MagIndustries Corp MAAFF

RE: MagIndustries Target Raised To C$0.20 From C$0

[exciting]

MAA is down ~30% over the last several weeks after TSC cancelled its Mengo

investment. Several "qualified" leads appear to have emerged, which gives us

.renewed hope that Mengo’s full value could be realized. MAA has invested ~$163M into the 1.2M mt Mengo potash project to date.

Including unrestricted cash of $7.5M, we estimate the market is giving MAA

.credit of only ~40¢ per dollar invested. While we are not privy to the list of interested parties, and therefore cannot

offer insight into the quality of the leads, we believe there is now more

.upside than downside risk on the prospect of a Mengo deal. Having seen the asset, we do not doubt the quality of Mengo, but expect MAA

will remain a "show me" story due to three failed attempts at securing a

.financial or strategic partner over the past few years. We have cautiously returned to a 2-Sector Perform rating from 3-Sector

.Underperform, and have increased our target price to 20¢ from 15¢. We expect the stock to trade sideways until a tangible deal with a credible

partner is announced (3x before), due diligence is complete (2x before), and an

investment into the project is made (yet to occur).