MGX - Mount Gibson Iron

[haemitite]

A couple of points about the "high cost" comments

There is a capex/opex tradeoff to consider, ie the smaller miners often lease their mining fleet, so appear to have higher opex than the big guys when they simply are playing a capital charge on equipment

And a high cost producer - and I don't think MGX is comparatively - is more leveraged to upside in a higher price environment

 

[greenfs]

The following comment was provided by Tolhurst to an investor colleague when asked to comment on GWR prospects

We are approaching the latest round of Iron Ore price negotiations with our major Asian clients and we are expecting a large increase in Fe prices this time round. 25% is about market consensus.

If this is the case it will probably fire up the sector yet again.

I have to say I much prefer the likes of Mt Gibson (MGX) as they are a producer and they have just pulled back to around $2.25 which represents great value.

 

[danc]

THe following is an extract from a uk news letter i sub to, from todays.I hold more than a few of these so am preety keen to see it go

Mineweb.com: BHP and Rio both to push for freight premium for Aussie iron ore shipments to China - Thanks to a subscriber for this article from Mineweb by Lawrence Williams which highlights a potential bonus for BHP Billiton and Rio Tinto if they succeed in their negotiations with the Chinese on iron ore pricing for the next year. Here is the article in full.

Reports from good sources in Australia suggest that this year BHP Billiton and Rio Tinto will both demand premium prices for their iron ore shipments to China based on the freight cost differential between iron ore shipments from Brazil and those from Australia. If these differentials can be negotiated with the Chinese, then the effective price increase for Australian shipments could be as much as around 20 percent over and above whatever other price increase the miners might receive.

Currently China receives the vast bulk of the iron ore shipments necessary to feed its ever growing steel industry from Australia and Brazil, with BHP Billiton and Rio Tinto dominating the Australian deliveries and CVRD those from Brazil. In effect, the Chinese are currently paying considerably more fro Brazilian output, even though the fob iron ore prices are the same. The balance is made up from the freight cost differential because of the extremely long shipping route from Brazil.

BHP Billiton has raised this possibility in previous negotiations with the Chinese (and Japanese) steel mills, but this idea had been thrown out by the mills and without a stand from Rio Tinto on the same issue, BHPB had to concede.

Mineweb did touch on this issue in the article 'Forget gold and base metals
- iron ore may be the place to be' but the latest reports from Australia that the two mega companies will probably both take a similar approach makes the whole scenario more likely.

If the Chinese agree reluctantly to a landed price for iron ore equivalent to the landed price of Brazilian material, analysts feel that the effective price increase likely to be achieved by the Australian miners would be 50 percent or more, which would make a huge impact on profits even for the big diversified companies. If such a price increase flows through to the smaller iron ore mining companies, where iron ore may be their main product, then the impact on profits, and on share prices, could be enormous.

Chinese steel mills, which have seen iron ore prices rise dramatically over the past few years, have been the victims of their own success as it has been their demand which has led to the iron ore price increases. With their appetite for iron ore seemingly unstoppable short of a huge worldwide recession, the outlook for iron ore producers remains among the best for any metal.

My view - I do not believe that this eventuality has been priced into the shares of Rio Tinto (RTP in the USA) and BHP Billiton because it seems like such a long shot. However these companies along with CVRD have succeeded in negotiating significant price increases in the last three years so they may be able to pull this off. If they can, the resulting jump in company profits will swiftly be reflected in the share's prices.

 

[jman2007]

THe following is an extract from a uk news letter i sub to, from todays.I hold more than a few of these so am preety keen to see it go

Mineweb.com: BHP and Rio both to push for freight premium for Aussie iron ore shipments to China - Thanks to a subscriber for this article from Mineweb by Lawrence Williams which highlights a potential bonus for BHP Billiton and Rio Tinto if they succeed in their negotiations with the Chinese on iron ore pricing for the next year. Here is the article in full.

Reports from good sources in Australia suggest that this year BHP Billiton and Rio Tinto will both demand premium prices for their iron ore shipments to China based on the freight cost differential between iron ore shipments from Brazil and those from Australia. If these differentials can be negotiated with the Chinese, then the effective price increase for Australian shipments could be as much as around 20 percent over and above whatever other price increase the miners might receive.

Currently China receives the vast bulk of the iron ore shipments necessary to feed its ever growing steel industry from Australia and Brazil, with BHP Billiton and Rio Tinto dominating the Australian deliveries and CVRD those from Brazil. In effect, the Chinese are currently paying considerably more fro Brazilian output, even though the fob iron ore prices are the same. The balance is made up from the freight cost differential because of the extremely long shipping route from Brazil.

