I was able to sell 50% of my UCL two weeks ago at 1-1.2c, and topped back up at 0.8c. I was hoping to buy some more actually, but I found another great stock, so I will tell you about that one after I get some. I think UCL has a great deal of upside. There are several things which could happen:
1. Minemakers makes a takeover for Union Resources
2. Simultaneously someone makes a takeover for Minemakers to secure 90% of the Namibian phosphate project
BHP's tilt at Potash Corp and Vale S.A.'s acquisition of potash assets in Brazil highlights some interest by the majors in fertilisers. Understandably, they see an opportunity to consolidate their market power in this industry. Look at the dynamics:
1. Morocco currently produces 80% of global seaborne phosphate trade.
2. Union/Minemakers project has the potential to be the 2nd lowest cost producers after the Moroccans.
Personally, I agree with Mathew Kidd at Wilson Asset Management (WAM), that BHP should just buy-back shares. These companies have reached a size where there is simply no upside, or no capacity to get ahead of the market. Don't you buy stocks to out-perform the market? So where is the ability to do that if you have acquired the market. Even the ability to extort some market price advantage is lost on the fact that you are so big that any market you buy into fails to deliver much upside. You are better off just buying back your own stock...at least for the sake of the market. I think these CEOs are in such a 'pattern of behaviour' they fail to realise this.
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Andrew Sheldon www.sheldonthinks.com
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