MGX - Mount Gibson Iron

[nulla nulla]

Seems like the Chinese government has manipulated the chinese iron industry, post Bejing Olympics, to cause hardship in an Australian producer. Thus creating an opportunity for the chinese government to secure supply on their terms, to the future detriment of the Australian industry and the Australian public. I hope Kevin Rudd & Wayne Swan take a close look at the leadup to this situation and the implications for the Australian Iron Ore industry for the future, while considering whether to allow this deal to proceed.

 

[nunthewiser]

Seems like the Chinese government has manipulated the chinese iron industry, post Bejing Olympics, to cause hardship in an Australian producer. Thus creating an opportunity for the chinese government to secure supply on their terms, to the future detriment of the Australian industry and the Australian public. I hope Kevin Rudd & Wayne Swan take a close look at the leadup to this situation and the implications for the Australian Iron Ore industry for the future, while considering whether to allow this deal to proceed.

not wrong m8 . damned if they do , damned if they dont .IF the deal allowed they allowing a foreign majority stake that they previously knocked back in regards to apac trying to buy mr ruskies stake and leading to a chess played move by the chinese to first stick mgx in the poo then bailem out for chips leading to a dirt cheap takeover of an ozzie asset. If they dissalow the deal MGX stuck trying to find a new buyer, has no cash bailout and will maybe have to try and raise the funds from australia , and in current markets i think will be hard to do . ......... intresting times

 

[nulla nulla]

Surprised they didn't go to institutional investors for capital raising to buy time to ride ot the chinese brinkmanship. Additional share issue would have been the same without locking production into discounted prices for the apparantly extended period it has. Also would not have given up board seats and future board disharmony. Can't see chinese government directors voting in any other fashion other than as directed by chinese government and certainly not necessarily in the interest of smaller shareholders (read Australian shareholders).

 

[Sharks37]

Difference this time around presumably is that management will work for not against the chinese in selling this option to shareholders and regulators to avoid a worse fate...

 

[nunthewiser]

Difference this time around presumably is that management will work for not against the chinese in selling this option to shareholders and regulators to avoid a worse fate...

yep , fair call , currently dont really have much choice in the matter but to agree to it and promote it as the best outcome for shareholders in current climates , and yeah it WAS mgx that called in the regulators to block the sale last time , geez poor ole mr ruskie going to be spewing aint he big difference in what he could have got back then to todays prices . wouldnt surprise me if he has his own ace up his sleeve for a rainy day..

i do think this will be exciting and vey intresting times for MGX and its holders in the months to come

 

[nulla nulla]

Wonder if Slater & Gordon are preparing a class action on behalf of shareholders that have suffered a loss as a result?

 

[nunthewiser]

Wonder if Slater & Gordon are preparing a class action on behalf of shareholders that have suffered a loss as a result?

LOL wouldnt that open up a canful of worms ...... would have every man and his dog queing up for a piece of it ..couldnt see it ever happening due to the changing needs and intrests of shareholders as viewed by management at any period in the past but geez wouldnt that be a mud fight if they attempted something of sorts

 

[muddy waters]

Are you guys saying there is no other option but to accept the current proposal?

Surely, MGX board is panicking.

By negotiating these offers they are limiting the short/long term growth in sp - and will ultimately hand over control to the Chinese;

This stock [a once share market darling - and rightly so!]
has quickly become the biggest lemon in our market. [down approx 90%]

This is another case where management has been issued unlimited monopoly money [ options ] and don't have real money invested in the coy

- and won't really lose a significant proportion of their life savings from this deal.

Are there any other options ?

Is the board moving too quickly?

 

[Sharks37]

Personally MW I don't believe this is the only option. Management have played a lacklustre game of chess with the chinese grandmasters and they've been outplayed.

But what it does do is it puts a floor in where the rug has been pulled out from under management's feet by the chinese. The offer provides some certainty in terms of the company's survival although effectively the farm has been sold off. However there is still value there for the average shareholder, albeit the upside potential is not now what it once was.

At the end of the day, it still requires approval from shareholders and regulators so it may still not go through. It might also bring out from thw woodpile other interested parties...

 

[nunthewiser]

GO MGX FOR HOLDERS AND TRADERS ALIKE nice volumes , intresting times indeed they say....... anyone got any tech views on this ?

 

[sean2008]

http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=106340

White knight tip emerges in battle for Mt Gibson control

5th November 2008, 6:00 WST


Mount Gibson Iron could find itself targeted by a white knight suitor to stymie plans by two Chinese steel groups to all but seize control of the struggling miner, analysts said yesterday.

A day after Mt Gibson unveiled plans to see China’s Shougang Concord and APAC Resources lift their collective stake in the Mid-West miner as high as 40.5 per cent and secure discounted ore for the life of the mine, Macquarie Research Equities analysts Len Eldridge and Jim Copland suggested the battle for the miner might not be over.

 

[speculator101]

Boy, what a couple of months...
There I was thinking that after investing for 3 years, building up my stake, slowly averaging up, due to buying in so low initially.
That happy days were ahead.