BHP Billiton has raised this possibility in previous negotiations with the Chinese (and Japanese) steel mills, but this idea had been thrown out by the mills and without a stand from Rio Tinto on the same issue, BHPB had to concede.

Mineweb did touch on this issue in the article 'Forget gold and base metals
- iron ore may be the place to be' but the latest reports from Australia that the two mega companies will probably both take a similar approach makes the whole scenario more likely.

If the Chinese agree reluctantly to a landed price for iron ore equivalent to the landed price of Brazilian material, analysts feel that the effective price increase likely to be achieved by the Australian miners would be 50 percent or more, which would make a huge impact on profits even for the big diversified companies. If such a price increase flows through to the smaller iron ore mining companies, where iron ore may be their main product, then the impact on profits, and on share prices, could be enormous.

Chinese steel mills, which have seen iron ore prices rise dramatically over the past few years, have been the victims of their own success as it has been their demand which has led to the iron ore price increases. With their appetite for iron ore seemingly unstoppable short of a huge worldwide recession, the outlook for iron ore producers remains among the best for any metal.

My view - I do not believe that this eventuality has been priced into the shares of Rio Tinto (RTP in the USA) and BHP Billiton because it seems like such a long shot. However these companies along with CVRD have succeeded in negotiating significant price increases in the last three years so they may be able to pull this off. If they can, the resulting jump in company profits will swiftly be reflected in the share's prices.

Cheers for the article danc,

Pretty much follows on in a similar vein to what I was saying earlier in this thread today. It will be interesting to see whether the smaller miners such as MGX are able to exert an influence over their customers re price increases.

Does anyone know if the contracts are renewed on an annual basis? I suppose if the company was unhappy with the outcome of negotiations, they could always sell their ore on the spot market.

Cheers
jman2007

 

[jman2007]

Morning,

Slightly surprised that the recent sp performance hasn't been commented on. Reached 2.80 this morning even on the back of an average day so far on the ASX. Even from the recent pullback to 2.25, investors could still have made a healthy gain. IMO traders are banking on the results of the current round of iron ore price negotiations in the expectation of a significant increase in favour of the producers.

Cheers
jman2007

 

[TheAbyss]

Charts looks great if you are a holder. opportunity to buy didnt last long if you have been looking to get in recently. Those that have held for a while will be feeling good at the moment

 

[BigJohnny]

Quarterly activity report out after market, as well response to speeding ticket.

 

[chansw]

MOUNT GIBSON IRON LIMITED (“MOUNT GIBSON”)
QUARTERLY REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2007
ASX ANNOUNCEMENT 16 OCTOBER 2007

HIGHLIGHTS

• Record quarterly production and sales
  - 35% production increase compared with the previous quarter
  - 69% sales volume increase compared with the previous quarter
• Strong operational performance at Tallering Peak
• Solid increase in production and sales from Koolan Island as open pit operations are established
• Crushing and ship-loading capability increased at Koolan Island
• Increases in Reserves and Resources with further increases likely
• State government environmental approval of the Mt Gibson Iron Ore Mine and Infrastructure Project finalised. Commonwealth approval, based on the State recommendations, is expected by early November
• Mount Gibson entered into a Facility Agreement with HSBC Australia Limited and National Australia Bank Limited as the joint lead Arranger and Underwriting Banks for a $200 million debt facility

MGX continues to look good.

 

[michael_selway]

MOUNT GIBSON IRON LIMITED (“MOUNT GIBSON”)
QUARTERLY REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2007
ASX ANNOUNCEMENT 16 OCTOBER 2007

HIGHLIGHTS

• Record quarterly production and sales
  - 35% production increase compared with the previous quarter
  - 69% sales volume increase compared with the previous quarter
• Strong operational performance at Tallering Peak
• Solid increase in production and sales from Koolan Island as open pit operations are established
• Crushing and ship-loading capability increased at Koolan Island
• Increases in Reserves and Resources with further increases likely
• State government environmental approval of the Mt Gibson Iron Ore Mine and Infrastructure Project finalised. Commonwealth approval, based on the State recommendations, is expected by early November
• Mount Gibson entered into a Facility Agreement with HSBC Australia Limited and National Australia Bank Limited as the joint lead Arranger and Underwriting Banks for a $200 million debt facility

MGX continues to look good.

