Came across an interesting article;
http://www.smh.com.au/business/iron-ore-bubble-to-bounce-or-burst-20120904-25cj3.html
It touches on issues of the debt held by Fortescue and Atlas, i think MGX has a much more attractive balance sheet and is lower risk play.
I also think arguments against a higher cost base for MGX are flawed by the assumption that other iron miners are de-risked by their cost structures. When taking their debts into consideration, the cost per tonne in my opinion would be higher than is visible.
I pasted a part of the article below:
Jim Chanos back in April will ring in Twiggy's ears. Is it only five months since Chanos rather famously described Fortescue as a ''value trap''? Particularly seeing it came with a stinging kicker that the company was characterised by ''a somewhat promotional management team''.
Chanos punted that iron ore prices were headed south big-time and with it Fortescue's share price.
''Increasingly, with any kind of reversion to the mean of iron ore prices to $US100 per tonne or less, we're going to see a dramatically lower ability to service the debt and to service the capital programs they have. And a stock price materially lower than it is today,'' Chanos said.
Read more: http://www.smh.com.au/business/iron-ore-bubble-to-bounce-or-burst-20120904-25cj3.html#ixzz25aZqqKTl
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debt debt and more debt vs none
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32.0¢ |
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Mkt cap ! $389.5M |
Open | High | Low | Value | Volume |
32.5¢ | 32.5¢ | 31.0¢ | $500.4K | 1.571M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 107146 | 32.0¢ |
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Price($) | Vol. | No. |
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32.5¢ | 60553 | 2 |
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No. | Vol. | Price($) |
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2 | 107146 | 0.320 |
7 | 314659 | 0.315 |
11 | 609387 | 0.310 |
6 | 113300 | 0.305 |
8 | 152731 | 0.300 |
Price($) | Vol. | No. |
---|---|---|
0.325 | 60553 | 2 |
0.330 | 130172 | 5 |
0.335 | 157778 | 4 |
0.340 | 176714 | 5 |
0.345 | 217734 | 5 |
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