MGT (ASX) MGT General and Off Topic Chat

Originally posted by Realinvestor1: ↑

I have been reading few non sense posts about the high cost of producing magnetite and MGT will be one of the highest cost producer. I laugh and laugh and feel sorry for those people with such a poor knowledge about cost, revenue, profit, IO grade etc. Their posts are so ridiculous and ill informed. No wonder the stock market is so irrational lately as all these kinds of people are in the market buying shares. I give you a comparison of cost between FMG and MGT. Note this is relative comparison based on the grade. FMG’s cost is for DSO ore.

From the 2020 FMG annual report (all numbers in USD).
Average price of 62%fe $93
Average price realised $79
Average IO grade 58% fe.
Premium per fe% (93-79)/4 = $3.5

MGT minimum grade 67.5% fe.
Premium price over FMG’s 58% DFO (9.5 x $3.5) = $33.25

FMG all in operating cost $25
MGT all in cost ($55+ 2.38 royalty) = $57.38. Royalty is 2% for the 1st 5 years.
58% fe Equivalent cost of MGT ($57.38 - $33.25) = $24.13. So MGT is actually lower than FMG is relative terms.

These numbers are taken from FMG annual report 2020 and MGT PFS 2021.

So what does this mean?
MGT’s all in cost is on par with FMG taking into account the premium of higher grade product(Mark confirmed this in one of his interviews before the PFS). MGT costs doesn’t include potential saving from NextOre technology. So it will actually be a lot lower than FMG cost. FMG reported $12.94 as its C1 cost in big bold letter but that didn’t include freight and royalty so the actual cost is nearly double that.
In terms of actual margin per ton, MGT actually could be better.

So the question is why FMG is so profitable but MGT’s estimated profit so low in comparison? The answer is simple, it’s the quantity. FMG shipped 178.2 million tons in 2020. MGT planning to ship 2.7 million tons. The more quantity you sell, the more profit you make.

I won’t be surprised if I see some dumbs comments saying there is no comparison between FMG and MGT because I have seen more stupid comments than that.

So guys relax. MGT is not going to be high cost producers but will be one in the lower end of the cost curve. What we need is to ramp up the production level. Just doubling the current production level to 6 million tons with additional 90% in Capex will increase the after tax project NPV to A$4 bil at US$110 62% fe reference price.

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”People” have also been banging on about the economics of the project don’t stack up, with a min profit the company quoted it’s clearly obvious these “people” are don’t understand what they are talking about.

They are also not taking into the socio economic effects that will flow on from the mine and this is something that both state & federal governments will look at, especially in a time where they are looking to drive jobs and our economy.

Any government that invests in this project not only gets loan repayments & royalties they get income tax, profit tax, gst , from not only the mine but all of the other surrounding businesses, workers and communities that will be required to support the mine along with the associated jobs boost all of this will bring.

Originally posted by Puddle pirate: ↑

Hey RI, my post might have missed the mark slightly.

I also 100% agree with your cost breakdown calculations that we will be on par and possibly eventually lower with the big end of town. It was meant to be more pointing too the issue that people appear to be banging on about atm, rising the funds ($600M) to breath life into our beast & the apparent lack of suitably MASSIVE profit. There’s been plenty of “social commentators” claiming it’ll be nigh on impossible to raise. Which I don’t believe as I’ve seen far far more money stumped up for other major projects I’ve worked on with much shorter life expectancies & in far more difficult environments with absolutely zero infrastructure.

However with more and more countries pushing towards a cleaner greener future, I believe a company like ours with the product we have, with the greener SA power supply & the environmental low strip approach that they have selected & our location will make our product a very very attractive option both financially (Cheaper to refine) & environmentally for a long time to come.

My question regarding cost was aimed at raising that initial funds to get us producing a far greener product or countries/companies/people etc just walking the trodden path of more of the same. I think whoever invests in this with us will also see this green environmentally friendlier side of our operations as it will become not only more financially attractive because of carbon pricing etc and also the public relations side of it because we all know companies love to be seen to doing the politically correct thing.

Yes mining isn’t seen as the greenest industry, however the product is required and will be for decades to come & whilst we cannot currently match the big players, who would you rather hitch your wagon too? A company that takes our approach or a company like that who’s dams collapsed killing hundreds & causes untold environmental damage?

IMO as pressures mount around the world for everyone to clean up their act we more and more become the better option & in the big scheme of things $600M is a drop in the ocean. Crap NSW is currently spending a min of $1B per WEEK in subsidies, so state and federal governments combined with investors can easily stump up the coin with the knowledge they will receive tidy returns for a looooooong time!

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Last 30.5¢		Change 0.010(3.39%)		Mkt cap ! $30.02M

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30.0¢	30.5¢	30.0¢	$30.23K	99.80K

MGT General and Off Topic Chat, page-1088

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MGT General and Off Topic Chat, page-1088

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