MGX

0.00%

30.0¢ mount gibson iron limited

Great overview Auto. That runs very closely to my views....

First 28 Last

Share
Profile

Follow
Yeatesy

942 Posts.

77

11/03/18

19:45

Post #: 31673674
Share

Originally posted by Autosime ↑

Hi everyone
Apologies for bombarding the thread with posts but I did enter with a sizeable position of 800k shares on Friday and I have thus being down a deeper dive into the numbers to work out whether I add on weakness or exit on a decent bounce. I have kept broadly upto date as I was keen to get back in a a price that had a good safety of margin. ( Discount to cash ) I have read 4 broker reports in detail , read the half yearly and quarterly and listened to the last concerence call .
Here is what I have concluded but please free to contest my comments if you disagree.
I am firstly being conservative and assuming all the 97m will be spent on KI including the 10 contingency and I add another 3 m for good measure . As 32 m has been spent to date - that leaves another 68 m to go .
Last quarter the had a 10 m operational cash flow - this quarter I expect a little better because if the higher IO average and the improved price on discounts and lower AUD . So I am assuming 11, 10 10 and 8 for the 4 quarters this year. This includes interest minus Corp expenses . So if I add 477m and 39m I get 516 m minus 68!million for KI I get 448 ) I haven’t assumed they will get the remaining few million for the KI BI claim yet so if it comes in this year that is a bonus ) . Now even when KI does start there will be a time lag between mining and revert so I minus another 30 m off my 448
So by my calcs the cash position is unlikely to be any less than 418 which is about 38c per share cash backing. So downside is very much protected with the safest asset possible being cash and unlikely to drop below current SP . So one is buying KI for free
Therefore the upside lies in calculating DCF on KI. Now what I picked up in the Conf call was that a KI extension is looking increasing likely and even a 1 year expansion would have material impact but if one looks at the resource I would expect any mine life extension to be 2 years plus. There is on current high grade premiums a massive cash flow possibility and a 500-600m cash flow over a 5 year mine life is very probable. Not no analysts models a KI extension and if MGX do announce an extension each year can add 9-10 c of value, thus broker targets could easily shift to the 65-79 c range
Furhermpre the language coming from Jim both in terms of current balance sheet strength and asset opportunities suggests these may be closer than ever and a good purchase could see a significant rerate also . Furthermore Jim states any acquisition will not be in IO ( so put Southdown idea to bed Imo ) and I think MGX moving from a one mine one commodity stock to a multi mine multi commodity stock will be rewarded by the market, especially if the retain a decent cash balance.
So I have concluded I will buy more on weakness to take position to 1.2 m units and will look to extract a little more 35-50% from this low risk stock over 12–18 months.

Expand

Great overview Auto. That runs very closely to my views. cashflow from KI could be well well over $500m if prices hold up and extentions come in.
The question is, when is the share price likely to reflect the value here? starting to think we are going to have to wait for first sales from KI to kick this over .50
As you say though, 25% plus upside in the next 18 months is really very likely here.
Yeatesy.

MGX Price at posting: 38.0¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

Reply

Top Stories

AXP

Tambourah chases gold veins and mineralisation extension with drilling

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

WC8

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

ACW

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

MIN

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

There are more pages in this discussion • 5 more messages in this thread...

First 28 Last

Add MGX (ASX) to my watchlist

(20min delay)
Last 30.0¢		Change 0.000(0.00%)		Mkt cap ! $365.5M

Open	High	Low	Value	Volume
30.0¢	30.5¢	29.5¢	$237.0K	789.0K

Buyers (Bids)

No.	Vol.	Price($)
7	195619	29.5¢

Sellers (Offers)

Price($)	Vol.	No.
30.5¢	195225	4

View Market Depth

No.	Vol.	Price($)
1	37120	0.920
3	45770	0.915
3	31253	0.910
3	68342	0.905
2	44392	0.900

Price($)	Vol.	No.
0.925	15328	2
0.930	89494	6
0.935	70442	3
0.940	72592	7
0.945	128342	5

Last trade - 16.10pm 25/11/2024 (20 minute delay)

MGX (ASX) Chart

Great overview Auto. That runs very closely to my views....

Tambourah chases gold veins and mineralisation extension with drilling

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Great overview Auto. That runs very closely to my views....

Top Stories

Tambourah chases gold veins and mineralisation extension with drilling

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News