Magnum Mining and Exploration Ltd.(ASX: MGU) Research Initiation

Highlights:

• Arrowhead is initiating its coverage on Magnum Mining and Exploration Limited (Magnum) with a fair value bracket of AUD 0.21 to AUD 0.30 per share (share price on October 25, 2023: AUD 0.022) based on the Relative Valuation (Reserve-based multiple) method.
• Magnum Mining is an Australia-based company that specializes in the production of iron ore concentrate and green pig iron. The company has two key projects: the Buena Vista Magnetite Iron Ore Project, its flagship development located in Nevada, US, and the acquired Appalachian Iron Hlsmelt Pig Iron Project in West Virginia.
• The Buena Vista iron resource contains 232 mn tonnes (Mt) @ 18.6% Fe and 22.6% DTR. The company targets a production rate of 2.4 mn tonnes per annum (Mtpa) Direct Reduced Iron (DRI) magnetite concentrate over an initial life of mine of 25 years.
• Magnum expects to commence production of 0.8 Mtpa in the next 18 months (Q1 2025), which is a significant milestone in the project’s timeline. The technical work related to the project, such as drilling, metallurgy, hydrogeology and plant design, has already been completed, and the necessary development permits have been secured.
• The global DRI market, which was valued at around USD 8.2 bn in FY 2022, is expected to reach USD 16.8 bn by FY 2030, growing at a CAGR of 8.2%. In terms of volumes, the annual global DRI production stood at 127.36 Mt in FY 2022 and is likely to expand to reach c. 272.0 Mt by FY 2050, as per World Steel Dynamics (WSD) estimate. Given the close access to infrastructural facilities, such as railroads, highways, water supply and solar power, Magnum will have a first-mover advantage in serving the growing demand for DRI-grade ore globally.
• The company aims to leverage the HIsmelt technology acquired from Appalachian Iron to build the first green pig iron plant in the US, with net-zero carbon emissions using low-cost iron ore concentrate, at its Buena Vista Project in the coming years.
• Magnum plans to produce 1.3 Mtpa of pig iron in the Ohio Valley, using locally sourced, low-cost raw materials. This will enable MGU to decarbonize the US steel market while offering the lowest-cost pig iron, thereby making it the most reliable and preferred “Supplier of Choice”.
• MGU has entered a non-binding MoU with Anglo American and Mitsubishi Corporation RtM International Pte. Ltd. for the offtake of 100% of its commercial iron ore products from the Buena Vista Iron Project, including direct shipping ore (DSO) and iron concentrate for both blast furnace (BF) and DRI grades.
• Further, it has formed a strategic alliance with Midmetal, signing a non-binding MoU to develop the proposed magnetite mine and processing plant at the Buena Iron Project and a green pig iron plant in Saudi Arabia. The primary aim of this partnership is to expand green pig iron production projects in various regions, including North America and Saudi Arabia, through the deployment of Hlsmelt technology.
• Recently, Magnum has also signed a non-binding MoU with Levin-Richmond Terminal Corporation to leverage its rail terminal, stockpile area and bulk ship loading facilities to service its DRI magnetite export requirements.
• In September 2023, the company raised AUD 2.65 mn through a one-time placement with a one-for-two free attaching option to accelerate the development of the Buena Vista Iron Project and fund its working capital requirements.
• Magnum has an experienced top management with Mr. Neil Goodman, an iron and steel industry veteran with 40+ years of experience in the design, construction and operation of ironmaking plants worldwide, at the helm. His knowledge of the HIsmelt technology will be instrumental in the development of the green pig iron plant at the Buena Vista project in the coming years.
• The company has highly experienced professionals, such as Mr. Athan Lekkas and Mr. Luke John Martino, who will be responsible for successfully attracting top talent, raising capital for the Buena Vista Iron project and spearheading the company’s overall growth. Further, Magnum’s Board comprises Mr. Anoosh Manzoori (Chairman) and Mr. Matt Latimore (Non-Executive Director), who will contribute to the company’s success by bringing their vast and global experience to the table.
• The company is listed on the Australian Securities Exchange (ASX) under the ticker MGU and has commenced work for obtaining a second listing on the US stock exchange.