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Gold/Mining/Energy : Magnesium Alloy Corp. (MGAC.U - Cdn unlisted)
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To: Ron Everest who wrote (41)8/17/1998 6:04:00 PM
From: GlobalMarine   of 103
 
Ron, Tom and all: I spoke to MGAC today:

1) This project is already very far along. They could have gone directly into final feasibility if they wanted but pre-feas. is done to help secure agreements. The base analysis is already done. They plugged in an estimated chemical composition of the carnallite to the model and when the two holes are drilled in September, the actual composition will be plugged into the model and any adjustments made.

2) The cost of production may come in significantly cheaper than $1400 to $1600 a ton.

3) All the technology MGAC will use for the project is ALREADY PROVEN AND IN USE ELSEWHERE IN THE WORLD.

4) General Motors is interested in buying MGAC's magnesium output and MGAC is using the Russian and German engineering firms that GM likes. American and European automakers are much further along in using magnesium than their Japanese counterparts.

5) The operating cost per ton as well as capital cost per ton may be cheaper than any other plant in the world. It's nice that the other magnesum producers have spent all the time and money proving out technology that MGAC will now use.

6) Drills start turning in September. The drilling was to have begun a lot sooner but it was really hard getting drilling equipment to the site. The drills have to come from outside the country, for instance. The German engineering firm will conduct the drilling itself with very strong controls to prevent salting. MGAC will not play any role in the drilling.

7) They haven't been doing any promotion because the timing isn't really right. But they may not wait until the pre-feas is complete to start promotion. For instance, they may start after the cores are drilled & analyzed.

8) On political risk, there has never been a case of nationalization in Brazzaville Congo's history. World bank insurance can be gotten. Funding for the project can come from various African investment interests.

9) All in all, MGAC is not merely a promotional stock, unlike junior gold mining company. This is a serious attempt to bring a magnesium mine into production. It appears the ore body is highly economic to mine, so the only risks to consider are political risk and securing an electricity source.

10) On electricity, while electricty IS already available from a dam in the Democratic Congo (the one getting all the media attention), it's better to have a local source, and the best option here is to complete a partially built dam located near the ore bodies.

Rand
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