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Mag One Products (CSE: MDD) gets target price of $2.10 from eResearch

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Today’s buy recommendation comes from Toronto-based eResearch Corporation, which has initiated coverage on Mag One Products (CSE:MDD) (OTCQB:MGPRF) (FSE:304). Analyst Bob Weir gives the company a speculative buy recommendation and at target price of $2.10, a premium of 75% to the $1.20 price on April 18th, the day the report was issued. I’m Samantha Deutscher for Investmentpitch Media

Additional Information:

Company: Mag One Products
Website: http://www.magoneproducts.com
Stock Symbol: CSE: MDD
Date Published: Apr 19, 2016
Transcript: Available

Video Transcript:

I’m Samantha Deutscher for Investmentpitch Media

Today’s buy recommendation comes from Toronto-based eResearch Corporation, which has initiated coverage on Mag One Products (CSE:MDD) (OTCQB:MGPRF) (FSE:304). Analyst Bob Weir gives the company a speculative buy recommendation and at target price of $2.10, a premium of 75% to the $1.20 price on April 18th, the day the report was issued.

Mag One is constructing a processing and refining plant in Danville, Quebec to produce >99.9% pure magnesium ingots and ultra-pure magnesium compounds, including magnesium oxide and magnesium hydroxide.

The company’s objective is to become the world’s lowest-cost magnesium producer, with the goal of bringing its production costs closer to the cost of producing aluminum.

The company has secured access to 30 million tonnes of low-cost tailings, containing an average of 23% magnesium, at its Danville, Quebec site, which the company believes is sufficient for 70 years of magnesium ingot production, at a rate of 100,000 tonnes per year, utilizing 20 modules.

The report stresses that this magnesium has already been mined.

The company will be targeting primarily the automobile and aeronautical sectors, where the magnesium will be a lower cost and lower weight substitute metal.

It is estimated that, by 2020, 250 pounds of magnesium will replace 500 pounds of steel, and 90 pounds of magnesium will replace 130 pounds of aluminium per vehicle, resulting in an overall 15% weight reduction.

Magnesium had a reputation for being highly flammable and had not been authorized for use in airplane interiors.

However, now that the long-standing ban has been lifted, aircraft seat-makers will soon start using light-weight, new-generation magnesium alloys in seat construction.

The company recently announced plans to enter the high-performance wallboard market through a partnership with California-based MagBoard LLC.

Under the Agreement, the Mag One-MagBoard partnership will complete the construction of a magnesium oxide-wallboard plant that will adjoin Mag One’s magnesium processing plant

Currently, China is the only country that manufacturers magnesium oxide wallboard.

Magnesium oxide wallboard, or magboard, is a technologically advanced building material that offers superior performance in every category when compared to traditional wood, gypsum and cement based products.

Analyst Bob Weir stated: “The plant site’s strategic location coupled with easy accessibility of affordable resources and low cost ore represents tremendous scope for Mag One to monetize its resources. The site is located within an industrial area that, because of its close proximity to the USA, has a long tradition of export to that country. Thus, Mag One should be in an excellent competitive position to supply the U.S. market.”

At US$1.91 per kilogram, magnesium prices have been fairly stable over the past few years.

This likely reflects the effects of the U.S. anti-dumping policies against Chinese produced magnesium, and the shut-down of many high-cost Chinese magnesium producers.

The shares are trading at $1.34, well below the $2.10 target price, and with 32.3 million shares outstanding, the company is capitalized at $43.3 million.

For more information about MAG ONE, please visit the company’s website www.MagOneProducts.com, call 604-669-4771 or email info@MagOneProducts.com.

For a copy of the research report, please email InvestmentPitch Media at bmorgan@investmentpitch.com

I’m Samantha Deutscher for Investmentpitch Media