MDX 0.00% 0.3¢ mindax limited

young traders updated mdx research

  1. 9,188 Posts.
    Just got this off ASF. Newbies should see that YT kicked the ball rolling with this a few weeks ago and even last oct/november. His research is always excellent.

    Since then, shares have moved from 10cents to 30cents (300%) and options 2 cents to 10cents (500%).

    Not too shabby if i say so myself.


    So lets stick to the fundamentals, and their clearly outline below for all to see.


    Here is the new report he has put out today:


    http://www.aussiestockforums.com/forums/showthread.php?t=6137&page=15


    Today, 01:10 PM
    YOUNG_TRADER's Avatar
    YOUNG_TRADER YOUNG_TRADER is online now

    Join Date: Feb 2006
    Posts: 3,166
    Default Re: MDX - Mindax
    Quote:
    Originally Posted by YOUNG_TRADER View Post
    Well in hind sight it looks like this was the case,

    I now have no doubt that Red Rock have found something of great interest that most likely extends/continues into MDX's Mt Alfred tenements, why else would Red Rock spend their money buying 7.5m MDX shares?

    To me this validates and somewhat inhances the prospects of MDX's target claims, ie Red Rock believes it

    Now its hard to put a value on this as it is an exploration target, but considering MDX's closest comparative peer is FDL a comparison can me made between the two

    FDL


    Mkt Structure

    Shares
    950m + 380m 10c options


    Mkt Cap @1c = $9.5m Pre estimate
    Mkt Cap @15c = $200m Max
    Mkt Cap @10c = $135m Current


    Cash $6m + $8m in listed investments


    Projects

    Hamersley Project Iron Ore Hematite, 100%, Pilbara W.A.

    This project is next door to FMG's huge discovery and thus nearolgoy and continuation of FMG's deposit is playing an important role in validating the target size of FDL's project

    They estimate 325Mt's - 390Mt's @ 56% = 180Mt's - 220Mt's Iron Ore

    Given the current Mkt Cap of minimum $135m, the EV being used is 60c - 70c per target tonne of Iron ore resource



    MDX


    Mkt Structure

    Shares
    85m + 40m 20c 30th June 08 options


    Mkt Cap @12c = $10m Pre estimate
    Mkt Cap @45c = $50m Target lower
    Mkt Cap @70c = $70m Target upper


    Cash $3.5m + $7m if options exercised



    Projects

    Mt Alfred Iron Ore Hematite + Magnetite, 100%, Mid West W.A.

    A target of 650Mt's-750Mts @ 57%-63%Fe = 370Mt's DSO - 470Mt's DSO Hematite in Ground Value @ $100/t = $37Billion - $47Billion

    Valuation method 1
    Now this is an exploration target so the instead of using the usual rule of 10% of I.G.V. we should be conservative and use 1% of I.G.V.

    1% In Grond Value of TARGET = $370m - $470m = $3 - $5 depending on option conversion future raising etc, now this figure is ridiculous given the current share price so lets be ultra conservative and attribute 0.2% chance of success ie a 1 in 50,000 chance of success

    So attributing a 0.2% value for the In Ground Value of the target we get = $74m - $94m = 60c - 80c



    Valuation method 2
    Another way of possibly valuing this target is to use an EV, most Iron Ore companies trade on at least an EV of $10/t now, using the 370Mt's DSO - 470Mt's DSO Hematite target, an EV if it were JORC'd would be = $3.7Billion - $4.7Billion

    Again ridicilous figures, but given the risk if we only allow a 5% chance of success for a JORC = $185m - $235m = $1.55 - $1.95


    Valuation method 3
    A valutaion based on FDL's mkt cap,

    Per my above FDL related calculations I showed that FDL was trading on an EV of 60c - 70c per target tonne of Iron ore resource

    Applying this to MDX we get = $220m - $330m = $1.85 - $2.75



    Prefered Valuation method DISCOUNTED FDL comparison

    Now given the superiority of FDL's target claim base on the fact that they have

    1. FMG as the next door operator which provides potential offtake/infrastructure etc etc

    2. FMG has already delienated a massive JORC on adjoining tenements which validates FDL's target

    I would say MDX should trade at an EV = to 1/4 that of FDL's, ie discounted by 50% for each of FDL's superiorities

    So 1/4 FDL's EV = $55m - $83m = 45c - 70c



    Conclusions

    First and foremost it must be remembered that MDX have only stated an exploration target, a target which is based on geological surveys, geological mapping and rock chip samples, for such target to be converted to a JORC compliant resource alot of drilling is required to be completed

    That being said the company have been working away at Mt Alfred since November and are confident of achieving an intial DSO 90Mt- 100Mt Hematite resource by June/July,

    Moreover the buying of shares by RedRock who control nearby ground suggests that they may have found something which crosses over into MDX's grounds

    Finally all of the above calculations are a guide really and nothing more, when FDL announced its Iron ore target I thought wow this is going to run and bought heaps up to 3c which I sold about an hour later when it hit my intial conservative estimates of 4c-6c, it closed the day at 10c and opened the following day at 15c, so I guess my point is the mkt will put its value on a company and no one else, moreover traders will most probably rule this stock for the early parts of next week so be prepared

    Either way I think MDX is surely in for some interesting times

    p.s. please check my figures
    I have dug up the rough research I put up on MDX after the ann regarding the Fe target was released so all ASF'ers can see

    I think the stock has done incredibly well given the trying mkt conditions we're experiencing with the stock now up 250% and the options 500% in little over a week

    It should be noted that the above analysis constitues my thoughts and opinions only and thus are not 100% certainties, moreover as I have continually stressed MDX has a target alot of drilling (about to commence) is required to convert the target into the JORC

    Cheers and good luck to all holders

    p.s. It appears we know have 2 groups buying into MDX, Red Rock and this Andrew Tsang fellow
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    Note: I am not a Financial Adviser, nor are any of my posts intended to be financial advice, they merely express my own opinions
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