why low price, page-26

An obvious guide to the companies future earnings comes from Dec 2010 half year results. MGX sold 3.3mt of iron ore for $140m NPAT...for that 6 month period.

Based on their guidance for ramped up production of 10 mtpa from Dec quarter this year - and increased pricing, $450m NPAT would be a some guide.

MGX has a enterprise value (market cap minus their $400m cash )of $1.5b...so they may be on a PE ratio of about 4.

Other key points for embedded value within the company ...is the fact, (and shown in the Dec 2010 quarterly report fine print)......they have stockpiled 2mt of iron ore at Tallering Peak.

$250m worth.....Mining, crushing, grinding overburden - all done, paid for - significant when the WHOLE company is only worth $1.5b

also
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For three years the company have spoken about the potential for a major new iron ore deposit on the western side of Koolan Island.

Finally after all that time, drilling commences next month. See the story below....exploration success could see short term increases in production from their existing Island port and associated insfracture

.....these drilling results can be an obvious big share price driver, which maybe overlooked by investors just weeks out from the exploration program.....eg What if a large discovery meant they were able to double exports from Kooland.
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Sept 2010 quarterly report

A mapping program was undertaken over the western end of Koolan Island on Exploration Licence E04/1266, an area inaccessible until earlier this year.

The entire western end is composed of Yampi Formation which also hosts the existing orebodies on Koolan Island, with a large and varying abundance of interbedded hematitic sandstone.

Some high grade hematitic sandstone beds outcrop over many hundreds of metres of strike length and up to 10 metres thick (figure 18).

Some are highly siliceous and outcrop strongly while others are friable and comparatively recessive. Limited rock chip samples were collected with the best result of 67.3% Fe.

The main fold axes, in particular the Mullet-Acacia antiform (figure 19), were traced for over four kilometers to the western end of the island.

A drilling program of over thirty exploration holes has now been defined and approval to commence drilling is being sought from the Department of Mines and Petroleum.