MGX Australian Article

If holding cash in volatile markets is your thing then MGX with 33cps cash backing would seem to a good buy. Its hard to believe you can still get it for 20.5c today but I'm still a buyer.

Silver lining for cash-rich miners

• by: Maggie Lu Yueyang
• From: Business Spectator
• December 10, 2014 2:40PM

RESOURCES stocks have been hit hard recently due to weakness in commodities prices, but CIMB analysts still see some brightness amid the agony, particularly in cash-rich miners.
The value of some resources companies has reached a level where cash in the bank is greater than the market capitalisation, known as “negative enterprise value”, CIMB has said in a research note.
“Is this happening because investor pessimism is overshooting fundamental value?” the analysts asked.
“Surely at least some nominal value should be attributed to operations and the significant sums invested in infrastructure.”
The analysts put out a list of companies that have significant cash reserves.
For example, Mount Gibson holds 33c per share in cash, while its current share price is only 20c. BC Iron holds about $78 million in net cash and only has an enterprise value of about $14 million.
The decline in resource companies valuations is reasonable due to the weakness in commodity prices, but pricing a company below the value of their cash at bank seems overdone, the analysts argued.
“We take the view that such companies are highly leveraged to a significant upside move once commodities prices and sentiment turns,” they said.
Companies such as Mount Gibson, Alacer Gold and BC Iron, which all have significant cash reserves and well established operations, have the ability to capitalise strongly on a resurgence in commodity prices, they added.

http://www.theaustralian.com.au/bus...151327401?nk=00bcf7718d93192ca3824dfe6c970383