chops_a_must
Printing My Own Money
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You do realise not all of us have the AFR right in front of us dont you?
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MGX - Mount Gibson Iron
- Thread starter The Barbarian Investor
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You do realise not all of us have the AFR right in front of us dont you?
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You do realise not all of us have the AFR right in front of us dont you?
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sorry m8 nor do i , a friend just gave me a piece of it ....... The Australian Financial Review --- Page: 25
On 15 October 2008, Mount Gibson Iron issued a notice of general meeting, withthe aim of altering its
constitution. Shareholders will be called upon toendorse a clause specifying that a majority of investors must
approve a"proportional" takeover offer. That follows Merrill Lynch'ssuggestion the mining corporation could be
a takeover target once the bankingcrisis clears
prolly just another load of twaddle but thought id put it here anyways
Mt. Gibson Iron Said to Be in Talks to Sell New Stock (Update1)
By Helen Yuan, Sarah Thompson and Jesse Riseborough
Oct. 29 (Bloomberg) -- Mt. Gibson Iron Ltd., an Australian iron ore producer, is seeking to sell shares to investors in China, Australia and the U.K. as the credit crunch slows sales and squeezes financing, two people familiar with the deal said.
Mt. Gibson wants to sell stock at 60 Australian cents each, a 48 percent premium to its last traded price, the people with direct knowledge of the plans said, declining to be identified before the talks are completed. Perth-based Managing Director Luke Tonkin didn't return calls....
full story: http://www.bloomberg.com/apps/news?pid=20601081&sid=aMNj.dG1Vg.Q&refer=australia
By Helen Yuan, Sarah Thompson and Jesse Riseborough
Oct. 29 (Bloomberg) -- Mt. Gibson Iron Ltd., an Australian iron ore producer, is seeking to sell shares to investors in China, Australia and the U.K. as the credit crunch slows sales and squeezes financing, two people familiar with the deal said.
Mt. Gibson wants to sell stock at 60 Australian cents each, a 48 percent premium to its last traded price, the people with direct knowledge of the plans said, declining to be identified before the talks are completed. Perth-based Managing Director Luke Tonkin didn't return calls....
full story: http://www.bloomberg.com/apps/news?pid=20601081&sid=aMNj.dG1Vg.Q&refer=australia
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That is a shocking thing to hear about selling shares at 60cents.
I seem to recall that because there was big delays in settling the 2009 IO prices, that when the price was finally agreed MGX has to invoice its customers a significant amount on June 30 2008.
If you look at their year end trade debtors it has risen from 3,954,000 in 2007 to 78,493,000 in 2008 (a $75m increase).
I made some comment a few weeks ago that there was problems with Letters of Credit and their customers - another AFR rumour.
I fear now that their customers bankers would not extend them further credit lines to the tune of $75m or thereabouts which is now forcing MGX's hand here.
Any thoughts from people??
I seem to recall that because there was big delays in settling the 2009 IO prices, that when the price was finally agreed MGX has to invoice its customers a significant amount on June 30 2008.
If you look at their year end trade debtors it has risen from 3,954,000 in 2007 to 78,493,000 in 2008 (a $75m increase).
I made some comment a few weeks ago that there was problems with Letters of Credit and their customers - another AFR rumour.
I fear now that their customers bankers would not extend them further credit lines to the tune of $75m or thereabouts which is now forcing MGX's hand here.
Any thoughts from people??
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Sounds plausible, although with credit conditions easing already this situation could alleviate itself soon (hopefully). Quarterly report just issued. No statement of cash flows (unfrtunately) which would have given us a better picture of what the situation really is. However interestingly they claim to be re-negotiating shipping schedules with existing customers as well as potential off-take agreements with ne customers. Let's hope they succeed and they are not in fact attempting to issue further capital as rumoured.
