The report is 40 pages, so here is the first page. Hope that...

The report is 40 pages, so here is the first page. Hope that helps.


Due Diligence and Valuation Report
Arrowhead Code: 14-06-01 Company: Magnum Mining and Exploration Ltd.
Coverage initiated: October 25, 2023 Ticker: MGU
This document: October 25, 2023

Headquarters: Subiaco, Australia Fair share value bracket: AUD 0.21 – AUD 0.30

Share price (October 25, 2023): 0.022
i Executive Director: Mr. Athan Lekkas
Analysts CEO: Mr. Neil Goodman
Ayushi Saraswat Sumit Wadhwa Website: www.mmel.com.au
[email protected] [email protected]
Market Dataii
52-Week Range: AUD 0.015 – 0.06
Average Daily Volume (3M Avg.): 4,607,611
Market Cap (October 25, 2023): AUD 17.7 million (mn)

Company Overview: Magnum Mining and Exploration
Limited (ASX: MGU) is an Australia-based company that
specializes in the production of iron ore concentrate and
green pig iron. The company has two key projects: the
Buena Vista Magnetite Iron Ore Project, its flagship
development located in Nevada, US; and the acquired
Appalachian Iron Hlsmelt Pig Iron Project in West Virginia.
Magnum's Buena Vista Project is an advanced magnetite
iron ore development with over AUD 34.0 mn allocated for
completing the feasibility studies. The project is set to
produce a highly sought +67.5% Fe magnetite concentrate
for export, representing a significant value-addition
opportunity. With the US poised for a considerable
infrastructure boom, Magnum is redirecting its
development focus to take full advantage of the demand
for high-quality iron products. The Buena Vista Project is
strategically positioned to become the cornerstone of a
major steel production complex, given its exceptional ore
characteristics and proximity to key logistics, including gas,
solar power and existing road and rail transport. Moreover,
as a part of the project’s advancement, the company has
secured a key land package at Huxley and Colado. With a
firm commitment to sustainable growth, Magnum is
confident in the Buena Vista Project's vast potential to drive
long-term shareholder value. With the Appalachian Iron
Project, MGU is on track to becoming a leader in the
production of green pig iron in the US. By leveraging the
acquired expertise and know-how on the Hlsmelt process,
MGU is poised to meet rising demand for pig iron. It is
expected to produce 1.3 mn tonnes per annum (Mtpa) of
pig iron in the Ohio Valley, using locally sourced, low-cost
raw materials. This should enable MGU to offer the lowestcost pig iron in the US market.
The company is listed on the Australian Securities
Exchange and has commenced work for obtaining a second
listing on the US stock exchanges.
Key Highlights: (1) Magnum refreshed its mineral
resource estimate (MRE) in FY 2021, increasing its
resource base to 232 Mt @ 18.6% Fe and 22.6% Davis
Tube Recovery (DTR) from 178 mn tonnes at 18.9% iron
and 20.8% DTR reported in the previous MRE; (2) An
exploration target of c. 407 – 540 Mt @ 15 – 22% Fe has
been estimated for Buena Vista magnetite iron ore; (3)
Magnum is targeting a 2.4 Mtpa direct reduced iron (DRI)
magnetite concentrate production rate over an initial
mine life of 25 years, of which production of 0.8 Mtpa is
expected to commence over the next 18 months (Q1
2025); (4) The company recently raised AUD 2.65 mn to
accelerate the development of the Buena Vista Iron
Project and fund its working capital requirements; (5)
Magnum has signed a non-binding MoU with Anglo
American and Mitsubishi Corporation RtM International
Pte. Ltd, covering the offtake of all commercial iron ore
products from the Buena Vista Iron Project. It has also
formed a strategic alliance with the Middle East for
Metallic Industrial (Midmetal) to develop the proposed
magnetite mine and processing plant at the Buena Vista,
and a green pig iron plant in Saudi Arabia; (6) MGU also
signed an MoU with Renex Group Pty Ltd for the supply
of biochar to the pig iron facility in the US, which will allow
it to produce green and net-zero carbon pig iron; (7)
Magnum has entered into a nonbinding MoU with LevinRichmond Terminal Corp. to use its existing rail and
stockpile facilities to service its DRI grade magnetite
export requirements; (8) Mr. Neil Goodman, CEO of
MGU, has 40+ years of experience in the designing and
operation of ironmaking plants worldwide, including the
development of the Hlsmelt process.
Key Risks: (a) Buena Vista project’s profitability
depends mainly on the price of DRI grade iron ore. Any
prolonged and unfavorable iron ore price movements
could materially reduce cash generation from the project;
(b) Any difficulties in raising adequate funds could delay
the project’s commercialization.
Valuation and Assumptions: Based on our due
diligence and valuation estimates, Arrowhead believes
the MGU’s fair market value per share is AUD 0.21 to AUD
0.30, derived using Relative Valuation methodology.