Monday, October 22, 2007
Why Giralia Resources (GIR.AX) is the cheapest Iron Ore play in the market.
Giralia owns tenements in the Weld Range. This is the same part of town as MidWest (MIS.AX) and Murchison Metals (MMX.AX) and not too far from that other little Iron Ore stock, Fortescue (FMG.AX). Initial drilling has outlined grades in excess of 65%, this compares with the other's who have prospective grades in the region of 60%. The big advantage here is that the more pure the iron ore, the less you have to do it before you ship it. For GIR it's just a case of dig it up and ship it out. At $1 a share, GIR has a market cap of around $200m, and on a resource base of more than 100m tonnes (estimate), this is undervalued by about 4 times. The ongoing consolidation and interest from offshore investors (Russia, China, etc) means that this is one stock that is cheap at twice the price. This stock will be dragged along by the pedigree of it's neighbours.