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Gold/Mining/Energy : Magnesium Alloy Corp. (MGAC.U - Cdn unlisted) -- Ignore unavailable to you. Want to Upgrade?

To: Ron Everest who wrote (41)	8/5/1998 8:55:00 PM
From: GlobalMarine	Respond to of 103

Ron: Thanks for the info. I figured that a trading halt couldn't be on account of "normal" news because the company is starting the pre-feas. and couldn't possibly be in a position to release major news yet. I'm pleased that the halt, while perhaps a little harmful to the stock price, didn't reflect a fundamental problem. Rand

To: Ron Everest who wrote (41)	8/13/1998 2:18:00 PM
From: GlobalMarine	Read Replies (1) \| Respond to of 103

Ron: I called up MGAC today, and things look good: 1) The Drilling for pre-feasibility will be done in September. Two drill holes, about 500 meters apart or so. There will be dissolution simulations done on the core samples as part of the technical work for pre-feas. Depth before hitting th carnallite sections is about 500 meters, not that deep considering that other solution mines have to go much deeper. 2) The technical people doing the pre-feasibility say that there are no real technical hurdles in the way for building an economic mine. That is, they say the ore body is economic to mine. Political risk seems to be the main project risk. The World Bank can and does ensure for political risk and the company has started a file there. Lloyds of London can insure the end magnesium product. 3) One possible power source under consideration is to build their dam so that they can generate their own power, thereby reducing risks associated with obtaining power elsewhere. Cost of the initial dam to produce the 100 megawatts needed for a 50K ton a year plant is about $100 million, not too much considering the mining plant is $500 million. 4) Projects such as this have a negotiated tax rate with the government put under contract. Perhaps a 30% tax rate. 5) The pre-feasibility may end up costing only US$2.25 million to complete, so with almost US$3 million the bank right now, the company may have significant cash left afterwards. 6) The $1400 to $1600 a ton production cost assumes 1.25 cents per KHW. Building their own dam places electricity costs at around 1 cent, so there seems to be a nice margin for error here. All in all, IMO MGAC seems to be a far less speculative mining stock than junior gold mining stocks at this point. Market cap-wise, 17 million f/d shares X $0.35 = $6 million, rather cheap, esp. since cash makes up half of the market cap. A ten-bagger looks quite doable. Rand

To: Ron Everest who wrote (41)	8/17/1998 6:04:00 PM
From: GlobalMarine	Respond to 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