Mineral Deposits Limited (ASX:MDL)

MDL Details

Eighth supplementary bidder’s statement- Mineral Deposits Limited is a mining company engaged in the business of mining, integrating and transforming mineral sands resources. The Company is a mineral sands producer through its equity interest in TiZir Limited (TiZir). The TiZir joint venture consists of two integrated, operating assets: the Grande Cote mineral sands operation (GCO) in Senegal, West Africa and the TiZir Titanium and Iron ilmenite upgrading facility (TTI) in Tyssedal, Norway.Recently,acopy of the eighth supplementary bidder’s statement (issued by ERAMET SA) was lodged with ASIC and sent to Mineral Deposits Limited. As per the latest document, the offer price of A$1.75 per MDL Share is last and final, and it will therefore not be increased, in the absence of any alternative or competing for proposal in relation to MDL or TiZir. Meanwhile, ERAMET SA changed its substantial holding on 6 July 2018 from 39.14 per cent to 40.40 per cent voting power.


Trading multiples at Eramet’s earlier offer price (Source: Company Reports)

It is worth noting that MDL has not reported an annual net profit for more than five years now and has also not paid a dividend since it commenced trading as MDL on the ASX in 1999. ERAMET has attempted to justify the offer by criticising the Independent Expert and other industry specialists engaged by MDL to assist its shareholders in evaluating the Offer. Since opening its Offer on 14 May 2018, Eramet has increased its interest in MDL by only 20,895 shares (representing 0.01% of MDL shares on issue). The Group’s decision to sell a small part of its holding was a portfolio management decision and the offer was substantially below replacement cost of the joint venture's capital equipment.
ROE moved from (5.1 per cent) in June 2017 to (2.9 per cent) in December 2017 and Current Ratio moved from 11.37 in June 2017 to 7.59 in December 2017. MDL relies on forecast mineral sands prices which are inherently volatile and unpredictable. It is trading near its 52-week high price that is $1.83. The stock price has been rising since one year (up by 123.72 per cent as on 6 July 2018). It is better to take profits on the stock while it trades at the current market price of $1.75.
 

MDL Daily Chart (Source: Thomson Reuters)

 
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