up 55 per cent, page-17

SHARKIE,

RE: MGX

I also was an observer of mgx and was seriously tempted at 40c. But fortunately I decided to stay on the sidelines.

MGX has serious problems, not the least being board room and managerial incompetence. They hedged the $ at 88c for 55% of their production and that will cost them so much that 1 of 2 things will now happen:
Either:
1. They succeed in their proposal to raise capital by selling stock at 60c. This proposal seems fraught with danger as it further dilutes current s/h value. But also the last trade of mgx was about 40c so how they are going to sell the 60c formula is a mystery to me. Looks to me like the desperation of incompetence. This is not a market to be trying to raise capital, particularly at a 50% premium to the last trade.
OR
2. Sell assets. That would be most painful.

However, MGX has cash, which unfortunately will all get flushed up against the wall by the genius who hedged the $.

I think mgx is in for a spot of trouble. In other words the company seems very week and probably vulnerable to take over at a bargain basement price.

Of course the other problem is they lost their customers. That might soon be fixed. But don't hold your breath.

If MGX comes back on the market with no new customers ready and willing to buy the ore immediately, then MGX sp could fall further, (perhaps 20c) at which time I might buy in. New customers are hard to find in this market.

By the way the current shanghai spot price is US$65 cnf. At this price and with their hedge in place, MGX might have to simply close the mines. After mining, overland transport, insurance & shipping freight there is not much left over for the miner.

Not a pretty picture.