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Why MX Gold?

Why MX Gold?

There are a multitude of reasons to be excited about MX Gold.

The deal for the Max mine and mill facilities is extraordinary -­ bought for pennies on the dollar due to the misfortune of a producing molybdenum company that had to shut down operations a few years ago when moly prices crashed. The first rate Max mine won the 2009 B.C. Mining & Sustainability Award. I have personally visited the mine and mill.


Checking out the rocks at the Willa Deposit

Here’s what is impressive and important to consider:
Up to 2012, in an effort to build a molybdenum operation that unfortunately failed because of the collapse in moly prices, Roca Mines & Forty Two Metals invested over $100 million building the MAX mine and mill. Roca was trading almost at $4 per share and had close to a half a billion market capitlisation before its collapse. Yes, over $100 million -­ an asset that MX Gold has acquired for only $6 million, not to mention a $50 million tax loss pool that comes with it (in other words, the first couple of years of production for MX Gold Corp. will essentially be tax free!).

To build this kind of infrastructure today, including a state of the art tailings pond, could easily cost a company $100 million plus many years of permitting.

Willa Resources       Measured       Indicated
Tonnes                       496,000            262,000
Au grade                     7.2 g/t              5.7 g/t
Cu grade                     0.94%              0.67%
Ag grade                     12.2 g/t            13.3 g/t

The first adits at Willa were driven by prospectors in 1893. Amazingly, it was almost a century later, in the 1980s, when the main mineralized zones were discovered (personally, I’m intrigued by what else might be there that simply hasn’t been found yet). The Willa is open for expansion but has enough of a high-­grade resource right now to turn MX Gold into a cash cow if the company is successful at putting this deposit into production with the impressive game plan it has laid out.

Max Mine and Mill

According to Sector News Wire:

Final rehabilitation and upgrades to MX Gold’s 100%-owned MAX Mill are underway, on budget, and expected to be completed for commencement of production this Q4-2016, starting with a 10,000 tonne bulk sample sourced from its nearby 100%-owned Gold/Copper/Silver Willa Deposit. Shares of MXL.V are poised for upside revaluation as the inherent value and accomplishments are appreciated by the market.

Intrinsic Value: MAX Mill has a replacement value of ~$100+ million, the WillaMAX Gold Project has a NPV worth ~$39 million for starters (as per 2016 PEA using US$1,000 gold base case, plus the resource (& related initial mine life) is open for expansion), the moly resource under the MAX Mill is worth several millions (NPV of $40M (@ $15/lb Mo)), and the Company has a loss-carry-forward on the books of ~$50 million (allowing for tax free production for several years).

Strong PEA Economics: The WillaMAX All-in Sustaining Costs are estimated at CDN$750/oz gold (gold is currently trading above CDN $1700). Project economics are very robust; 83% IRR (after tax), with Cumulative Cash Flow of $56.1M after 4.25 year mine life (on the West Zone alone).

We are excited about the prospects that MX Gold holds for its shareholders. We look forward to continuing to update you.

Happy Investing!

Kal Kotecha PhD

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