News: MDI Middle Island Resources says All 10 Of The Co’S Exploration Licence Applications In..., page-47

Well, I just wanted to put some thoughts down on paper noting I hold much larger stakes in some other gold explorers than in MDI but when all is analysed I am far more comfortable with MDI than the others so I will look to arbitrage between them to build a much bigger MDI holding.
Now these are my thoughts only so please DYOR and don't take what I post here as gospel to make any sort of investment decision upon.

The market is partly discounting MDI because of the option overhang and slightly lower PoG over the last week, so the analysis here is based on a fully expanded capital base of circa 3250 million shares.

• Cash equivalents end of June were $4.7m.
• Lets do the maths - 3250M shares @ 1.8 cents = $58.5m expanded MC with full option conversion bringing in a further $7m into the coffers.
• $10.3m but lets say $20m to refurb mill plus some excavators and dumpers, worker accomodation and the like.
• One of the biggest pluses with MDI is the fact all mining & onsite milling approvals are in place so their are no third parties (including government/land holder titles, etc) to get in the way. The classic phrase applies of MDI are masters of their own destiny here unlike many other junior gold explorers come potential miners.
• JROC 2012 open pit resource of 157koz which MDI is hoping to expand to circa 225koz..........further underground JROC 2012 resource of 500kozs.
• Rick is on record indicating a ramp up in production from open pit mining only as 25, 40, 80 & 80 koz per year from Year 1 to 4 respectively.
• Let's use the known 157koz only with an ASIC of @$700 ounce. (At todays PoG leaving a $1900 per ounce profit)
• Working on a more conservative PoG $AUD2200 an ounce premise we have the first three's production only of 25 + 40 + 80 koz = $217m profit ($1500 per ounce) as a worse case if all is folded after three years against a current MC of $58.5 + $20m start up cost = say $80m.
• As you see the figures I'm using here are all at the conservative end of the spread that I'm assuming. Leaving all current cash and options exercise monies out of the equation as well we have $217m return against a current enterprise value of $80m after three years production. Yes there will need to be a CR to fund the refurb and that is taken into account with the $20m cost.
• This leaves the mill, Year 4 open pit mining and the underground 500koz resource as freebies plus whatever else is revealed with the current drilling campaigns.
• The question will be asked about the gold price tanking but being masters of your own destiny MEANS clarity in production volumes and once the decision to mine has been undertaken the appropriate forward hedges will protect the gold price received.
• Noting here that any toll milling will bring in additional revenues.

What other junior goldie has such a solid minimal risk entry proposition with the 'blue sky' potential of MDI?
I note Regal Funds are currently a substantial holder so from this I would take current share price movement as an opportunity to top up. Are they a long term holder - probably not unless the medium term value I'm sensing above is also on their radar.

Regards,
Vis