MDX - Mindax Limited

[mick2006]

very interesting action in MDX already this morning with some excellent volume and a nice SP rise.

I think the lure of the rights issue is driving this one at the moment with cheap shares 10c and free attaching options.

I would of thought the action going on today would be happening in the days directly before the ex rights date November 5th.

But saying that they have iron ore assays and gold drilling results due in the near future, so I guess people are gettin in early for the rights issue hoping to catch some good exploration results.

I already hold a nice stash and will continue to hold to at least the rights issue date.

 

[Pommiegranite]

very interesting action in MDX already this morning with some excellent volume and a nice SP rise.

I think the lure of the rights issue is driving this one at the moment with cheap shares 10c and free attaching options.

I would of thought the action going on today would be happening in the days directly before the ex rights date November 5th.

But saying that they have iron ore assays and gold drilling results due in the near future, so I guess people are gettin in early for the rights issue hoping to catch some good exploration results.

I already hold a nice stash and will continue to hold to at least the rights issue date.

Heads up 18%
Options up 12%

This suggests that the chase is on for the chaep 10c shares+free options, as usually in % terms options should increase by a greater amount than the heads.

People selling options to buy back heads???

One thing to keep an eye out for is that if the heads advance too far, it would be worth just buying the options and converting them by the deadline.

 

[roland]

Hi, I don't fully understand the MDX options issue. Could someone put it in plain English for us lower end traders

 

[JimBob]

Hey Pat, use 100,000 MDX shares as an example, under the rights issue you could buy 40,000 MDX shares at 10c (nice discount to current SP), and you would also receive 20,000 free attaching options.

That is how the option issue works. For every 5 MDX shares you own, you get the right to buy 2 MDX shares for 10c, and you will be given 1 free option for each 2 MDX shares you buy.

If you only hold MDXOA, unless you exercise these options, you dont get the right to buy any further shares under this plan.

 

[surfingman]

That is how the option issue works. For every 5 MDX shares you own, you get the right to buy 2 MDX shares for 10c, and you will be given 1 free option for each 2 MDX shares you buy.

If you only hold MDXOA, unless you exercise these options, you dont get the right to buy any further shares under this plan.

For MDX holders only not MDXOA:

For every 5 shares you now own you can buy 2 MDX shares @ 10c per share = 20c
and then you recieve 1 free option with these 2 shares you just brought.

Free Option has a 20 cent exercise price and 30 June 2008 expiry date: so should trade as MDXOA

Why they have chosen this ratio I wonder?

 

[roland]

That is how the option issue works. For every 5 MDX shares you own, you get the right to buy 2 MDX shares for 10c, and you will be given 1 free option for each 2 MDX shares you buy.

If you only hold MDXOA, unless you exercise these options, you dont get the right to buy any further shares under this plan.

OK, the 2 options at 10c for each 5 shares held is clear enough, these would be traded under a different code, I assume - MDXOA? These are only trading at 4c, couldn't I just buy MDXOA today at 4c?

What's with the free option, do we get shares for nothing?

 

[JimBob]

OK, the 2 options at 10c for each 5 shares held is clear enough, these would be traded under a different code, I assume - MDXOA? These are only trading at 4c, couldn't I just buy MDXOA today at 4c?

What's with the free option, do we get shares for nothing?

I think you are confusing the heads (MDX) and the options (MDXOA). Under this plan, you get to buy MDX for 10c, they are currently trading at about 20c. The free bonus option you get is MDXOA, which is currently trading at about 4.5c.

Say you have 10000 MDX shares. You get the right to buy 4000 MDX shares. You will then also be given 2000 MDXOA options as a bonus.

If you only buy MDXOA now, you dont get access to this plan, only if you own MDX. I hope this makes sense.

 

[roland]

I think you are confusing the heads (MDX) and the options (MDXOA). Under this plan, you get to buy MDX for 10c, they are currently trading at about 20c. The free bonus option you get is MDXOA, which is currently trading at about 4.5c.

Say you have 10000 MDX shares. You get the right to buy 4000 MDX shares. You will then also be given 2000 MDXOA options as a bonus.

If you only buy MDXOA now, you dont get access to this plan, only if you own MDX. I hope this makes sense.

JimBob, thanks for your time here.....

I understand the above now thanks.

Quote:
together with 1 free attaching New Option (with a 20 cent
exercise price and 30 June 2008 expiry date)

So, if I also get the free New Option, what does the "Exercise Price" mean and what needs to be done before the Expiry Date - these are the ones that will be traded under MDXOA? Are Options traded for money, just like normal shares, or do they convert into real shares?

Wahhh, I've been trading for 3 years - now I must look like a real dummy!

 

[Pommiegranite]

I think you are confusing the heads (MDX) and the options (MDXOA). Under this plan, you get to buy MDX for 10c, they are currently trading at about 20c. The free bonus option you get is MDXOA, which is currently trading at about 4.5c.

Say you have 10000 MDX shares. You get the right to buy 4000 MDX shares. You will then also be given 2000 MDXOA options as a bonus.

