400m nett profit this year pe 4.5

Broker concenious of about $360m this year......or PE of about 5.5

I think MGX can easily beat "the street" and deliver closer to $440m. Brokers missed the fact that 1.8mt of high grade Tallering Peak mostly lump... has been mined , processed and stockpiled for shipping. (All payed for last year)

1.8mt with the weaker aussie dollar....well that about $260m worth just sitting there....ie 62% FE lump @ A$220 per tonne - fines A$160 per tonne etc.

Geraldton new berth 5 commissioned in June 08 and MGX increased rail capacilty with delivery of new wagons several weeks ago.

They will sell close to 7 mt this year......compare that to 5.5 mt last year on revenues of $409m. (profit $113m )
Because of 85% price rise and additional production revenues will increase by an extra $500m.

Most of this $500m, because of the price rise (less tax )and sell down of stockpile, will kick straight to the bottom line as profit.

MGX has capitalised $500m of waste and premining stripping. This amount has to be written off over the 6 year mine life. Means nearly $100m a year can be deducted from profit.....increases surplus cash, but reduces profits. Much prefer the former.....this company is going to be a very high cash generator.

To capture the writedown over a 6 year term at Tallering Peak and Mt Gibson...we may not get any resource increases. I can assure you though, their is alot more iron ore at Tallering Peak than on their current reserve list.

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MOUNT GIBSON SEEKS MAGNETITE CONTRACTS - 31 October 2003

In a sign of a super-heated iron ore market, junior Mount Gibson Iron is negotiating development of magnetite resources in the Midwest region of Western Australia.

By establishing relations with new pellet producers in selected regions of China with restricted availability of locally produced magnetite concentrate or pellets, Mount Gibson hopes to achieve long term sales contracts with prices which will justify mine developments.

In addition to magnetite resources at Tallering Peak, which were reported to be 47.7Mt by previous owners Kingstream Steel, and at Mt Gibson, which has reserves of 180Mt, Mount Gibson has recently reached agreement to develop deposits at Koolanooka South, which are currently held by a private prospecting group.

The 1000 ha of Exploration Licenses at Koolanooka South cover iron mineralisation adjacent to the old Koolanooka hematite mine, which was operated by Western Mining Corporation between 1966 and 1972. Magnetite bearing iron mineralisation occurs here over a 4km strike length, either outcropping or occurring at shallow depth.

Mount Gibson will commence exploration of Tallering Peak and Koolanooka South magnetite resources next month, with the ultimate aim of developing mines producing 1.0Mtpa and 1.5Mtpa of magnetite concentrate respectively.

The Tallering Peak magnetite project will benefit from the infrastructure now in place for Mount Gibson's hematite mine at the same location, and the Koolanooka South project will benefit from an anticipated low stripping ratio, and its location 12km east of a 200km rail link to the port of Geraldton.

Mr Johnson said that the Tallering Peak and Koolanooka South magnetite resources will require further drilling and metallurgical test work before reserves can be delineated and a decision made on their development.

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With the base metals rout...and aussie coal mining companies on high forward PE's, there is just no other local mining company, like this stock.

Standout.