MGX - Mount Gibson Iron

[pixel]

They wont be paying a dividend in March. At the AGM they stated a dividend policy of paying once a year only.

Thanks Brty,
I had missed that. Even the fundamentalists in my trading group were surprised.

 

[Boggo]

Fair enough Pixel. It does look like it may break out.

Probably needs a convincing [insert your definition] close above 1.05 to show the start of another run. In market depth leans towards negative sentiment at the moment.

 

[pixel]

Given Shanghai's galloping start into the Year of the Horse", the more efficient io miners should benefit.



I am back on board; bought into the second leg of the breakout and expect the previous High $1.12 to be taken out before month's end.
If it doesn't, there is always Plan B: Stop on break below $1.01.

 

[notting]

I'll be taking the other side of that trade for sure.

No one wanted it at .45 cents where it's dividend on limited mine life was 10%!
All of a sudden people woke up and thought 'hey maybe Goldman's call on IO prices isn't gospel and this thing is trading at cash in the bank value.
Now ya reckon people are gonna want it at 1.07 with dividend at 3.4%, heaps of risk, IO flooding the market, limited mine life and China wobbling.
That would make it a technical trade I guess.
Very happy shorting here and stopping just above 1.12 if voluminousness implies some other reality.
(that is a word, my spell checker is fine with it!)
PPS Voluminousness wasn't right up there today.

 

[notting]

Well that went well.
Seems like China has gone even more bazerk building things to look like they are still growing.
Although we already new the Port Headland figures so - Why so Happy?
Probably don't wanna be short this sector for the minute.

 

[pixel]

Current resistance repeating last November High.
Took profit for now.



Will buy back in if the run continues; but some swing trades may be coming in a candle overlap.

 

[notting]

Yesterdays price action with a spike up then a sell off and low close got me interested in shorting MGX again.

RIO started positive in London last night after it reported quit a nice result but then reversed and finished negative. RIO has started positive today and just dipped into negative territory here, possibly having made a double top.
So am shorting MGX, thinking it's a sector top and IO could be weak from here with all the new production coming down stream and China having bought aggressively over the last quarter but I suspect will be less so now.
Selling is coming in at the 1.16 mark some of which is me!
But will be trigger happy to get out fast on any upside aggression.

 

[pixel]

Good luck, Notting;
I'm off as well, but that's because of our taking a holiday, meaning I can't keep watching.
Otherwise, I'd sit tight for another 10c upside.

 

[Knobby22]

It looks like a breakout, maybe there is some good news expected. I would wait a bit before shorting.

 

[notting]

It looks like a breakout, maybe there is some good news expected. I would wait a bit before shorting.

Went in hard doubling up the short at 1.215 at the open yesterday, to be averaged in at 1.1876.
Yet am concerned that sentiment on China seems to have abated and technically it remains that this could go higher. So felt to take it off the table today at 1.19.
BHP results were good and the opinion is it may break out on valuations.
IO prices were up again over night so appear to have settled for the moment.
The China credit volumes being record highs as reported yesterday has also fueled optimism so as far as a short term trade goes - will sit back and watch to see if some negativity takes the drivers seat again before shorting.

 

[jdenhaan]

MGX came out with some solid numbers today:

- Record six month sales revenue of $509.5 million (H1 2013: $416.2 million) on record iron ore sales
of 5.1 million wet metric tonnes (H1 2013: 4.4Mwmt).
- Net profit after tax increased by 111% to $78.3 million (H1 2013: $37.1 million).
- Cash and term deposits increased over the half year by $107.9 million to $483.9 million (30-Jun-2013: $376.0 million).
- Net operating cashflow increased fourfold to $170.6 million (H1 2013: $43.1 million).
- EBITDA of $212.1 million (H1 2013: $173.9 million).
- Total Cost of Goods Sold of $77.90/wmt, including royalties (H1 2013: $78.90/wmt).
- Average realised price (all products) increased to $100/wmt Free On Board (H1 2013: $94/wmt).
- Koolan Island unit cash mining and site administration costs reduced to under $9 per tonne of ore and waste moved, in lower half of guidance range.
- On track to achieve record FY2014 sales of 9.0 to 9.5 million tonnes

And yet we're at -15% today?!?

