I have thought the same. How many would sell, To be honest I would probably consider it. Like you said nearly 100% return at these prices.
Guess that is why you need a strong top 20.
However to put it in perspective even though price has dropped this week volumes haven't been that great.
A takeover offer could be a play from others.
Consider this:- If FMG does ramp up to 150MTPA
FMG could pay $468M - $3 share
Build the rail spur themselves and use for blending $600M
Mining and Infrastruture - $200M
Railway mined over 3 years 30MTPA
Profit margin $30Tonne
NPV as follows:-
Year 1 - -1,268,000,000 Year 2 - Nil Year 3 - 630,000,000 (900-270 Tax) Year 4 - 630,000,000 Year 5 - 630,000,000
NPV = $565,000,000
Pick up all other UMC prospects for Nothing and Add diversification with Bauxite.
These are my thoughts, could be way off the mark, But seeing the size and quality we have with railway has certainly de-risked my investment decision at the current stock price.
UMC Price at posting:
$1.60 Sentiment: LT Buy Disclosure: Held
