MGX - Mount Gibson Iron

[noirua]

Mount Gibson continues on the upward trend at $1.64, up 8.5 cents this morning. The recovery, about 100% from lows, look suspiciously like increasing strong interest from larger holders as the high trading volume continues onwards.

 

[chansw]

I found the following today and don't know if anyone of you has read this before. It sounds like they have their eyes on some targets already.

Mt. Gibson Iron Looking for Takeovers, May Buy Coal (Update1)

By Jesse Riseborough
http://www.bloomberg.com/apps/news?pid=20601080&sid=aoQVl7uIC_nI

Mount Gibson Iron Ltd.'s operations on Koolan Island July 12 (Bloomberg) -- Mt. Gibson Iron Ltd., backed by Russian billionaire Alisher Usmanov, is looking for iron ore and coking coal acquisitions in Australia and overseas to benefit from soaring demand for steelmaking ingredients driven by China.

``We have identified some very clear winners within the M&A space,'' Luke Tonkin, managing director of Perth-based Mt. Gibson, said yesterday by phone. Potential acquisitions could be made within the next 12 to 18 months, he said.

Rising demand from China has pushed iron ore prices to records for five years, spurring acquisitions including Mt. Gibson's purchase last year of rival Aztec Resources Ltd. Shares of Cleveland-Cliffs Inc. surged in May on speculation the company may be acquired by Cia. Vale do Rio Doce, the world's biggest iron-ore producer.

``Mt. Gibson has a track record of acquisition,'' Merrill Lynch & Co. analysts Mike Harrowell and Stuart Howe said in a July 10 report. ``We expect this pattern to continue with a positive valuation outcome for shareholders.''

Shares of Mt. Gibson rose 1.5 cents, or 1 percent, to a record A$1.475 at the 4:10 p.m. Sydney time close on the Australian Stock Exchange. The company, whose stock has gained 66 percent this year, has a market value of A$1.2 billion ($1 billion).

Usmanov, through Gallagher Holdings Ltd., holds about 17 percent of Mt. Gibson and ``will participate'' should the Australian company find assets worth buying, Tonkin said. The Uzbek-born billionaire controls Metalloinvest, the world's fourth-largest iron-ore producer, among other businesses.

Seven Years

Iron ore will rise through 2009 for a record seven consecutive years of price gains as global production of the key steelmaking raw material fails to meet Chinese demand, UBS AG said in a July 8 report. The price of coking coal, also used in steelmaking, may jump 22 percent next year, Goldman Sachs JBWere Pty. said in a May report.

Mt. Gibson will ``closely look at'' acquisitions overseas as well as coking coal assets as its business cycle is complementary to iron ore, Tonkin said. It completed the A$207 million takeover of rival Aztec in January to gain control of the Koolan Island mine where first ore was shipped last month.

``They have got to be the right size, so around Aztec's size is good but we could certainly do a little bit larger at the moment and the reason for that is we are in exactly that sweet spot in the cycle,'' Tonkin said. No opportunities had matured, he said.

Mt. Gibson also owns the Tallering Peak mine in Western Australia state, and is awaiting environmental approvals at a third mine, Extension Hill, to bring total production to about 10 million metric tons annually, Tonkin said.

Macquarie, Citigroup

Development of the Extension Hill mine will cost about A$80 million and take four months to construct once approval is received, Tonkin said. The mine will produce about 3 million tons annually, he said.

Iron ore will climb 25 percent in 2008 and 10 percent in 2009, UBS analysts led by Daniel Brebner wrote in the report. That's higher than UBS's previous forecasts for a 10 percent gain in 2008 and no increase in 2009. Macquarie Bank Ltd. expects 2008 prices to rise 17.5 percent, Citigroup Inc. forecasts 20 percent and Credit Suisse Group 25 percent.

Demand for iron ore is ``as strong as we have seen it,'' Tonkin said, adding that ``you just can't stop the juggernaut overnight.'' Additional supply in the next three to five years may reduce the price of the ore, he said.

Increased production at steel mills is driving demand for iron ore, the costliest ingredient in steel that's used in items from toasters to cars, UBS said. That leaves BHP Billiton Ltd., Rio Tinto Group and Cia. Vale do Rio Doce, the mining companies responsible for three-quarters of global trade in iron ore, in a better bargaining position for higher prices.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net

Last Updated: July 12, 2007 02:37 EDT

 

[chansw]

Quarterly report was released last night and the result looks good.

