MGX - Mount Gibson Iron

[tinhat]

Director Simon Godric Bertie Bird (I'd like to meet his parents) acquired 20,000 shares yesterday for $23,050.

 

[notting]

Fell into it's dividend payment, then fell by it's dividend amount today as it went ex.
Now double dipping on support that's held since early Oct 2009!!
There was a pick up in volume as it fell through it's day low toward the end of the day and that continued into the close. Not a good short term sign!
Will keep an eye on it next week to see if buyers come in with a bit of volume or see if it breaks down with a bit of volume!!

 

[nulla nulla]

Fell into it's dividend payment, then fell by it's dividend amount today as it went ex.
Now double dipping on support that's held since early Oct 2009!!
There was a pick up in volume as it fell through it's day low toward the end of the day and that continued into the close. Not a good short term sign!
Will keep an eye on it next week to see if buyers come in with a bit of volume or see if it breaks down with a bit of volume!!

Well worth keeping an eye on.

 

[Bibimbap]

Hit a low of $1.02 yesterday.
Tonight's your money your call valued it at around $1.45.
People's view of its short to medium term prospects?
Fundamentally, I think it is a good business with no debt, n a 7 year mine life.
Got a small amt at $1.05 today

 

[Nutmeg]

The share price weakness in this company is largely caused, in my view, by the disfavour with which it is viewed by institutional investors. But you can see why institutions don't like this company:

1. large blocking shareholders;

2. the risk that the block shareholders will put their own interests ahead of the company;

3. the fact that the block shareholders are also customers of the company and are suspected of trying to renegotiate contracts on more favourable terms;

4. board disharmony; and

5. concerns of a China slowdown and the concomitant weakening of the iron ore price.

All these concerns are very real and should not be discounted entirely. But of course it is the extent to which these concerns need to be discounted that is the difference between risk and value.

For what it's worth, it seems to me that MGX is a classic example of a great company that is presently unloved and with a cloud hanging over it. The question is: if the cloud breaks will it bring sunshine or rain?

 

[Nutmeg]

I should add to the list above of reasons why institutions don't like MGX - the regular and generous awarding of options to board members! See today's announcement after the close of trade.

 

[notting]

It was a good prospect, now it's just a prospective not for profit supplier to it's customers.
You wouldn't want them to use the debtless levage capacity to make a take over some other miner with share holder equity.
Thus inceasing it's wholesale supply capacity at no expense to it's owner/customers.

Then again if the market gets frothy it's bound to get a run as those trying to catch the rally look for stuff that's still valuable looking.

 

[tinhat]

I should add to the list above of reasons why institutions don't like MGX - the regular and generous awarding of options to board members! See today's announcement after the close of trade.

The announcement today is regarding issuing of shares for the dividend reinvestment plan which I assume all shareholders are entitled to opt into. Please let me know if I am missing something.

 

[Nutmeg]

The announcement today is regarding issuing of shares for the dividend reinvestment plan which I assume all shareholders are entitled to opt into. Please let me know if I am missing something.

Yes, you're right. Apologies. Do you know if the 2,000,000 "unlisted options" referred to at paragraph 9 also refer to the dividend reinvestment plan?

 

[tinhat]

Yes, you're right. Apologies. Do you know if the 2,000,000 "unlisted options" referred to at paragraph 9 also refer to the dividend reinvestment plan?

I don't know who owns those options. They are the last unlisted options left. In previous years options owners have been converting their options to shares at lower prices (from around 70c up to 90c). MGX is currently reporting that there are no directors who hold options.

The 62% Fibonacci retracement of the 2009-10 bull run is around $1. If the stock doesn't find support above $1 then who knows where it will end up.

 

[Miner]

It was a good prospect, now it's just a prospective not for profit supplier to it's customers.
You wouldn't want them to use the debtless levage capacity to make a take over some other miner with share holder equity.
Thus inceasing it's wholesale supply capacity at no expense to it's owner/customers.

Then again if the market gets frothy it's bound to get a run as those trying to catch the rally look for stuff that's still valuable looking.

MGX got some serious issues.
First the CEO left few months now.
The projects on site got serious problem. They should audit the scope of works vs completion if not done already. This is well known to site but surprisingly not yet evaluated properly - so project delay, rework and more capital to be invested. MGX is not alone - with poor planning and execution it is some times inevitable with med Caps.
I held MGX some times back and still watching for the right time.
Iron Ore is not so much hot any way for small players like AGO, MGX any way. Some of the large building contractors got bank rupt suggesting less building projects and hence lesser iron demand by China in near terms.
DYOR

 

[Nutmeg]

The projects on site got serious problem... This is well known to site but surprisingly not yet evaluated properly - so project delay, rework and more capital to be invested. MGX is not alone - with poor planning and execution it is some times inevitable with med Caps.

Where did you hear that MGX is suffering project delays? It's difficult not to assume that so much negativity has been built into this stock that rumours of project delays (if they are rumours) would make much difference. I think today's weakness has to do with data from the Australian Bureau of Statistics showing that weakening ore and coal prices pushed export prices down by 7 per cent in the first quarter of 2012.

 

[felix000]

The share price weakness in this company is largely caused, in my view, by the disfavour with which it is viewed by institutional investors. But you can see why institutions don't like this company:

1. large blocking shareholders;

2. the risk that the block shareholders will put their own interests ahead of the company;

3. the fact that the block shareholders are also customers of the company and are suspected of trying to renegotiate contracts on more favourable terms;

4. board disharmony; and

5. concerns of a China slowdown and the concomitant weakening of the iron ore price.