If you only buy MDXOA now, you dont get access to this plan, only if you own MDX. I hope this makes sense.

I think its nothing short of ludicrous not to buy MDXOA.

Ok...lets take the following scenario based on the company being undervalued and seeing SP appreciation over the coming 2 weeks. (We won't take into account the drill results at this stage)

You have $15k to spend
You buy 333,333 options (MDXOA) @ 0.045cents
You then convert them @ 20c per option

Cost = $15K+$66.7k(conversion cost) = $81.7K

You then receive 133,333 share rights@ 10cents each
&66,667 'free' options

Cost = $13,333

You convert the free options @ 20c each

Cost = $13,333

TOTAL SHAREHOLDING: 533,333
TOTAL COST: 15k+66.7k+13.3K+13.3K = $108.3K

AVERAGE COST PER SHARE = 108,333/533,333 = 20.3 cents

Now going back to my first point. We should see the SP move by people wanting to buy in for the rights issue. It could move even further with upcoming results.

So lets put a conservative 30c target due to demand. This means selling at 30c would give $160K

Gross profit = $51.2K.

KEYWORD= LEVERAGE

Of course, if things tank, you just wouldn't convert your options and hold them for better days. Then again, you shouldn't be buying into any spec if you expect things to go badly.

 

[Pommiegranite]

Scrap my above post...its total rubbish..thanks

SP would need to move above 30c to really see the levearge kicking in. It probably best just to buy the options and not convert until as late as possible..imo

 

[JimBob]

JimBob, thanks for your time here.....

I understand the above now thanks.

Quote:
together with 1 free attaching New Option (with a 20 cent
exercise price and 30 June 2008 expiry date)

So, if I also get the free New Option, what does the "Exercise Price" mean nd what needs to be done before the Expiry Date - these are the ones that will be traded under MDXOA? Are Options traded for money, just like normal shares, or do they convert into real shares?

The exercise price just means that if you want to convert the options into normal shares, you have to pay the company 20c per option you want to convert. The free New Option should be traded under MDXOA, you can buy and sell them the same as normal shares. The only time you have to pay the 20c is at the end of June next year.

 

[exberliner1]

Interesting to note where the buying was today in both the heads and oppies.

Today there were 3,845,288 shares traded of which 2,315,770 were bought in the 20s. Although it closed at 18 on a low volume sell off the VWAP for the day 19.78.

The rise above 20c has also flushed out some depth for the sell side which is good going forward as up until this afternoon there was hardly any depth there at all. At least the stock is there now if you are prepared to pay for it ...as 2.3mn worth of buyers did today.

There was a simillar story on the oppies

Record volume of 1,789,210, although it closed at 4.5c, of the day's trading volume - 1,021,084 were bought above 5c, VWAP 4.84 for the day.

Again we now have some 2 way volume although the sell side is not huge with the oppies at 4.5c and plenty of orders of the 100k+ type going through.

____

Add this to volumes from recent days some of which were 5mn plus for the session .... then the freefloat that is available to the market for normal daily trading is surely getting rapidly smaller. This should accelerate any upwards momentum as we basically run out of stock.

Then as the higher the share price goes the more valuable the 2 for 5 issue becomes, buying in at 10c with the options as well. This in turn then makes the shares worth more and so on and so on. Then in the middle of this sentiment we are going to get some nice Fe sampling results and perhaps an update on the gold drilling which started recently.

Lack of stock could make this bounce all over the place until we reach the record date for the new issue.

It all looks very good for another plus day on Thursday.

EB

 

[YELNATS]

Scrap my above post...its total rubbish..thanks

SP would need to move above 30c to really see the levearge kicking in. It probably best just to buy the options and not convert until as late as possible..imo

I had a good think about your post, until I saw your later one saying to scrap it.

Actually, in your example assuming the share price goes to 30c, a 47.3% profit of $51.2k on an outlay of $108.3k isn't too bad, although not really sensational considering the risk factor.

I guess, considering you have as late as November 12 to convert the options, as you say, you could limit your exposure to just the $15,000 on the options, just watch the price action until then, and then decide as late as possible whether to exercise them or not. If you didn't exercise, you'd have to decide what to do with them before their 30 June 2008 expiry.

 

[Pommiegranite]

I called the MD earlier today - Mr Bromley. Very nice chap who had plenty of time to share. I would ask one question, and he would just talk and talk. I got the impression he's an old boy who's been in the game for years and is passionate about his work.

He seemed to have a lot of time on his hands as we just chatted about many issues such as his tenements, china, and subprime.

From memory, these are the points which were mentioned.

Mr Bromley said that they've had the Mt Forrest region for 20years and the strikelength runs for 17kms and doubles back on itself.

MDX were origianlly drilling for gold at Mt Forrest, but everywhere they drilled they had to cut through iron. This, along with with the current insatiable demand for Iron, was the reason for progressing with Iron sampling.

