a fundamental question, page-3

Briefly looking through the fundamentals.

They reported op profits of approx 2 mil last quarter for an annualised 8mil EBIT. This is despite a strong market for iron ore. If China's economy comes to a mishap, as you mention, and I do think that's still a real possibility given there's still no sign it's economy is under control, iron ore prices could go backwards to pre commodities boom level. Magnetite plans will be mothballed, TP will bleed red and MGX will be as good as gone. Assuming iron ore prices hold well, it could work out nicely but with current earnings of 2mil versus a market cap of $100m+ I don't mind holding out a bit.

On the China issue. I am aware that Morgan Stanley's chief Asia economist Andy Xie has been bearish on the Chinese economy for a while. He cites a sudden dumping of US t-bills by the central banks, a property bubble in many major cities, and oversupply in certain sectors such as steel as key risks. Any one of these events could turn this China boom into a China bust. It's worth noting that while he is against consensus economists views here he has predicted previous financial mishaps with deadly accuracy.

MGX could turn out to be a real beauty but still pretty high risks IMO.