2. Union Resources (UCL.ASX) - The company has a 45% share in an offshore phosphate resource in Namibia. Its JV partner failed to takeover UCL, and now UCL is undertaking a takeover of Minemakers (MAK.ASX). Personally, I would prefer not to see UCL add a premium for MAK's Queensland phosphate resource because its located in an isolated region. The best course of action would be a in-species listing of their respective Namibian phosphate asset, or better still a buy-in by a major investor. This latter option strikes me as the most likely prospect. UCL has the best looking balance sheet; most particularly because it retains any upside from the Iranian Mehiabhad lead-zinc project, which has immense value...if they are able to avoid nationalisation by the Iranian government. This project probably has a NPV of $300-500mil, depending on the scale of the project and prices. The implication is that UCL is well-positioned. It has cash reserves of $2.8mil and 95mil shares in issue at 16c. This company is likely to be a long-life phosphate producer. Expect a takeover or scheme of arrangement to greatly add value to UCL, and MAK as well.
3. Metals Ex Ltd (MLX.ASX): This is a company that I have liked for some time, particularly for its nickel exposure. Tin prices buoyant, so its appealing that this company produces 2.5% of the world's tin supply, and is expanding production and reducing costs. Fortunately a tight tin market heralds well for this project, however one must acknowledge that the profit margins are thin, and the global resource grade of 0.8% is way below the current mining grade of 1.48%Sn. The more significant issue is the prospect of developing its nickel project, one of the largest undeveloped nickel resources in the world. Nickel is an important alloy in stainless steel, and given the huge market for stainless steel, as well as the life of building facades, expect this to underpin projects like this. I expect this company to make substantial returns from its nickel project. The company is in the process of merging with Westgold, which has the potential to contribute 200,000oz/year of gold production. MLX also has $105mil of investments and cash. I'm expecting a recovery in gold prices due to the very low interest rate environment and perhaps modest inflation.