HIGHLIGHTS

• Record full year net profit after tax (unaudited) of $47.7 million, up 103% on the corresponding period last year;
  
• Mount Gibson ideally placed to leverage from strong iron ore prices and demand with 6Mt of iron ore production forecast for 2007/08;
• Iron ore shipments commence from Koolan Island marking the transition of the project from construction to production;
  
• Koolan Island project scope of work to be completed on budget;
  
• Major iron ore sales agreement finalised with Chinese steel producer, Rizhao Steel Holding Group Co. Ltd;
  
• Mount Gibson appoints HSBC Bank Australia Limited and National Australia Bank Limited as the Joint Lead Arranger and Underwriter
  Banks for a A$200 million Corporate Debt facility;
  
• Mount Gibson reconstitutes the Board of Directors; and
• Infill drilling at Tallering Peak continues to confirm T2 resource and drilling program at Koolan Island commenced with early encouraging results.

 

[Mofra]

Quarterly report was released last night and the result looks good.

Also interesting to note the board are expecting a 5%-30% increase in iron ore prices in 2008. Really is up to CVRD, BHP & RIO to negotiate though, between them controlling 75% of the world supply.

 

[greenfs]

Whilst iron ore may be extraordinary, I understand from someone within Rio that it is budgeting for an across the board metal price decline of 0.5% in its budget for the next three years. My reason for stating that to you is that it contradicts the 5-30% increase you are using here for iron ore.

Given the rises in metal prices in recent years, I would not be relying on further prices increases. Call it a bonus if the price rises occur.

 

[haemitite]

Whilst iron ore may be extraordinary, I understand from someone within Rio that it is budgeting for an across the board metal price decline of 0.5% in its budget for the next three years. My reason for stating that to you is that it contradicts the 5-30% increase you are using here for iron ore.

Given the rises in metal prices in recent years, I would not be relying on further prices increases. Call it a bonus if the price rises occur.

No contradiction at all

Iron ore is widely expected to go up between 15-25%, "accross the board" measures a different beast altogether

 

[noirua]

An ASX announcement, early this morning, has placed Mount Gibson Iron in "Trading Halt"

http://www.asx.com.au/asxpdf/20070802/pdf/313s88ynjv3snz.pdf

 

[Mofra]

Whilst iron ore may be extraordinary, I understand from someone within Rio that it is budgeting for an across the board metal price decline of 0.5% in its budget for the next three years. My reason for stating that to you is that it contradicts the 5-30% increase you are using here for iron ore.

5-30% Increase is the board ann tipped for next year only. May well decline beyond that, although RIO (or any major company for that matter) would generally plan their contingencies on worse than average expectations.

 

[benwex]

Does anyone have ideas to the trading halt??

I am an Aztec share holder who was unwillingly become a MGX holder and dont know a hell of a lot about their management.

In time like these it pays to send the right message to the market!!!

 

[noirua]

Does anyone have ideas to the trading halt??

I am an Aztec share holder who was unwillingly become a MGX holder and dont know a hell of a lot about their management.

In time like these it pays to send the right message to the market!!!

There are rumours that the Russian Billionaire Tycoon, Alisher Usmanov may be in talks with Mount Gibson Iron.

 

[benwex]

Thanks for that...

I have been following that rumour as well but it is safe to say he was not an on market buyer yesterday thats for sure...

It was a big drop with very little resistance on the down.

Hope to see some positve news in the next few days.

Benwex

 

[chansw]

There are rumours that the Russian Billionaire Tycoon, Alisher Usmanov may be in talks with Mount Gibson Iron.

It is to do with the Appeal Decision Report released today from the Minister for the Environment. In short, Mount Gibson has been given OK for the development of its Extension Hill iron ore mine. However, according to the following article, some other mining projects in the Mid West region are not clear.

Mt Gibson appeal leaves Mid West future unclear
2-August-07 by Mark Beyer

http://www.wabusinessnews.com.au/en-story/1/55473/Mt-Gibson-appeal-leaves-Mid-West-future-uclear

Mt Gibson Iron Ltd has overcome environmental objections to the development of its Extension Hill iron ore mine in the Mid West but the decision by Environment Minister David Templeman has left the future of iron ore mining in the region unclear.

In a report released by the Office of the Appeals Convenor, Mr Templeman rejected the advice of the Environmental Protection Authority which said the mine should not proceed.

However the Minister failed to address wider concerns which the industry believes could threaten a large number of future mining projects.

A Ministerial strategic review is addressing the future of the region, particularly the impact of mining on its flora and fauna.



