I’ve noticed WestAussie’s mention of a possible likely offer of...

I’ve noticed WestAussie’s mention of a possible likely offer of $1.50 has ruffled a few feathers on here. I agree with WA that this is where our first offer is likely to come in around given our current share price. I only hope we receive a counter offer or offers, because if not we will have to make a decision on $1.50.

Some posters have mentioned here that the UMC share price has been artificially suppressed due to recent bot trading. Whilst I agree with this, my view is that the UMC share price has been far more influenced by the takeover rumour since the fifty cent days. Therefore I would suggest that if shareholders were to reject a takeover offer of $1.50 then they should consider where the share price is likely to settle back to.

Personally I’d like to see 6 to 10 dollars per share for UMC but we are now in entirely different times from our high tide days in June of 2008 at circa $2.60. Compare some other stocks at around the same time, just a few BHP $50, FMG $12 and RIO $150. In June 2008 when UMC was running hot and was well and truly due for a correction and consolidation, I believe that a lot of future potential was already factored into that share price of $2.60. A takeover at that time based on our current approx 120 million tonnes of DSO of double the current share price would have been realistic in my view ($5.20).


Back at the November 2007 UMC AGM I formed the view as a result of speaking with the directors that the Railway deposit would yield somewhere around its current DSO tonnage as it stands today. I can clearly recall one of the directors mentioning to me $5 per share for UMC as a takeover or the selling off of Railway. At that time the SP was circa $1.10.


Whilst we all have very optimistic expectations of what else we have on our other tenements, I’m sure a takeover suitor will apportion little or no value for any unproven ground. As for the granting of the KNP tenement, it is just a pie in the sky for now and any takeover suitor wouldn’t factor in any value for this in my view.


But as I mentioned we are now living in entirely different times courtesy of the GFC, and this is how we should now consider the situation when valuing UMC in considering a takeover offer or the sale of Railway. My view is that Railway accounts for 99% of the value of UMC when looking through the eyes of a predator and not a shareholder. If we were to accept $1.50 as WA mentioned or even $2 and reinvested that capital into BHP, RIO, FMG or whatever then where would you be when the market picks back up in a year or 2. Do you think FMG will see 10 or 12 dollars again, I do.


I’ll be considering 2 very important facts and they are that at present we’ve got Buckley’s chance of geting our ore to port and access to a port facility. We are dependant on another party with very long pockets for this and in this current economic climate I think its a big ask. It may be worth considering a takeover or the sale of Railway if presented to us. As for UMC mining in 2010, this is pie in the sky stuff for me. Even if we could be mining, the logistics of transport and port remain a conundrum. With all due respect our directors don’t have the expertise to run a mining operation of this scale. They’ve been excellent geologists and real estate developers with UMC ground.

I’ll be giving much consideration to what our directors advise in the matter of any offers that come our way. We should put our faith in them that they are far more informed of the true situation and what is likely to transpire in the event of a rejection.