We have a Junior Australian Iron miner that?s just been given an extension on a project that will unlock not only its own potential as a major exporter of iron ore to china but that of all it?s billion dollar counterparts in the mid west,
Not only have they been given until December 31st but they have indicated that they plan to thrash out their BFS by June this year, that?s only 3 months away,
They are backed by Japan?s biggest company (Mitsubishi) who have maintained their support since the project was signed off on and who could fund the entire thing with some spare change from their back pockets if they seriously wanted,
And if this doesn?t inspire enough confidence in their ability to get this project off the ground and start bringing in some serious cash flows through their port and rail business and their mining operations we have the premier of WA and most spectators commenting on the fact that Chinese investors will likely become involved,
and the best way for them to do that is either directly through a big stake in MMX or indirectly which will still benefit MMX at the end of the day,
Not to mention the general consensus amongst analysts that MMX has set itself up as a prime takeover target for any potential player looking for exposure to the rapidly growing and emerging Midwest iron ore market, this would also mean massive potential gains for MMX...
Now let?s look at some of the major shareholders in MMX:
o JP Morgan (30 million + shares) o UBS Nominees (11 million + shares) o HSBC Nominees (36 million + shares) o Resource Capital Funds (12 million + shares)
We are talking about the biggest investment banks, hedge funds and fund managers in the world who currently hold huge stakes in MMX, AND on top of this we have Deutsche Bank taking out massive equity swaps on the stock sending the price soaring 16%! Does that perhaps tell you something about the stock?
It would only be rational to ask yourself, ?why? are all these big players currently holding and increasing their stakes in the company?
Looking further into the company given the recent good news it would probably be imperative to note also that the last broker report from UBS rated MMX as a ?BUY? with a price target between $3 and $4... That?s before CB came out and granted them the extension and reiterated his confidence in their ability to make the project happen! Not too bad considering that they are currently trading at less than half of that.. ($1.47)
The best investors will take an opportunity and break it down to its most simplistic level to determine if it will be profitable going forward, based on the evidence they then gather they will decide whether or not to invest (fundamental investing at its best)
In the case of MMX we have a company who is tied up in a huge deal to produce perhaps the most significant infrastructure WA has seen in years, with huge reserves of iron ore and the potential to increase these reserves, backed by one of the world?s largest corporations and now the WA government (not to mention potential Chinese investors)
They are currently trading at a HUGE discount to their 52 week high of $3.00 + and their all time high of $6.00 + not to mention the average price targets set by analysts currently covering the stock of around $3.00 and they are also looking like a potential takeover target,
Over the past year their share price has been hammered by rumours surrounding their rights to the OPR project which have all been proven to be untrue and given the fact that yesterday?s announcement has taken a lot of uncertainty out of the equation they are now looking a lot less risky and a lot more attractive to potential iron ore investors,
It?s also worth mentioning other factors holding the price down such as adverse weather conditions in WA and current market conditions such as the global unrest that has come out of the current situation in Libya however these are all short term speed bumps and it usually pays to be forward thinking and look at the bigger picture..
I?ll finish up by putting forward the question of ?where to now??
It would be interesting to see how their share price reacted to previous encouraging announcements and what people think the price will do now, I personally think that the facts are starting to speak for themselves and what may have looked like a dangerous investment is shaping up to be a solid earner... let?s not forget that FMG was once a $1.00 stock with high hopes, a few calculated risks and some good business decisions later and they are flying sky high!