All these concerns are very real and should not be discounted entirely. But of course it is the extent to which these concerns need to be discounted that is the difference between risk and value.

For what it's worth, it seems to me that MGX is a classic example of a great company that is presently unloved and with a cloud hanging over it. The question is: if the cloud breaks will it bring sunshine or rain?

I've been researching this stock lately and can't think of why it would have fallen out of favour so badly except for a resources pull back. (these are my initial thoughts http://equityideas.squarespace.com/strategy1-ideas-mgx).. maybe what you are suggesting is having a bigger effect. Do you think this still applies after the board restructure which was discussed in the Feb 23 announcement?

 

[tinhat]

I've been researching this stock lately and can't think of why it would have fallen out of favour so badly except for a resources pull back. (these are my initial thoughts http://equityideas.squarespace.com/strategy1-ideas-mgx).. maybe what you are suggesting is having a bigger effect. Do you think this still applies after the board restructure which was discussed in the Feb 23 announcement?

Limited mine life is one issue. Currently,

Extension Hill - 5 years.
Koolan Island - 7 years.
Tallering Peak - < 1 year?

 

[skc]

Limited mine life is one issue. Currently,

Extension Hill - 5 years.
Koolan Island - 7 years.
Tallering Peak - < 1 year?

When it comes to mine life I get the feeling that the market is short sighted. There tends to be a premium built into the miners with short mine life, as if the market thinks that current management will be able to struck additional gold (or iron ore or whatever) between now and the end of the operating mine.

If they do find something you have something like a NST.
If they don't you have something like a RMS.

Just an observation although I am no mining share expert.

 

[Miner]

Where did you hear that MGX is suffering project delays? It's difficult not to assume that so much negativity has been built into this stock that rumours of project delays (if they are rumours) would make much difference. I think today's weakness has to do with data from the Australian Bureau of Statistics showing that weakening ore and coal prices pushed export prices down by 7 per cent in the first quarter of 2012.

Dear Nutmeg
If you are in mining

I am sorry for seeing your query very late. I did visit ASF occassionally but with my lesser frequent visits in ASF, the delay cuased.
Okay, if you are in the Mining game as a Miner and not as a shareholder alone in WA, you would realise every one talks about mining success and stuff up well in advance the market knows about it.
There are principally two sources : the people working there and talk in pub. It goes higher when they see an old buddy and over a beer opens hearts.

The second source is the vendors of the company. They no matter what confidentiality is executed, talk with a potential client about their availability to do a job because they see no value in another project or they are not available because of high commitment in another project. It works both ways. It is very natural when a prospective client asks direct question about their commitment to a new bid.

Of course, you can not ignore the local community around a mining town.

So under the letter of law such information is not insider trading but more of a commonsense.

It is just not MGX alone. I have seen how vendors were frustrated when FMG delayed payment to vendors outrightly but due to market condition vendors were stuck with FMG with a hope one day they will pay. their patience have now paid off.

With MGX the situation is not same as FMG or AGO. The project management at MGX I believe is single handedly managed (?) by a consultant . The management is not having same level of skills and experience as you would see in BHPB, Rio or FMG. Market is competitive. Check out the profiles of senior management and just not the directors. Drop in at MGX office at Perth and meet the guys there to have a cup of coffee.

So they tend to select less competent contractors and hence the resultant comment I said. It is my personal opinion and as always I could be very much wrong on my perception. DYOR.

Disclaimer : I do not work for MGX directly or indirectly, and do not hold MGX shares.

 

[Nutmeg]

It is just not MGX alone. I have seen how vendors were frustrated when FMG delayed payment to vendors outrightly but due to market condition vendors were stuck with FMG with a hope one day they will pay. their patience have now paid off.

With MGX the situation is not same as FMG or AGO. The project management at MGX I believe is single handedly managed (?) by a consultant . The management is not having same level of skills and experience as you would see in BHPB, Rio or FMG. Market is competitive. Check out the profiles of senior management and just not the directors. Drop in at MGX office at Perth and meet the guys there to have a cup of coffee.

So they tend to select less competent contractors and hence the resultant comment I said. It is my personal opinion and as always I could be very much wrong on my perception. DYOR.

Disclaimer : I do not work for MGX directly or indirectly, and do not hold MGX shares.

Thanks Miner. I had gathered that MGX has a less than amicable relationship with its contractors by the number of litigated claims pending against it. Litigation can be an awful and needless drain on a company's finances.

 

[Nutmeg]

Paul Dougas, a director of MGX, purchased shares today for his super fund. Good to see that insiders are buying.

 

[skc]

Paul Dougas, a director of MGX, purchased shares today for his super fund. Good to see that insiders are buying.

He bought 2 days ago.

MGX joining the growing list of stocks that are in the "breaking the buck" club.

Other new members include LNC, STB, LYC, PAN, AWC. Who's next?!

 

[StumpyPhantom]

He bought 2 days ago.

MGX joining the growing list of stocks that are in the "breaking the buck" club.

Other new members include LNC, STB, LYC, PAN, AWC. Who's next?!

MGX has today got itself a new CEO.

Does anybody think that will put its share price on the road back?