Magnum Mining (ASX:MGU) share price slides 7% on project update

Investors will be keen to watch this space…

| More on:
a person in a business suit wipes his forehead with his handkerchief while a red, falling arrow zigzags downwards behind him

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Magnum Mining and Exploration Ltd (ASX: MGU) share price is having a woeful time during late Friday afternoon trade.

This follows the mineral mining company's latest announcement in regards to its agreement with Anglo American.

At the time of writing, Magnum shares are down 7.69% to 12 cents apiece. Earlier, the Magnum share price hit a 5-month low of 10.5 cents within the first hour of market open.

What did Magnum announce?

Investors appear worried about the potential offtake arrangement, selling Magnum shares today. The arrangement would see Magnum sell its entire direct shipping ore from its Buena Vista iron ore project to Anglo American.

According to Magnum's release, both parties have extended the exclusivity period to conduct due diligence for the agreement. As such, the Magnum board does not foresee any impact to production timings should the offtake agreement be reached.

The exclusivity date has been pushed back until 4 November 2021. However, a formal contract is expected to be signed well before.

The term sheet remains unchanged. This includes the right of first refusal to Anglo American for 100% of the offtake volumes. This consists of iron ore concentrate, hot briquetted iron (HBI) and Pig Iron from Phase 2 of the project, as well as financing.

Magnum said it would provide a further update when the formal agreements were complete.

In addition, the company is reviewing other attractive opportunities in the region to increase its resource inventory from adjacent land. It also is working towards a bankable feasibility study to progress the HBI and Pig Iron project.

About the Buena Vista iron ore project

Located in Nevada in the United States, the Buena Vista mine is positioned to become a green steel producer. The term 'green' refers to producing materials from waste products. The mine is also considered a significant magnetite mineral resource that has had $34 million invested in advancing the project.

Additionally, the mine has close access to rail, water, port, and power facilities.

Magnum share price summary

Until recently, a strong 12 months hyped by investor sentiment led the Magnum share price to jump by more than 240%. Year-to-date performance has been just as impressive, with Magnum shares posting gains of more than 120%.

Based on valuation ground, Magnum has a market capitalisation of around $59.5 million, with approximately 496 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Mini house on a laptop.
Dividend Investing

Do ASX 200 dividend shares out-earn Aussie property?

We compare the forecast FY25 dividend yields of the top 10 ASX 200 companies to rental property yields.

Read more »

A fit woman in workout gear flexes her muscles with two bigger people flexing behind her, indicating growth.
Best Shares

Top ASX shares to buy with $500 in November 2024

$500 worth of ASX shares might not sound like a huge investment. But, to realise the benefits of compounding, you…

Read more »

A diverse group of people form a circle at a park and raise their arms together.
Share Market News

Here are the top 10 ASX 200 shares today

ASX investors ended the trading week on a high note this Friday...

Read more »

Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Catapult, De Grey Mining, Domino's, and Nufarm shares are charging higher

These shares are ending the week strongly. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Healthcare Shares

This ASX All Ords share is diving 18% as inflation pain draws blood

This healthcare company delivered a trading update at its annual general meeting today.

Read more »

Three analysts look at tech options on a wall screen
Technology Shares

Up 70%, is it too late to invest in Xero shares?

This ASX tech darling hit a new all-time share price record yesterday.

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why Healius, Opthea, Peninsula Energy, and Wildcat shares are falling today

These shares are having a tough finish to the week. But why?

Read more »