why is it so?

Hi Guys,

I have been naïve enough to believe the way to invest is to do lots and lots of research and find companies which have quality resources that are in long term global short supply, have good management and strong financial positions that I think are undervalued. Take a position and expect long term capital growth. In particular I like tin, copper, gold, lithium, molybdenum, phosphate, etc.

I amateurishly value a company by adding the value of cash assets (less liabilities) and 2-5% of their in the ground resource valuation (depending on grades and viability) and increase or reduced this value for other factors like blue sky, management and likely long term commodity price movement then divide it by the number of shares on issue.

In MLX’s case it shaped up as an outstanding investment. I considered it to be exceptional value and worth a $1+ a share which given the depressed nature of the small cap mining market should be 35 – 45c at present. I took a position in MLX via WGR. They go from strength to strength gobbling up resources such as WGR and Wingelina, find more and more tin, have buckets of cash and are as safe as houses but are only trading at 11c.

As Julius Summer Miller would say “why is it so?” Could it be that like some other undervalued miners they are Chinese controlled and managed to supply China with metals and not to provide either dividends or share value to the minority share holders. Are all profits to be used to find more metal to export to China?

Are the shares virtually worthless? They will never pay a dividend and as it is not possible to have management input there is no point in a significant investor taking a large position.

Perhaps the new government should have a look at situations like this as Australians should get more from their resources than employment and a small royalty? Can Australian Equity do the same thing in China?

I would like to know what others think. Am I wrong?

All the best
Tasidevil