Ann: 2020 Annual Report, page-2

Annual Reports are wonderful documents for those interested, and bothered, to read & review them. So many juicy tidbits that most shareholders will simply skip over, or ignore completely.

For those obsessing over charts and wondering why MGX isn't over a $1, i'd suggest a simple read of this Annual Report, and less staring at charts.

For those who KNOW and understand MGX, KI is the main game. And in this regard, the following extract from the Annual Report explains perfectly why MGX's share price is where it is and why it will not raise substantially until next year, all things being equal.

I would therefore suggest that those interested read and adsorb what MGX are saying themselves, in the following paragraphs from the AR. I've even bolded a few lines for emphasis.......

"At Koolan Island, the focus is on increased mining movements to substantially complete the planned open pit waste stripping phase over the next 12-18 months, to enable significantly increased ore shipment levels from next financial year onwards. Total mining volumes in 2020/21 are targeted to increase by approximately 50% (with a waste to ore strip ratio of ~9.4x) compared with the 2019/20 year, and unit mining and administration costs, including all logistics and sustaining capital expenditure, are targeted to reduce to around $9 per tonne of material (ore or waste) moved. Reported cash costs per tonne of ore sold will necessarily remain at elevated levels over the year due to the elevated strip ratio and the lower ore production during this waste stripping phase. Ore sales will vary from quarter to quarter, with the site targeting 2-3 shipments per month. Shipments are weighted towards the second half of the financial year, with sales for the December 2020 quarter expected to be lowest as the waste movement cycle reaches its peak.

Koolan Island is expected to contribute 1.8-2.1 Mwmt of high grade iron ore fines sales in the year, with site operating cash costs expected to average $60-65/wmt FOB before advanced waste stripping investment of approximately $100 million and other Koolan capital improvement projects of approximately $20 million. These projects include an upgrade of the existing crushing plant to modernise aged components and ensure it will be capable of processing the significantly increased ore throughout expected to occur from next financial year onwards.

In accordance with the Koolan life-of-mine plan, Mount Gibson originally anticipated that the waste stripping investment in the next year would not result in a positive cashflow for the 2020/21 financial year. However, net cashflow from Koolan this year will likely be modestly positive at prevailing iron ore prices. Following this investment, the operation will see substantial increases in production, sales and cashflow generation from next financial year onwards, in line with the life-of-mine plan."


MGX is a great investment for those who are patient and prepared to understand the companies plans.

Oh, and for those interested, it appears from the AR that the company continues to assess acquisition options, and has clearly spent funds this past year considering some. However, clearly, no decisions have been made in this regard.

Your welcome - have a great weekend!!