Seeking Alpha: Mount Gibson Iron Still Needs To Buy Its Future

I wasn't overly fond of Mount Gibson Iron (OTC:MTGRF) back in January of this year, as I wasn't enamored of the company's production outlook, its corporate governance, or the need to redeploy cash on the balance sheet to improve its mining assets. The shares have underperformed Fortescue Metals (OTCQX:FSUGY) since then (by around 10%), and while I do think Mount Gibson could better withstand further weakness in iron ore prices (and deploy its capital to add reserves/resources), I'm not as bullish on the shares.

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Mount Gibson Iron Still Needs To Buy Its Future

Seeking Alpha: Mount Gibson Iron Offers A Curious Twist On The Mining Sector

Australia's Mount Gibson Iron (OTC:MTGRF) (MGX.AX) offers investors a curious twist on the prevailing story among junior miners today. Instead of being a mining company with an attractive portfolio of prospective mining assets but insufficient capital and liquidity, Mount Gibson is long on capital and cash but short on mining properties. The extent to which Mount Gibson can add economical reserves at its existing facilities and/or deploy its cash to acquire shovel-ready projects has everything to do with the value of these shares.

I have some concerns about Mount Gibson, and it's not my first pick in the mining sector. I do believe the shares are a little undervalued today, and I do acknowledge the potential of the company's NAV heading higher if the company announces good news in exploration or value-adding deals. Compared to more established miners like Fortescue (OTCQX:FSUGY), Rio Tinto (RIO), and Vale (VALE), though, I don't find the value proposition to be compelling enough for my own funds.

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Mount Gibson Iron Offers A Curious Twist On The Mining Sector