MMX 0.00% 4.7¢ murchison metals ltd

bit muddy at midwest

  1. 296 Posts.
    Daily Assay - The Australian - Kevin Andrusiak

    Bit muddy at midwest
    IF anyone thought that a generous 65 per cent rise in iron ore benchmark prices for 2008 would have purified the guff in the local mining industry, then you have been sorely mistaken.

    If anything, the waters are even muddier.

    Now, you can put it down to money, ego or access to resources, but whichever way you look, much of the local iron ore industry is in a tizz.

    Check out this little beauty of an announcement from Midwest Corp, the iron ore wannabe without access to much-needed infrastructure.

    “Sinosteel proposal undervalues Midwest” screamed the headline in a letter to shareholders.

    Hang on a second, what proposal? Surely you don't mean the incomplete, non-binding offer Sinosteel made late last year to buy the company out at $5.60 a share?

    That “offer” never got past first base. If you are more a fan of the local vernacular, the “offer” never got past the first tackle, or beat short extra cover.

    What Midwest aren't telling you is that Sinosteel were never even going to contemplate making a bid for the company since Murchison Metals let its scrip-bid for the company lapse on February 2.

    But the punters probably new that, given that Midwest shares never breached the $5.60 level and Midwest made sure that everyone knew there was a solid block of votes ready to kill off any takeover bid.

    And just to solidify the position, Midwest announced that Dato David Law - the man behind the second biggest shareholder in Midwest after Sinosteel - is now deputy chairman of the company, replacing Francis Ng, who now moves to an executive director post.

    Let's check out the Daily Assay Magic 8 Ball for an answer to the question of will Midwest ever get taken over.

    “It is doubtful,” was the response. The 8 Ball is rarely wrong.

    Yet, on the Murchison side of the ledger, groovy New York trader Philip A Falcone has moved his Harbinger vehicle to a near 19.9 per cent stake in the company.

    What Falcone is up to is anyone's guess. Remember, this is the guy who backed Fortescue Metals almost right from the start in what has become a billion-dollar bonanza for his funds management group.

    Could it be that Falcone & Co are long in Murchison and ready to hedge their bets that Murchison is a better horse to be on than Midwest (the two companies share twin projects in the emerging iron ore province of Western Australia’s mid-west)?

    Or is Falcone smart enough to know that his 19 per cent stake is worth more to someone else and is in there trying to build competitive tension?

    There's got to be some consolidation in the WA mid-west, everyone knows that.

    Maybe Midwest will turn the tables and make a bid for Murchison, courtesy of Harbinger vending in its 19 per cent stake.

    Maybe we should consult the Magic 8 Ball.

    The answer is ... “Not known at this point in time.”
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