So, reality has set in. MGX board to say the least has led the company down a very rocky road.
My worry is that in making the latest 'transaction' they have not looked at all possibilities.
They have basically sold 2/5 of the company.. at a price of 60cents.
Now, from a T/O view, that’s 50% above the s/p when it was announced.
Which, some may look at as 'ok' value. Well. As a long term holder... Im a little disappointed to say the least.
I believe that the only outcome that could have been worse, was the company saying to the market... we are broke.
They have basically given away the company at a bargain price, and, ha... even giving away Iron Ore for 6 months.

So, from a firm supporter of the management, which in the past successfully T/O aztec, got two mines running, and raised the company’s value 20fold.. to this.

As for this White Knight possibility, yes, there are company's that have been interested in MGX for about 18 months. However, it would be extremely hard to gain control of the company with the current shareholder configuration...
I am very interested to hear what other holders/investors think of MGXs future path?

IMHO.

 

[furiouswilly]

sharply dropped again!! it seems never end. i hope they wont belly up! All the news is bad. anyone have any thought?

 

[jeffTH]

Is MGX now ahead of the pack?

The somewhat drastic action taken by the Board has come as a huge shock to longer term investors (me included). However reading the Explanatory Memorandum dated 25 November gives me some relief to know that debt will no longer be the main problem and that funds will be available for Extension Hill and further work at Koolan Island. Furthermore, long term contracts for life of mine at all mines should be possible albeit at a 10% discount to Hammersley prices for APAC and Shougang.

Probably little chance of a takeover premium in the stock once this transaction takes place but I feel some relief in knowing that the stock will be there in the next few years and when the market picks up, I expect to recoup my full investment. I wish I had the same sense of security with my other small and midcap resource stocks.

Anyone share my view?

 

[furiouswilly]

Help with MGX new shares Right

Under the Rights Issue, Eligible Shareholders will have the opportunity to subscribe for 1 New Share
for every 5 Existing Shares held on the Record Date at an Issue Price of A$0.60 per New Share.

Old shares i have current is around $0.37, New shares is $0.6, how this thing work out? 5 shares getting 1 new shares, that mean my shares worth about $0.01, so why would i do this for? sorry iam a beginner, can someone tell me what should i do? if this $0.6 is a pro rate, they said is discount, so new shares will be high than $0.6?

 

[tommymac]

The share hasn't traded at $0.60 since October (I think) so I too find it hard to work out why they did this.

The prospectus says the market is undervaluing the company and hence a rights issue of $0.60 is more appropriate. That is rubbish. The market values a company - end of story.

The offer is also underwritten which means the underwriter (APAC & Shougang Concord) will ensure the offer is a success by buying any shares not taken up. This in itself is not bad, but in combination with the price of $0.60, something doesn't sit right with me.

APAC is a majority shareholder while Shougang was earlier this year. Could this be a quick way to increase their shareholdings without buying on market. Or is this just another conspiracy theory by tommymac.

There was another company (SUN???) that offer a share purchase plan where the offer price was higher than the share price. It was forced to cancel the plan.

Personally, I wouldn't go accept the offer, because if you wanted to buy more you would do so on market. The brokerage costs would be less than paying an extra $0.25 per share.

 

[furiouswilly]

will this effect the mgx shares price n the new shares price?

 

[prawn_86]

APAC is a majority shareholder while Shougang was earlier this year. Could this be a quick way to increase their shareholdings without buying on market. Or is this just another conspiracy theory by tommymac.

I would actually also think along those lines tommymac.

APAC et al probably know they can get more than 60c per share out of MGX if they had control, so by doing this it means they will get an increased stake as no-one is going to participate if they can buy them cheaper on market.

Long term view taken by APAC imho

 

[tommymac]

will this effect the mgx shares price n the new shares price?

Can't tell for sure, but I reckon there won't be much change based on this.

The market is reacting to small news and its really difficult to know if it is reacting positively to something one day, or negatively to something the next, Particularly with commodities.

What are your thoughts on this MGX?

 

[drsmith]

Re: Help with MGX new shares Right

Under the Rights Issue, Eligible Shareholders will have the opportunity to subscribe for 1 New Share
for every 5 Existing Shares held on the Record Date at an Issue Price of A$0.60 per New Share.

Old shares i have current is around $0.37, New shares is $0.6, how this thing work out? 5 shares getting 1 new shares, that mean my shares worth about $0.01, so why would i do this for? sorry iam a beginner, can someone tell me what should i do? if this $0.6 is a pro rate, they said is discount, so new shares will be high than $0.6?

To best illustrate what MGX is offering you, consider the following example.

Lets assume you have 10000 eligible shares in MGX. MGX would then be offering you the opportunity to purchase another 2000 shares (one share for every five) at $0.60. Total cost for the shares would be $1200. If however MGX are trading at $0.37, you can by an equivelent parcel of 2000 shares for $740 + brokerage.

With the above example it is obvious which is the better option for increasing your shareholding.

As a general rule if you wish to purchase shares offered in a rights issue first check the market price for the shares. If the market price + brokerage is less than the cost of taking up the rights issue, purchase the shares in the market instead.

There was another company (SUN???) that offer a share purchase plan where the offer price was higher than the share price. It was forced to cancel the plan.

Stockland's (SGP) recent share purchase plan price was well above the share price by the time the offer closed.

For holders that took up Stockland's offer, the company returned the cash.