bhp

Hi everyone,

I have been saying for a while that I do believe BHP is behind the take-over.

The lack of any leaks and the fact that no other company on the ASX has gone into trading halt points all towards BHP imho.

We all know, the fact that the railway deposit from UMC borders the BHP tenements, and that BHP would rather take-over UMC then having to deal with a company that is going to be partly owned by the Chinese.

Once taken-over, there will be no more future pressure on BHP to open up the railway lines to UMC, and they can add a new iron ore resource, that has the potential to rival, or at least has the same potential, as their AREA C which they are mining right now.

And not only do they get hold of this first class iron ore resource, but they are going to get it for a pittance for what it is worth imho.

BHP will not want to pay top dollars for UMC, unless they are forced to do so.

It will be up to the management and the large shareholders to put pressure on BHP to up the price.

The current options that the management are holding can be used as some indication and with 2.3 million options at $1.75 we should be looking at a figure higher then this as a take-over premium.

I also do not think that we can expect a counter offer from any other party if BHP is the predator.

RIO would stay away imho as they are now going to be buddies in the pilbara and a bidding war between the two, would do nothing to add to the relationship.

Our only hope would be FMG imho as the Chinese are bound by foreign investment restrictions.

So I think, that unless our management are excellent negiotiators we should be looking at a best case scenario of around the $2 mark for UMC.

We all know that this company is only worth as much, as it can eventually ship ore to the port and that is where this deal becomes so unequal and unfair.

BHP is in the drivers seat when it comes to negotiating , but the Chinese deal has given the UMC management some leverage, which they certainly will use imho.

I would have like to see $3 for UMC, and even that is cheap for someone like BHP who has the infrastructure basically in place, to start mining this deposit.

Next week we will know what the deal is, but as always the first offer with a take-over is NOT always the last.

Even in this scenario we have to keep an open mind imho.

A first class iron ore recource like UMC has, with some of the highest grade Fe in Australia and low impuraties are not easy to find, and will ALWAYS attract attention.

And its those, who are patient, and realise where they have invested their money in, who ultimately get the rewards.

Good luck to all UMC holders

jojo