My research on MLX:Current price 42.5 cents. 980,255,380...

My research on MLX:

Current price 42.5 cents.
980,255,380 ordinary shares on issue
143M cheap options on issue
Market cap including options = $477M
Cash on bank = $33M
Accumulated losses = $50M
Equity = $168M

17 October 2007
Renison to re-open as a Tin & Copper Producer
The Renison Project (excluding the fuming project) is expected to produce approximately 8,500 tonnes of tin metal per annum with a blended feedstock from both underground mining at Renison and open pit mining at Mt Bischoff. It expects to resume tin production after
commissioning of the process plant in mid 2008.

Current tin price = US$7.80lb or AUS$18,700 per tonne = annual revenue to MLX of AUS$160M plus copper credits.

Annual report says: A detailed operating plan for the first three years of production after re-start has been generated and it is expected the project will operate at an average production rate of 8,000 tonnes of tin metal per annum with cash operating costs below A$10,000 per tonne.

Therefore the operating profit from the Renison tin will be $70M to $75M or $50M NPAT or 4.5 cents EPS.

Current operations are not profitable, which will diminish the EPS.

Also, regarding Rentails Project, Metals X is still determining the expected copper recoveries, but for guidance, if 25% recovery of the copper can be achieved, co-product profit of $10M per annum ($5/t) would be achieved or 1 cents EPS.

Wingellina project will not produce until 2012 if lucky and require $1 billion capex.

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At current nickel prices, AGM will earn around 20 cents EPS, making the share price worth $1.20 to $1.60.

For MLX to earn 20 cents EPS, they will have to make a NPAT of $200M, which is impossible.

If MLX can manage 6 cents EPS, at most that is worth 50 cents a share.

The question arises: Is Wingellina non-producing, as a resource only, worth 70 cents a share, so MLX can acheive share price parity with AGM?

The obvious answer is "No", because if Wingellina was worth 70 cents a share or $700M as resource only, then the current MLX share price would be at least 70 cents.

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Conclusion: MLX/AGM merger is bad news for AGM shareholders and will dilute earnings greatly.