Having exited Union Resources (UCL.ASX) some weeks ago I re-entered the stock today. They are back to their issue price. I suggest they will not stay at this price very long for the simple reason:
1. The company will be making good progress on its feasibility study
2. There is the prospect of news related to those studies, including costings
3. The issue was only a 1:10 issue, so there is not going to be much dilution. For this reason, I don't see them going back to 1c. They touched 1.2c today, and that I think will be their support.
4. Fertilisers is a food-related business, so I expect some good news there.
5. Morocco which is experiencing some political unease along with the rest of North Africa is the largest supplier of phosphate. It will be interesting to see if that becomes a value proposition. Perhaps not. Though I do think UCL/MAKs JV in Namibia would have to be the most compelling exposure to the phosphate market. There is plenty of experience in this reason dredging the seafloor for diamonds, so I look forward to the feasibility study. The upside in food (i.e. commodity) prices can only make this project more appealing....particular given the environmental disaster in the USA precipitated by uninformed, emotive environmental groups who have caused food stocks to go into fuel production. People are starving because of environmentalists.
I expected the stock to fall back to this price level, so having reached my target price, once again I see myself trading into this stock.
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