Good morning miningnut,Yes, buying another operation can be...

Good morning miningnut,

Yes, buying another operation can be fraught with danger.

However, MGX has a lot of mining experience and have already stated many times that they will stick with what they know best, that being bulk minerals.

Some possible scenarios . . .

1. MGX has been keeping a very close eye on 5 or 6 operations for quite a few years and have had a small investment in each for a number of years.

2. MGX has also been actively resource drilling Butcher's Track at Tallering Peak. (Tallering Peak was MGX's first adventure into mining). There are a number of tenaments in the Tallering Peak area that have been reporting good drill results, not just iron ore but several other minerals.

3. Koolan South (800 metres across the water on the mainland), has had some initial exploration.

4. Possibly a contributing reason for MGX being slow to convert resource to reserve on Koolan is to take advantage of the "officially stated ore reserve", in that it allows faster depreciation on capital expenditure, resulting in a faster cash build . . . Peter Kerr has stated fast cash build is the priority.

Peter has used the word "incrimental" regarding ore reserve. Building the reserve in incriments can translate to faster depreciation of capital expenditure.

Faster depreciation recoups capital expenditure faster. A dollar today is worth more than a dollar some years in the future. The ATO gives no compensation for loss of value for future dollars.

By stating an "officially stated" low reserve can assist MGX to recoup capital expenditure faster.

So it is quite possible Koolan will be operational longer than the "3 to 4 years" that Peter stated in his recent audio.

5. Being cashed up puts MGX in the hot seat for when the situation arises of good companies going for attractively low prices, which in the volatile bulk minerals commodites business happens in frequent cycles.

6. The contolling shareholders have a proven history of supporting MGX's successful expansion and profitable aquisitions of several mines over the last two decades.