It forms part of the Richardson range, from which IRM sampled 60%+ grades of Haematite as part of a Banded Iron Formation. Mr Bromley seemed to be very well aware of IRM's findings and shareprice increase. I got the feeling he is expecting the same.

He mentioned that the 17kms does not consist of a continuos Iron band but there are several very interesting formations that run for a few kms each.

When I questioned why the results mentioned in the August release seemed to produce lower grades of Iron the IRM's 60%+, Mr Bromley said that the original sampling was so small (10 samples?) and wasn't from specific targeted formations. The current sampling is vast and they are very busy studying the many assays. Obviously it goes without saying that he didn't go into details, except that he seemed very positive

When I asked as to when we can expect some results, I was told that the quaterely is out in the next few days which will have some information. The full picture will be announced within 2 weeks.

Gold results will also be out soon. We didn't go into too much detail, but he did say that the current resource will be able to provide good cashflow for future project developments.

We also touched on the Uranium JV with Quaser. I was told that this is a long term play and priorities are iron/gold.

I also questioned the timing of the entitlement offer. I asked "why not give the market the results and then offer the entitlement at 15c instead of 10c?"

I was told that the entitlement offer was decided a long time ago, and then subprime hit the headlines to delay the placement. I get the feeling that he felt it was better to get the funding for future drilling arranged asap to secure the company's short-mid term future, than risk leaving the placement for a few weeks and have the volatile markets affect any capital raising again.

I found it quite amusing that Mr Bromley also like us follows the US markets. He said he was very unhappy at last Friday's Dow performance. This is understandable, as it could affect whether the placement is taken up. However, from where we stand with the current share price, this should not prove to be a danger.

I have to say that this seems to be a very shrewd move in which everyone benefits. Afterall, the dilution would only take the market cap to around $20million, and leave the company with a good few million in the bank.

All in all, I feel very confident that we should hear something very positive. If we do, I reckon this entitlement offer will seem one of the best bargains we've seen in the resources sector recently.

 

[mick2006]

nice piece of work there pommiegranite, pretty well sums up my discussions with the company.

they have started receiving the iron ore assays and are compiling the results, so not long to wait now, don't be surprised if the results are released to time perfectly with the ex-rights date to ensure full take up of the offer.

 

[Gekko]

I think this has consolidated spendidly over the past 2 days.

It is certainly on the radar now. Results would be much appreciated

 

[Pommiegranite]

I was wondering whether any of you chartists had an opinion on MDX's chart and where the SP could be going, or will this one play out on fundamentals alone?

Cheers

 

[Pommiegranite]

I've just found out something very interesting which I wanted to share.

I've been looking into where MDX's Mount Forrest prospect is actually located (Google Earth coordinates: 28'43' South & 119'57 East).

This N shaped formation pretty much all belongs to Mindax. All except the bottom right hand 9ks of the length which belongs to Iron Mountain. I knew IRM was close but not right next door!!

On 8th October, as we all know, IRM's SP multiplied 3 fold based on sampling from 3 of their prospects from their 3 Mt Richardson prospects: Brooking, Alfred and Iron Mountain.

It is the third of the above mentioned prospects which neighbours Mindax's Mt Forrest, and guess which prospect's samples yielded the highest grades? Yes - Iron Mountain's Iron Mountain prospect.

To take it even another step further, IRM's best samples were close to the border of MDX's Mt Forrest (see attached image for sample locations). So I hypothesize that, should MDX take samples close to border with IRM, the same high grades will be found.

I quote this from IRM's announcement which sent the SP north: " At the Iron Mountain Prospect rock chip

samples averaged 61.3% Iron (Fe) over two kilometers of strike"​

I've also attached IRM's geology map for the Iron Mountain prospect, as it contains info on MDX's Mt Forrest's prospect.​

To conclude, Mt Forrest is much longer and wider than the Iron Mountain project and will contain similar high grades. I expect to see sample results in 2 weeks containing high levels of Hematite with low levels of Silicate and contaminants, as per IRM's results.​

I just wish I'd known all of this when IRM announced on 8th October. Note that MDX's SP hasn't moved on nearology, or it would have moved on the same day. So plenty of SP upside to come once the market wakes up!!​

 

[Nyden]

I too seem to be unable to find straightforward answers with regards to these options? Are they only available to pre-existing holders, or all buyers who get in prior to the 1st?

Purchasing the shares prior to November 1, is that suffice - or would one need to utilize a registry site to be 'on the books' by November 1st?

What are the rights with regards to entitlements exactly? How many options does one get per share? Or rather, how many shares grant right to one option?

Might be worth throwing a penny in the fountain on this one, sell in the short term & hold the options

Regards,
Nyden

 

[exberliner1]

Nyden....I am a bit confused by your post all infomation was in the MDX ANN of last week.

You have the right to buy 2 shares at 10c for every 5 you own....for every 2 rights shares you buy you will get a free attaching option June 2008 with a 20c exercise price....in other words the same as MDXOA at the moment.

____

Finally Pommiegranite...great post... I too was googling the MDX tennements this afternoon and was planning to to run a comparison...you beat me to it.

EB