Reading this thread due to Idle Wanders contributions to the GRR thread.
Thought i would have a good look at MGX and i like what i see..
The conversation of MGX vs GRR is somewhat irrelevant in my mind as GRR are selling a treated Pellet product vs MGX Iron Ore operations. MGX are in the ASX 300 where as GRR are not at this stage and this probably wont happen until the GRR share price appreciates alot given the capital structure of the company.
In saying that i am a shareholder of GRR that thinks the price will run hard from here. I am about to become a share holder in MGX also given the upside from this level based on the margins... This is obviously subjective to the price of Iron Ore (for both companies).
Thought i would throw some figures around this morning to review the margins of MGX vs GRR as per the comparison in this thread. My opinion is GRR market cap is likely to move up significantly from here but i also think the same case will exist for MGX..
| ASX GRR |
|
| ASX MGX |
|
|---|
| 1 | Shares on Issue | 1,157,338,698.00 |
| Shares on Issue | 1,187,980,278.00 |
|---|
| 2 | Cash / Receivables at 31/3 | $332,020,000.00 |
| Cash / Receivables at 31/3 | $412,000,000.00 |
|---|
| 3 | Cash / Receivablesvalue per share | 0.286882311 |
| Cash / Receivablesvalue per share | 0.346807104 |
|---|
| 4 | Debt | 0 |
| Debt | 0 |
|---|
| 5 | Current Net Position | $332,020,000.00 |
| Current Net Position | $412,000,000.00 |
|---|
| 6 | Share Price | 0.75 |
| Share Price | 0.93 |
|---|
| 7 | Market Cap | 868,004,023.50 |
| Market Cap | 1,104,821,658.54 |
|---|
| 8 | Assumed production costs (AUD) | $120.00 |
| (WMT FOB) | 65 |
|---|
| 9 | Life of Mine/Production asset (years) | 10 |
| 10 years + (TBC) | 10 |
|---|
| 10 | Pellet price AUD | $420.00 |
| Iron Ore Price | 288 |
|---|
| 11 | Earnings per tonne | $300.00 |
| Earnings per tonne | 223 |
|---|
| 12 | Likely annual production rates | 2,500,000 |
| Likely annual production rates | 3,000,000 |
|---|
| 13 | Assumed EBIT | $750,000,000.00 |
| Assumed EBIT | $669,000,000.00 |
|---|
| 14 | Tax of 30% | $225,000,000.00 |
| Tax of 30% | $200,700,000.00 |
|---|
| 15 | Earnings after 30% tax reduction | $525,000,000.00 |
| Earnings after 30% tax reduction | $468,300,000.00 |
|---|
| 16 | Earnings per share | 0.45 |
| Earnings per share | 0.39 |
|---|
| 17 | Assumed PE ratio of 5 | $2.27 |
| Assumed PE ratio of 5 | $1.97 |
|---|
| 18 | Assumed PE ratio of 5 + cash at 31/3 | $2.56 |
| Assumed PE ratio of 5 + cash at 31/3 | $2.32 |
|---|
| 19 | Assumed PE ratio of 10 (life or project) + cash | $4.82 |
| Assumed PE ratio of 10 (life or project) + cash | $4.29 |
|---|
| 20 |
|
|
|
|
|
|---|
| 21 | 40% discounton PE of 5 + cash (Iron ore price, production cost uncertainty etc) | $2.16 |
| 40% discounton PE of 5 + cash (Iron ore price, production cost uncertainty etc) | $1.92 |
|---|
| 22 |
|
|
|
|
|
|---|
| 23 | 20% discount on PE of 5 + cash (Iron ore price, production cost uncertainty etc) | $2.36 |
| 20% discount on PE of 5 + cash (Iron ore price, production cost uncertainty etc) | $2.12 |
|---|
| 24 |
|
|
|
|
|
|---|
| 25 | 10% discount on PE of 5 + cash (Iron ore price, production cost uncertainty etc) | $2.46 |
| 10% discount on PE of 5 + cash (Iron ore price, production cost uncertainty etc) | $2.22 |
|---|
Please note my posts are not advice and are the opinion of myself only. I am not a professional investor and these are numbers that i have been playing with that are extremely subjective. None of my posts or opinions should be used as advice or to encourage anyone to trade anything. Speak to a professional as i am not one and these are just my back of the envelope musings. As always do your own research.
(20min delay)