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is no longer a holder of mgx , long termers , short termers the whole
caboodle , will trade them in the future but that ann has just destroyed all my confidence and respect
in there bizzness playing skills
they have been outplayed by there major holders and are on a one way street to being in checkmate
go mgx for holders
those that have known me over the years know this wasnt no easy task for me to do .
but hey gotta protect whats mine and lose confidence lose everything
poor form MGX jam sand upya clackers
P.s i should point out that i have made a profit on this BUT still not happy regarding my liquidation of a long term love affair
caboodle , will trade them in the future but that ann has just destroyed all my confidence and respect
in there bizzness playing skills
they have been outplayed by there major holders and are on a one way street to being in checkmate
go mgx for holders
those that have known me over the years know this wasnt no easy task for me to do .
but hey gotta protect whats mine and lose confidence lose everything
poor form MGX jam sand upya clackers
P.s i should point out that i have made a profit on this BUT still not happy regarding my liquidation of a long term love affair
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PPs . i must point out my exit has nothing to do with TA reasons or thinking there price wont rise , i dare say it may .. my sellout is for personal reasons and my OWN fundamental view of them as of todays ann .
over the years they have looked after me genourously but my time withem has finished as an investor
over the years they have looked after me genourously but my time withem has finished as an investor
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ive riden the waves of these guys also, got out before the trading
halt, back in this morning though at 36 cents
jonny
halt, back in this morning though at 36 cents
jonny
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Just some back of envelope scribbles in terms of the impact of today's announcement, trying to unwind the complexity somewhat.
If there are any glaring errors, anyone please post & advise.
Shares on issue rise 1 in 5, assuming 813m share son issue + ~ 162.6m +
110m = 1,085.6m shares, + exercised options since July.
Approx production costs $244.6m last FY, 1 Jan to 1 July offtake agreement (Medium Term) is for 100% of production, using last year's figures for the 10%margin that's ~$25m operating profit for H1 09.
Add short term income to 31/12 of $13m (325k tonnes x $40) it seems like a massive hit to the income, before the currency hedging losses are taken into account.
For next FY, using the shipping totals 1.272m wmt shipped last FY, shaving 10% off the average price for 80% sale certainty may help but it is certainly a fair cut from previous broker estimates of EPS, before dilution of capital is taken into account.
Not sure rolling the hedging forward (mentioned as a possible strategy) will help in an environment where the RBA are cutting rates and the spot price for iron ore has taken a tumble (using it as an indicator of likely agreements for next year).
Will be interesting to read any proper analysis of the imapct of today's statement. God bless zero dollar averaging.
If there are any glaring errors, anyone please post & advise.
Shares on issue rise 1 in 5, assuming 813m share son issue + ~ 162.6m +
110m = 1,085.6m shares, + exercised options since July.
Approx production costs $244.6m last FY, 1 Jan to 1 July offtake agreement (Medium Term) is for 100% of production, using last year's figures for the 10%margin that's ~$25m operating profit for H1 09.
Add short term income to 31/12 of $13m (325k tonnes x $40) it seems like a massive hit to the income, before the currency hedging losses are taken into account.
For next FY, using the shipping totals 1.272m wmt shipped last FY, shaving 10% off the average price for 80% sale certainty may help but it is certainly a fair cut from previous broker estimates of EPS, before dilution of capital is taken into account.
Not sure rolling the hedging forward (mentioned as a possible strategy) will help in an environment where the RBA are cutting rates and the spot price for iron ore has taken a tumble (using it as an indicator of likely agreements for next year).
Will be interesting to read any proper analysis of the imapct of today's statement. God bless zero dollar averaging.
http://www.businessday.com.au/business/mt-gibsons-iron-ore-shock-20081103-5gkg.html
Mount Gibson Iron will be forced to sell its iron ore at just $US40 a tonne - a 60% discount to the benchmark price - until the end of the year to allow it to move the product after several customers cancelled deliveries.
In a stunning about-face, Mt Gibson will sell half of its discounted ore to Shougang Concord - a company associated with Shougang Holdings.
Mount Gibson Iron will be forced to sell its iron ore at just $US40 a tonne - a 60% discount to the benchmark price - until the end of the year to allow it to move the product after several customers cancelled deliveries.
In a stunning about-face, Mt Gibson will sell half of its discounted ore to Shougang Concord - a company associated with Shougang Holdings.
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I'd have to agree with nunthewiser MGX management do not appear to have been too savvy. I've only bought in in recent weeks and bought some more today, and I have the following take on what's happened:
All in all not I think its a good deal out of a bad situation. I note from the statement that the forex hedging was a caveat tied to financing arrangements so maybe management's hands were tied on this.
