Ann: Sampling Maps High Grade at Buena Vista, page-30

Ok i posted this before but will summarize again ,see below my back of the envelope valuations for MGU at various stages , they are my opinion only and not financial advice .

1. Scoping study or PFS complete with no finance and no offtakes , 10-20% of NPV ..
2. DFS or BFS with no finance or offtakes , 15-30% of NPV .
3. DFS or BFS with offtakes secured 20-40% of NPV .
4. DFS or BFS with offtakes and finance secured 35-50% of NPV .
5. DFS or BFS with offtakes , finance and in construction 50-75% of NPV .

So the big question is whats the NPV going to be for a 20 year mine life for PIG Iron ?? we ran the numbers last year and many came up with roughly 800 million to 1 billion NPV . If Magnum can produce 250,000 tones a year with a Pig Iron price of US$500 a ton and an operating cost of $300 a ton then that leaves us with US$200 a ton profit , at 250k tons a year that works out at US$50 million a year in profit or 1 billion over a 20 year mine life . Now im lowballing here and would like to assume that Magnum can produce a lot more per year with maybe a more attractive Opex and a more attractive Pig Iron price .
But its not hard to see that Magnum is very cheap for the progress they have made over the past year .

In the coming weeks Magnum should have a DFS out for Pig Iron , if that study can show a viable operation with an NPV of roughly US$800 million with no offtakes and no finance then i reckon MGU should be at least sitting at a market cap of roughly 15-30% of NPV or 120 to 240 million Market cap , which roughly translates to a share price between 15 -33 cents give or take .Its very hard to see the share price run that far just on he back of a positive DFS , i think cash in the bank is a concern for investors , but no matter what way you look at it , the company is a steal at these prices especially if they can produce a positive DFS for Pig Iron production , so run back into the teens is not out of the question .

In regards to near term cashflow via DSO we can look at the likes of FEX or GRR as examples .

GRR , they are shipping 2.5 million tons a year of high grade IO products ,GRR currently sitting at a market cap of AU$619 million .

FEX , they are shipping 1.3 million TPA of high grade DSO ,FEX market cap AU$ 180 million .

With offtakes and finance locked in for DSO Magnum should be at least 50-100 million market cap , Capex for a small start up operation could be under $10 million , pretty easy to finance if offtakes are locked in , thats if they cant get a prepayment from Mitsubishi .

Magnum should be shipping high grade DSO by this time next year and at that stage i would like to think that they at least have offtakes lined up for Pig iron , and finance and bigger US government grants should be in the works as well .
Magnum have a lot of irons in the fire currently , and at some point all of this will come together , my opinion is that the DFS for Pig Iron will be the key to unlocking offtakes , finance , larger US grants and a hell of a lot more interest from global funds and investors .
Its been a tough hold but we are on the cusp of some serious news flow , the next few weeks and months will be interesting .

All of the above is my opinion only , and please feel free to correct me on any mistakes or add to my musings .
GLTA.