DO you know how much?

"Increases in Reserves and Resources with further increases likely"

thx

MS

 

[chansw]

DO you know how much?

"Increases in Reserves and Resources with further increases likely"

thx

MS

The following is extracted from the quarterly report

Mineral Resources and Ore Reserves Statement as at 30 June 2007
Mount Gibson Iron Limited

Since last reported for December 2006, Mount Gibson’s 100% owned Ore Reserves have increased, replacing production over the half-year of 1.8 million tonnes (Mt) and rising 4.3 Mt, up from 57.7 Mt to 62.0 Mt.

This increase is primarily due to:

• Incorporation of Main Pit West into Koolan Island Ore Reserves; and
• More appropriate modeling of mining dilution at Koolan Island’s Main Pit;
• Refinement of pit designs at Extension Hill and Mullet-Acacia (Koolan Island).

Mineral Resources including Reserves (also 100% owned) have increased 3.9 Mt after production, up from 99.4 Mt to 103.3 Mt, primarily due to the introduction of a uniform 50% Fe lower cut-off reporting grade to better reflect blending opportunities and mining practices.

Infill, extensional and exploration drilling is planned to continue throughout the coming year at Koolan Island and Tallering Peak. Systematic updates of resource models, mine designs and mining schedules will be conducted during the year. Work at Extension Hill will commence when all site access approvals are received, anticipated for December 2007.

The next Resource and Reserve update statement is scheduled for September 2008.

 

[trendsta]

It looks like theres a lot going for MGX atm ..

Its already in production, has customers in China, has mines in mid-west region where some consolidation is taking place, recent acquisition ..

Also, India is curbing its iron ore exports due to its growing economy. This is going to put more pressure on supply to China thus increasing prices going forward.

 

[trendsta]

after hours news release just came out

APAC resources, a chinese company bought 2.2 million worth of shares. It now holds over 20% of MGX.

From their previous trading it looks like they have been buying up over last few months.

 

[trendsta]

mac bank started covering MGX and has target of 3.15

given its already producing and has strong cashflow I think MGX wil be looking to acquire some more assets..

 

[michael_selway]

mac bank started covering MGX and has target of 3.15

given its already producing and has strong cashflow I think MGX wil be looking to acquire some more assets..

It only has a mine life of 6-8 years so yes it really needs to find more resources

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 7.1 11.2 24.3 33.8
DPS 0.0 4.2 10.4 16.9

thx

MS

 

[haemitite]

The main point is that they will be selling tonnes into an under-supplied market over the next 3/4 years. After that its a question of resource extension and/or new developements

PS - why do you equate cashflow to EPS in your tag, very different animals.

 

[chewy]

The main point is that they will be selling tonnes into an under-supplied market over the next 3/4 years

Thats right - same reason i am in to TTY as well as MGX

Nearly all the other IO players (except the bigguns bhp and rio) are going to miss the best IO prices over the next 3/4 years.

 

[Flying Fish]

Nearly all the other IO players (except the bigguns bhp and rio) are going to miss the best IO prices over the next 3/4 years
What is IO ?

 

[j4mesa]

That is Iron Ore for IO.
Sometimes abbreviation is confusing isn't it ?
but as time goes by if you have been in aussie stock forum ,sometimes u can guess it.

 

[Flying Fish]

That is Iron Ore for IO.
Sometimes abbreviation is confusing isn't it ?
but as time goes by if you have been in aussie stock forum ,sometimes u can guess it.

Ok I am sorry a little new to this Iron ore ok so mostly FeO2 or something like that. Anyway I hope this makes 100 charcters and thanks again

 

[Miner]

Dear Flying fish

Never mind.
I do not prefer using too many TLA (two or three letter acronyms) however when I personally use MGX then I would know that MGX is Mt Gibson Iron Ore and deal with Iron Ore = IO.
Not to offend you but I think no iron ore company has ever produced FeO2 but FeO, Fe2O3 and Fe3O4. These are essentially Iron oxides : Fe for Ferrum and O for Oxygen. Under chemical valency Iron (Fe) can have bonding between Oxygen only in two forms FeO and Fe2O3. Some times they combine and then we get Fe3O4 which is also called as the common rust .

Sorry not preaching but more dissemination of information which I also receive from may forum participants in this forum and enrich my awareness.

More seriously how the market and hence MGX and others will behave on Monday after DJ fall down on Friday night is the key question.

Regards