MGX, even though they produce at high cost, have so much cash on hand that they should be able to hunker down and weather a storm.

 

[Valued]

WOAH.



And yet we're at -15% today?!? What am I missing here?

The people who wanted to get out of this stock were likely selling into the good news.

If stock prices go down on good news, it's a warning sign unless you can find some other reason for it (like a company holding this stock was liquidated and the liquidators put their holdings onto the market without any regard for fundamentals).

 

[notting]

They are not paying a mid year dividend all of a sudden.
Grandpa's didn't like that.
With Lee Seng Hui taking over, do you really think they will ever do anything for share holders again?
No

 

[laurie]

They are not paying a mid year dividend all of a sudden.
Grandpa's didn't like that.

No

I'm a grandpa and no i prefer interim and final dividend as I'm retired at least its spread over 6 months now its 12 months to wait for a payment

 

[notting]

Smashed today.
On the announcement that it is moth balling it's biggest mine due to wall collapses and low IO price.
Resulting in the majority of workers at the site being laid off, and a hefty impairment charge to be included in
its half-year accounts in February.
Mount Gibson said it would decide on the mine's future by June next year.

Shares on Issue Current price Market Value
MGX 1090805085 0.22 $239,977,118.70

Is this bad, sounds bad, sounds terrible.

But is it?

MGX has 500 million in the bank.
That is twice as much as the current share price is trading at. Why would you want them to even continue to mine IO in this market?
Better to just mothball the mines and put the cash in some high bearing bonds and sit back.

It's good news!

 

[skc]

But is it?

MGX has 500 million in the bank.
That is twice as much as the current share price is trading at. Why would you want them to even continue to mine IO in this market?
Better to just mothball the mines and put the cash in some high bearing bonds and sit back.

It's good news!

Cash is now $360m per announcement, and they are still mining 4.4-4.8m tonnes for the year (not sure how much was YTD, but they'd all be cashflow negative), and there'd be costs invovled - $11m redundancy and costs to put the mine in care and maintenance. The writeoff would be a non-factor as no one has ascribed any value there for some time.

So I'd say net cash of around $300m (allowing $50m to do something to the mine before walking away) or 27.5c per share. So it's only trading $60m below cash backing...

Had they simply announce mothballing all mines without the flooding, then it'd be great news.

 

[notting]

Good points.
However -

The writeoff would be a non-factor as no one has ascribed any value there for some time.

Apart from those that sold it down 50% after todays writeoff announcement making it official I suppose.

Also the impairments are 'non cash.'

 

[skc]

Good points.
However -

Apart from those that sold it down 50% after todays writeoff announcement making it official I suppose.

Also the impairments are 'non cash.'

The 50% sell down is not due to the write off. Its due to the fact that they no longer have a big part of their operating mine.

First AGO, then ARI, then MGX. All <20c. Who's next? BCI is the closest!

 

[notting]

The 50% sell down is not due to the write off. Its due to the fact that they no longer have a big part of their operating mine.

First AGO, then ARI, then MGX. All <20c. Who's next? BCI is the closest!

Their all no longer viable businesses.
However if they all just stop one will have lots of money in the bank. The others will be in debt.
That's the difference.
If they keep operating it's only going to be more debt.
So the fact that MGX wall collapsed and got flooded with sea water is awesome!
Cause it's going to make it harder for them to lose more money!

 

[Miner]

Their all no longer viable businesses.
However if they all just stop one will have lots of money in the bank. The others will be in debt.
That's the difference.
If they keep operating it's only going to be more debt.
So the fact that MGX wall collapsed and got flooded with sea water is awesome!
Cause it's going to make it harder for them to lose more money!

This will be a great excuse for the top management to divert share holders' attention to nature's hand and get some insurance. I agree with you and SKC's comment