Extracts from the Appeal Decision Report are pasted below:

Executive Summary


The EPA released its report and recommendations on the Mt Gibson Mining and Infrastructure proposal in November 2006, and a total of thirty two (32) appeals were received against that report.
The grounds of appeal are:
1. Reservation of other areas of the Mt Gibson range, in particular significant flora species;
2. Floristic communities;
3. The adequacy of the proponent's offsets;
4. Performance bond;
5. The significance of Gastrolobium laytonii;
6. Procedural fairness;
7. EPA assessment of the Darwinia masonii and Lepidosperma sp. at Mt Gibson;
8. Conflict of interest;
9. The transport of hematite;
10. Dust and surface hydrology;
11. Translocation of rare plants;
12. Impacts on surrounding properties; and
13. Compliance Reporting Condition.


On the first ground of appeal, taking into account the advice from the Appeals Convenor, and that this proposal would lead to a loss of 14-15% of the known population of D. masonii and around 46% of the Lepidosperma sp. Mt Gibson population, the Minister concluded that at least most of the remainder of the Mt Gibson Range has significant conservation value and that this value is worthy of protection in the long-term. The Minister dismissed this ground of appeal on the issue of the conservation significance of the remainder of the Mt Gibson range.
However, the Minister also decided to allow this ground of appeal to the extent that the proposal can proceed independent of the process to protect the remainder of the Mt Gibson Ranges subject to conditions. In allowing this appeal in part the Minister noted that the conditions recommended by the EPA on the proposal, the initial commitments made by the proponent and the additional commitment made by the proponent to provide resources to the DEC to manage the remainder of the Mt Gibson Range whilst the proposal is operational, subject to conditions, should give adequate protection to that area from the impacts of the proposal.


It should be noted that in allowing these appeals to this extent this should not be seen as a downgrading
of the significant conservation values of the remainder of the Mt Gibson Range.


On the second ground of appeal, the Minister found that the EPA assessment of this factor is neither flawed nor unreasonable as it referred to both the advice of the proponent's consultants and the DEC to arrive at its conclusion. To this extent, the Minister dismissed this ground of appeal, but with regard to the matter of the class 'A' nature reserve, the Minister had previously allowed this appeal ground to the extent as set out in appeal ground 1.
The Minister noted, however, that the use of floristic communities in determining ecological and biodiversity values is a matter of some debate within the scientific community, as indicated by the differences expressed through this assessment and the appeals process. The Minister has written to the DEC seeking appropriate advice on how best to progress the science of defining and applying floristic communities in WA.


On the third ground of appeal, the Minister accepted the proponent's offsets as reasonable for the
direct impacts of the proposal, and allowed this ground of appeal accordingly.


On the forth ground of appeal, the Minister considered that to cover the likelihood that some or all of the pipelines will need to be removed following mine closure, a bond should be required to cover post-closure works in the corridor, and that the amount recommended by the EPA is reasonable. However, in acknowledgement of the possibility that the size of the bond may need to change once the EPA has completed its work on bonds for service corridors, the Minister has allowed this appeal only to the extent that the date that the bond needs to be lodged to the DEC be put back from 'prior to ground-disturbing activity' to 'prior to commencement of operations of the mine'. This will allow time for the EPA policy position to further develop. If the amount being asked in this case is excessive, then it is open to the proponent to suggest that the Minister initiate a Section 46 change to conditions process to have the amount of the bond bought into line with that policy position. The Minister also supported the EPA recommended changes to Condition 15 so as to better clarify the intent and meaning of this condition.

The Minister concluded with the matter of the class 'A' Nature Reserve.


Whilst the Minister has allowed appeals to the extent that the proposal can proceed at this time without the approval being linked to the question of a class 'A' Nature Reserve for the remainder of the Mt Gibson Range, the Minister agreed with the EPA that the remaining areas need some high level of protection in the long term. As a result, he wrote to his colleague, the Minister for Resources, seeking his agreement to a process that will guarantee a high level of protection to a significant portion of the area.


In deciding on the level of protection that should be offered to the remainder of the Mt Gibson Range, the two Ministers took into account the following advice from both the EPA and the DEC:
- it is highly unlikely that the two DRF species will be found anywhere else other than at Mt Gibson Range;
- the long-term re-establishment of these rare species in rehabilitation, or in other than their normal habitat, is a high risk strategy that is unlikely to be successful; and
- the floristic communities associated with the DRF must also be protected in order to preserve ecological processes and habitat that may be critical to the long-term survival of these species in the natural environment.


Both Ministers were of the view that the southern ridges of Mt Gibson and Mt Gibson South require immediate long term protection and should be reserved as a class 'A' Nature Reserve. The central ridges of Iron Hill East, Iron Hill South, Iron Hill North and Extension Hill South will continue to be protected through the provisions of the Environmental Protection Act 1986, notably the EPA formal assessment provisions under Part IV and the clearing provisions under Part V. Any proposal for exploration or mining in this area would need to demonstrate compatibility with the established conservation values.


