Ann: High Grade Ore Sales Commenced from Koolan Island, page-180

MGX has a single mine, with a 5 year life. MGX's share price might therefore be expected to resemble the likely cash generated by this mine over the next 5 years, less a discount for the time value of money. Yes, if today's ore price prevailed for 5 years, MGX would be monumentally undervalued. However, 5 years is a LONG time, and iron ore is at the highest price in 6-odd years. The likely direction of travel from here is down, at least in the medium term.

Another reason for a discount to this valuation, particularly relative to peers, is that MGX has only one operating mine. Another sea wall problem, or a bad tropical storm, and poof, back to 18 cents.

That said, iron ore is still tracking steadily upwards and the outlook seems fairly robust at least in the short term, the AUD/USD is low and probably heading lower, and MGX has strong record of careful management. I could certainly see the price climbing. Of course, every time a ship leaves, more cash is banked at these excellent prices and exchange rates, and less risk remains on the table to be subject to tomorrow's market conditions.

With every passing day, MGX mines less waste and more ore, and its cash costs fall. The longer the IO price and AUD/USD rates remain favourable, the more money they are going to be making.

There is arguably also some potential upside from whatever MGX may do next. It's very creditable that MGX spent four years NOT SPENDING their huge cash pile. They must have been tempted. Management is careful. They must get opportunities to acquire stuff all the time. My guess is that when it happens, it will be a good one.