MGX - Mount Gibson Iron

[The Triangle]

Still no word on insurance payout. I get the impression they are gung-ho to restart KI -Or could this all be insurance posturing? Is it fear of MGX pouring a hundred million into rehab on KI that is keeping the price well below cash backing?

More than a year on and they still have $345 m of cash. Net assets of $275 m (assuming zero long-term assets) and managed to increase cash this half by 15 million, yet MC sits at $195. If iron stays depressed I wonder if they can flog off all the 'worthless' mining assets (and the long-term liabilities) for a token few million to some junior and end up with $320-$330 million of net assets in cash and pay a 1 - 1.5 cent dividend for eternity.

What don't I see that the professionals see about these guys...

 

[The Triangle]

Well, now cash is up to $440 million following an insurance payout. MC up to 280 million. I don't understand how so many people miss these opportunities....

 

[tinhat]

Well, now cash is up to $440 million following an insurance payout. MC up to 280 million. I don't understand how so many people miss these opportunities....

What opportunity? Do you think shareholders are ever going to see any of that cash horde in their pockets?

 

[The Triangle]

I don't expect them to give it back to shareholders. History suggests MGX hoard money and don't like to pay dividends. Who knows what the future holds, but I think the difference between net cash and market cap is too large to be ignored, especially considering they are adding cash each quarter.

The first opportunity saw a return from 19 cents to 27 cents. I flagged it months ago. The second opportunity will be from the next insurance payout. The third opportunity will come from the company eventually doing something with the cash. I could sell on capital gain alone. don't need a payout.

 

[laurie]

Still leaving itself open to a take over !!

 

[The Triangle]

Still leaving itself open to a take over !!

Now sitting at 40 + cents. Still have hundreds of millions in the bank. Constructing a mine with a NPV of 500$m on current spot rates.

 

[The Triangle]

My isentia is not performing but at least MGX is. In latest quarterly/investor preso the pre-tax NPV for KI is 900 million @ spot rates. Share price looks like it now stay above 50 cents for the foreseeable future with $450 million cash in the bank, no debt and a $600 million market cap this has a very good looking future.

 

[$20shoes]

Nice run of late. The rally may be approaching a final interim phase. However, if you look at historical rallys in MGX they can be extremely exuberant. A lot of past rallies have exceeded 100% gainis before petering out. So when she runs, she runs well.

Not to point to fine a point on Elliot and stocks (which I'm cautious to do ), you can see a count that might suggest a Wave 5 top somewhere around the 85c mark. I am expectant that we should at least reach this high but may potentially push on, attracted to around number of 90c.

 

[Zaxon]

A lot of past rallies have exceeded 100% gainis before petering out. So when she runs, she runs well.

Excellent. As a holder of MGX, I insist it does gain 100%.

 

[The Triangle]

Excellent run. I sold a small holding (was always overweighted in MGX). Would not be surprised if this touched 90 cents.

History tells us that MGX trades at a silly low level to where it should be. About time it started to recover.

NPV of KI calculated today at spot would surely be over 1 billion. I wonder if our major shareholders are going to be paying less than top dollar for the ore? Also will we some of the ‘mineralised waste’ from the mid west sold this quarter as low grade prices skyrocket?

 

[Ann]

S&P have added MGX to the ASX 300 at their quarterly rebalance effective March 18.

 

[Zaxon]

S&P have added MGX to the ASX 300 at their quarterly rebalance effective March 18.

Yes, I am very excited to see what should lead to upward pressure on the SP.

 

[Ann]

Yes, I am very excited to see what should lead to upward pressure on the SP.

We will have to wait and see Zaxon. Years ago I used to watch the S&P rebalance like a hawk and had a thread on another forum with the quarterly announcements. There didn't really seem any hard and fast outcomes. The thing I did notice to a certain extent was companies dropping off lists sometimes went up, my imagination painted a picture of fundies selling the stock up to get out of it. Other going onto a list tended to fall, again I imagined the fundies buying lower as they accumulated. However this is not something to bank on as it was never consistent.
I think in MGX and all the iron ore stocks will rise and fall on the iron ore price. This is all going to depend on China growth along with the rest of the world. Currently the chat is slow growth from now on. However, that is this weeks news, next week may be boom times!

 

[Zaxon]

Years ago I used to watch the S&P rebalance like a hawk and had a thread on another forum with the quarterly announcements. There didn't really seem any hard and fast outcomes.

That is unexpected and interesting observations you've made there.

Let's look at the fundamentals:
As new companies enter an index then there will be more demand. Funds that track that index will have to buy up new shares. And people in superannuation who are restricted to only buying shares that belong to that index, could be buying in for the first time. So definitely there's an increase in demand.

However, I've never tracked the effect personally. I'd be interested to know over what time period you looked. When a share goes ex-dividend, the resulting drop in share price is immediate. But when a stock is added to an index, I can see a range of dates that could be important.

1. The announcement date. Typically a week before the actual index change, is possibly a time when buyers with discretion could start buying in.
2. The index change date. Those without discretion, so index funds and people restricted within super, can start buying in from this date.
3. Buying over time. Funds may need to acquire their stock over a period of time due to limited volumes, so the demand could be spread out over time.

 

[Smurf1976]

There didn't really seem any hard and fast outcomes.

I'm always cautious about being invested in anything which is undergoing a significant change that isn't routine business.

If it's a good thing then be careful that the market hasn't already priced it in and falls the moment it happens.

If it's a bad thing well it's bad.

What does create a huge opportunity is things which look bad but really aren't so bad in practice. Opposite effect for things which sound good but don't mean much in reality.

 

[$20shoes]

This has turned into a bit of an outlier to help improve my portfolio performance.
Was expecting some sideways movement from 85-90c but I'll take the upward swing above 90c!

 

[Smurf1976]

I'm always cautious about being invested in anything which is undergoing a significant change that isn't routine business.

My caution was unwarranted it seems. At least in the short term I was wrong - up it goes.

I do not hold.

 

[Zaxon]

My caution was unwarranted it seems. At least in the short term I was wrong - up it goes.

I do not hold.

I hold it. Iron ore seems to be doing really well lately. Coal, on the other hand, not so much.

 

[Cam019]

 

[jonnycage]

this one just keeps on rising. koolan island sales about to start again. i happilly entered at 68 cents a month or so ago