and in the production of green energy technologies, such as, rare earths magnets used in wind turbines and in permanent magnet motors for electric vehicles. Defense Metals owns 100% of the Wicheeda Rare Earth Element Property located near Prince George, British Columbia, Canada. Defense Metals Corp. trades in Canada under the symbol “DEFN” on the TSX Venture Exchange, in the United States, under “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Phase II drilling program. Defense Metals completed Phase II open pit diamond core and sonic infrastructure geotechnical drilling. The program consisted of six diamond drill holes totaling 1,182 meters within the Wicheeda rare earth element (REE) deposit pit shell, inclusive of four open pit geochemical drill holes totaling 920 meters, and two near-mine exploration holes totaling 262 meters. Nine sonic overburden drill holes, and 14 test pits designed to help characterize the soil subsurface and bedrock foundations of future waste rock storage, contact water pond, crusher, processing plant, and tailings storage facility locations were also completed. A final Phase 3 drilling program will entail 10 sonic overburden drill holes and three test pits.

Successful outcomes. South and west pit wall drill holes WI23-81 and WI23-82 intersected significant widths of visibly REE mineralized dolomite carbonatite. Hole WI23-82 drilled into the west pit wall of the Wicheeda Deposit tested a new ground radiometric anomaly. Assay results are pending.


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Timken Strengthens Industrial Motion Portfolio Through Des-Case Acquisition

Posted on by slightbourne@noblecapitalmarkets.com

The Timken Company (NYSE: TKR), a global leader in engineered bearings and industrial motion products, has announced its acquisition of Des-Case Corp., a Nashville-based manufacturer specializing in filtration products for industrial lubricants. Founded in 1983, Des-Case serves various industrial sectors, and it is expected to generate approximately $40 million in revenue in 2023.

Des-Case is recognized for its innovative filtration solutions that complement Timken’s automatic lubrication systems. This acquisition opens up opportunities for synergy, such as cross-selling and international expansion. Des-Case’s product range includes breathers, filter elements, condition monitoring, lubrication storage, and filter systems, all of which play a crucial role in improving equipment reliability, reducing downtime, and extending the lifespan of customer systems.

Des-Case employs around 120 individuals and operates manufacturing facilities in both Tennessee and the Netherlands. The acquisition was funded through a combination of cash reserves and Timken’s existing revolving credit facility.

Timken, with over a century of experience and innovation, designs and manufactures engineered bearings and industrial motion products. In 2022, the company achieved $4.5 billion in sales and has a global workforce of more than 19,000 employees across 46 countries. Timken has received recognition as one of America’s Most Responsible Companies, World’s Most Ethical Companies, America’s Most Innovative Companies, and America’s Best Large Employers by various prestigious organizations.

Take a look at other companies in the metals space by exploring Mark Reichman’s coverage list.