In arriving at this decision both Ministers were both mindful that this is a decision specific to this particular BIF and not the other BIF's in the Mid West region. The Strategic Review being conducted by DEC and DOIR will address the broader issues of environmental and socioeconomic values of the remaining BIF's.


Background
Mount Gibson Mining Limited proposes to mine and process iron ore (hematite and magnetite) from the northern portion of the Mt Gibson Range, involving Extension Hill and Extension Hill North, approximately 350km north east of Perth and some 80km east of Perenjori. The proposal also includes the construction of infrastructure, being a pipeline to transport the magnetite slurry to Geraldton Port, and infrastructure at the port to remove the ore from the slurry for export. The operation will yield approximately 13 million tonnes of hematite over 8 years and 230 million tonnes of magnetite over 20 years. The transport of the hematite is not part of this proposal, and will be
stored at the site in the interim.

Consideration
The Minister noted that the primary reason for many appeals is concern that he would adopt the EPA recommendations relating to the remainder of the Mt Gibson Range not impacted by this proposal being included in a class 'A' nature reserve, and that the proposal not proceed unless and until this is. This matter was covered after he considered all of the appeal grounds. The Minister noted that many of the appeal grounds were in support of this concern, and that many appellants also raised a number of issues that are either more strategic in nature or are largely socioeconomic, which the Appeals Convenor advised go beyond the scope of the environmental
appeals process. These matters are reported in the Appeals Convenor report but were not taken into account in his recommendations to the Minister.

 

[shinobi346]

WA Environment Minister oks the project. Should get the price rolling again.

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00745581

 

[noirua]

No Tycoon around, but at least MGX shares have got back into their stride again.
Despite the sharp fall in the US Dow late on Friday, MGX should still go on from here. Looks very interesting.

 

[haemitite]

Merrills still like it ....

Fundamentals in place, buy once halt ends​

Mt Gibson is in trading halt, pending management review of today’s
environmental approval, which was basically good news for MGX in our view,discussed separately. Market fears of iron ore price risk is misplaced, in our view,and our valuation, $2/sh target and Buy recommendation intact.​

WA Minister approves new MGX mine, but…​

The WA Environment Minister has approved Mt Gibson’s Extension Hill and
not required MGX to give up other exploration targets in the Geraldton region as a condition, as far as we can see. However, there are a large number of hard to interpret comments by the Minister, which MGX says will take it until Monday to interpret.​

Strategic issues arising​

The downside case is that MGX access to new projects in the Geraldton region may be limited, and the company may have to go elsewhere to grow. We do not see this as material to our existing valuation or impacting on our price target or recommendation.​

Earnings changes from Prodn Report​

We have market FY07 earnings to actual but still refer to the year as an estimate because we only have the headline NPAT. The audited result is expected next week. FY08 earnings has increased 7% on higher sales volumes guidance.​

 

[Mofra]

Cheers hemetite for posting that report.

a. It's nice to see they had a hard time interpreting the Minister's report as well, if you see a lawyer to English dictionary avaialble, please let me know :

b. Having to go elsewhere to grow shouldn't be a problem, would be surprised if the Aztec takeover is the last piece of corporate activity undertaken by the board. Media reports even mentioned the idea of coal being added to MGX's interests.

 

[noirua]

With all the prospects from the recent go-ahead this stock plunge appears ridiculous, however, I could be wrong. Found time to add a few more in hopes this has all been overdone. Time to be brave, well, maybe.

 

[juw177]

Was down around 15% at one point today. The trend on the graph starting to look bearish. But then so do most other stocks on the asx.

 

[noirua]

After adding stock on the big plunge I have decided to unload as a rebound to $1.53 this morning is a surprising one. Hope it goes on up for everyone - Good Luck in these tricky markets

 

[shinobi346]

Full year accounts came out today. No dividends but they have enough funds or access to it to develop and mine the Tallering Peak, Koolan Island and Extension Hill iron deposits.


Financial Highlights
• Record full year net profit after tax of $47.8 million, up 103% on the previous year;
• Sales revenue of $165 million, up 119% on the previous year;
• Operating profit before tax $42.3 million, up 140% on previous year;
• Net assets total $454 million, up 316% on the previous year;
• Cash on hand at June 2007 - $61 million; and
• New Corporate Debt Facility signed on 28 August 2007 and conditions precedent to drawdown to be satisfied in early September


I wonder what their next move is other than getting Koolan Island into production. A buyout possibly?