Ann: FY2024 Appendix 4E and Statutory Financials, page-2

IMO this is a pretty sad report. My take is that despite managements 'intent' to restore market cap to something at least greater than cash holding, this report looks like a deliberate attempt to weigh even further. A couple of observations:

1. The recently announced business interruption amount has not been recognised in any form, yet indirectly, the costs have. If it had been recognised, net profit after tax would have been A$27m brighter.

2. Deep in the notes is an amazing calculation of the fair value of Koolan Island.(see note 18-19). The composition post write down is Deferred stripping (A$41m), Mine properties (A$40m). At face value I would have thought the Koolan mines 2.5 years cash flow would amount to a tad more than $40m given it generated operating cash flows in FY2024 at around A$328m ... hmmm. But alas, I doubt this will be the first time an accountant has published something 'silly'.

3.The impairment note is based on forward cash flows and values Koolan Island CGI (cash generating unit) at A$130m. Given the design of the note, the CGU embraces Deferred stripping costs; other mines and PPE (circa A$106M). However, the calculation would seem to ignore the rehabilitation provision effectively netting that book value a further A$54m. Short version : the impairment adjustment looks to be about A#30m overdone, in which case net progfit after tax should have been a further A$30m brighter ... at least!

4. Lastly, per note 19, a dour forward Fe market is expected US$108/t (2024) -> US$99/t (2027). And the masters have overlaid a AUDUSD rate 0.68 -> 0.69. I think it can be shown that the strength of the Aussie is much aligned to the price of Fe so that an increase in FX does not necessarily align with a fall in Fe prices. As shown FX adjusts the derived value by around A$6m per 100 basis points. To be clear, if they used 67 rather than 68 (difference 100 basis points), then the value would have been A$6m higher. If they use an exchange rate of 65, then the value of A$130m is roughly understated by about A$18m.

Short summary: MGX book value underdone by around:
Insurance recovery A$27m
Overdone impairment A$30m
Miserable FX assumptions A$18M
-------
A$75m

And all that without grabbing a calculator!!

Sad indictment of the management team me thinks

Have a great day!