Finally, it would appear Shougang reckon the company is a steal at $0.60/share given that (a) as a buyer of the product they secure 6 months worth of IO dirt cheap and then a long term discount to market and (b) the as a shareholder they are buying in at a bargain price (and as my new favourite saying goes - winner winner chicken dinner).
But that means for existing shareholders there is still long term price upside. I might not be like nunthewiser and have only purchased recently, but I'm betting that the boys at Shougang are pretty switched on and they will ensure the compnay will be better run in future.
- MGX have been hit by customers cancelling their orders in the current climate, and that's left the company stranded with a cash flow problem to see them through next year.
- Shougang (a chinese steel producer) both directly and indirectly through APAC is taking advantage and offering to up its stake in the company at a guranateed price by underwriting the rights issue.
- In return, Shougang and APAC between them will basically see the company through till next June by guaranteeing to buy the company's product at a firesale price to provide enough cash flow to keep operating through this period, and the rights issue will pump in the remainder of the cash needed.
- Atfer next June they guarantee (through the long term offtake agreement) to buy all the company's future production at the hammersley benchmark rate - 10% owner's discount.
- MGX have shown what they expect to produce beyond 2009, which will be subject to the Hammersley benchmark pricing minus 10% so even at that it looks pretty good (assuming prices recover which everyone says they will).
- The deal puts a floor on MGX's value IMO, and if it is a rip-off then we can expect someone else to have a crack so we may do even better.
- The deal is subject to shareholder agreement so we don't have to take it - but if another offer doesn't come out of the woodwork I think we should.
All in all not I think its a good deal out of a bad situation. I note from the statement that the forex hedging was a caveat tied to financing arrangements so maybe management's hands were tied on this.
Finally, it would appear Shougang reckon the company is a steal at $0.60/share given that (a) as a buyer of the product they secure 6 months worth of IO dirt cheap and then a long term discount to market and (b) the as a shareholder they are buying in at a bargain price (and as my new favourite saying goes - winner winner chicken dinner).
But that means for existing shareholders there is still long term price upside. I might not be like nunthewiser and have only purchased recently, but I'm betting that the boys at Shougang are pretty switched on and they will ensure the compnay will be better run in future.
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sorry but never said they wasnt savvy i said i have lost confidence
also i have been a holder of MGX for a number of years actually , removed all capital PLUS an extra 300% ish on top , my remaining hold i sold today comprised of a free holding plus those bought mid 50,s and mid 40,s
please if ya gunna use my name and comments gettem right at least
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OK, apologies, I stand corrected. I was calling them un-savvy - gotta work on my grammar - it was not my intention to claim you said that.
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yeah no worries , look my exit has nothing to do with future share price and i DEFINATELY will be trading them in the near future , my exit is purely from an investment view as i feel that they are no longer the company that has been growing over the years and are now merely a takeover target for a song by a better bunch of chess players . DEFINATELY cash to be made playing this stock and i will most likely be enjoying some of the volatilty it will produce .
also i am not saying this is the bottom for it as we still got a disgruntled russian major holder out there with a lot of stock and no one to sell it too except the open market thanks to previous asic desicion .
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am i receiving mixed messages here?
didn't you mention you were accumulating in the 40s now today you told us you have sold??
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i think you should scroll back instead of confusing yourself over one post, i have explaied my actions , i have no need to justify them to anyone but i have to point out my standing after todays announcement , if you read that then read ALL my posts of today it may become a little clearer for you
thankyou
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Nunno got me in years ago at 16c, bless him
I'm still holding, but have taken more than my initial investment out in $$$ terms
Will wait until the dust settles before getting more though. Have to keep the powder dry as a few bargains are appearing to form support levels
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Understood. I like to invest in companies that I respect for the way they run their business. I'm a big fan of FMG 'cos I really like the way they do things and they've got lots of potential. I chose MGX as a 2nd IO play because this commodity has been very oversold in recent months and will come back strongly in 2009, and on paper a few weeks ago they looked better than MMX and AGO (being less developed and therefore at greater risk than MGX). Anyway, I'm in now and I will be keen to see how it plays out and take part along the way. Good luck in other ventures.
