takeovers panel

The 29th April is the latest date for the Takeovers panel to give its ruling in the Shougang share purchase, after this date under the orders given the transaction can proceed.

So we are roughly half way through the wait and the countdown has now begun.

Shares have been trading on fairly lowish volumn and the price movements have been in line with market changes, with strong support recently in the low $2.80 range before being snapped back up to $2.90 range in quick time, which would appear that someone is accumulating in that range.

So some time in the next few weeks we should expect an outcome, what this will mean is anyones guess, will it mean a takeover, will it be business as normal, before a takeover?

IO negotiations are ongoing with much written about possible outcomes, but the great thing for MGX is that no matter what the price rise will be 71% as this is what Vale have agreed to for premium ore which is what MGx are selling, most people have only factored in 65% rise which is Vales agreed price for lower grade ore. A number of Analysts are now expecting 80% to be closer to the mark for Rio/BHP.

Even on 71% if you do the figures MGX is undervalued at present prices due to the Takeover panel pending decision and the price is being held in a price range. MGX has been selected as the pick of the pure IO companies outside the top tier(of course there will be debate on this, but I agree), with broker ranges from $3.40 to $3.90.

With or without a takeover the future is bright with production ramp up continuing, high grade ore, minimal debt and a strong management team. MGX was recently described as a company who just gets on with the job without all the fanfare.

The IO sector has been quite the last couple of weeks along with many commodity companies, but at the end of the day MGX has a guaranteed income strean which isn't effected by day to day price fluctations and a strengthing price outlook, an aspect commonly overlooked.

Have been accumulating in the last couple of weeks to top up initial holdings from 2003/2004 and will continue to do so.