MUSTANG MINERALS CORP V.MUM

Always a good read .... Jennings Capital

[Lucy1]

Go MUM Go! Disclaimer – The information contained in this report was obtained from sources we believe to be reliable. We do not represent that such information is accurate of complete and it should not be relied on as such. Any opinions expressed herein reflect our judgment at this date and are subject to change. Jennings Capital Inc. and/or employees from time to time may hold shares, options or warrants on any issue included in this report and may buy or sell such securities. This report is not to be construed as an offer to sell or solicitation to buy securities. Member – CIPF. THIS WEEK IN MINING Sector: MINING, GOLD & PRECIOUS MINERALS Analyst: Ron Coll e-mail: [e-mail] Tel: [phone] Fax: [phone] Date: Wednesday, June 29, 2005 New Ni-Cu Discovery at Mayville. Further Resource Expansion Potential at Maskwa. Source: www.bigcharts.com Mustang Minerals Corp. is a Canadian growth oriented junior exploration company, focused on the exploration and development of near-surface, open-pitable base metal deposits in Canada, principally Manitoba. The Company holds a 100% interest in the Maskwa Property and a 90% interest in the Mayville Property, both located in southeastern Manitoba. Mustang is rapidly expanding its near-surface, open-pitable nickel and copper resources at both properties. Mustang Minerals Corp. (TSX-V-MUM $1.27) Recommendation: Speculative BUY Target: Cdn$2.25 Market Cap (C$MM) Shares o/s (MM) Shares o/s FD (MM) 54 52 week hi/lo (C$) $1.38 $0.30 Major Shareholders management 10% Cash (C$ MM 31/03/05) $1.5 Debt (C$ MM 31/03/05) $0.0 Working Capital (C$MM 31/03/05) $1.5 12-Month Target (C$) Book Value $/Share (C$) $2.25 $0.15 $55 44 New Discovery at Mayville Ni-Cu Property Mustang’s Mayville Property is located in southeastern Manitoba approximately 150 kilometers northeast of Winnipeg. The property is easily accessible by road and near all required infrastructure including power, rail, water and a skilled workforce. Mustang acquired a 90% interest in the property through two transactions; (1) by acquiring 60% from Exploratus Inc. (a unlisted junior exploration company) for Cdn$90,000 cash, Cdn$165,000 due 18 months following closing, 700,000 MUM shares and a 1.2% Net Smelter Royalty and (2) 30% through the acquisition of 72.6% of the shares of Maskwa Nickel Chrome Mines, a private company controlled by Falconbridge for Cdn$120,000 cash, 400,000 shares of MUM and a Cdn$210,000 non-interest bearing note payable over 5 years following commencement of commercial production. Falconbridge does not retain a back-in right and does not retain a royalty. A detailed airborne geophysical survey identified a 1,300-meter long EM conductor located along the contact of an east-west trending mafic intrusive complex, the Bird River Sill. The strong conductor is coincident with several historic trenches. Grab sampling of the trenches by Mustang in 2004 returned values up to 0.83% nickel, 5.56% copper, 1.71 grams Pt/tonne and 0.55 grams Pd/tonne. Core drilling designed to test for Ni-Cu sulphide mineralization associated with the EM conductor and related surface trenches commenced in early June. The preliminary plan calls for three section lines of drilling (four core holes on each section line) for a total of 12 holes. Drill sections are 30 meters apart with two drill stations per section, and two angle holes drilled from each drill station. Mustang management reports that all eight holes on the first two sections have encountered coarse grained and net textured semi-massive and massive sulphide mineralization averaging 40 to 50 meters in approximate true thickness. The discovery, the M-2 zone consists of chalcopyrite, pyrrhotite and pentlandite and pyrite within a mafic to ultramafic intrusive unit. 2 MINING RESEARCH Mineralization was encountered at the bedrock-overburden contact and has been traced to a vertical depth exceeding 200 meters. Assay and analytical data are pending and the remaining 4 holes on the third drill section are expected to be complete by month end. Following a short break in July, drilling is expected to resume with the objective of defining the extent and to determine the grade continuity of the M-2 nickel-copper discovery. With the encouraging results of preliminary drilling to date and based on continued successful drilling of the mineralized zone, we believe the Mayville M-2 Zone has the potential to host a 10 to 15 million tonne nickel-copper sulphide deposit suitable for low-cost open-pit mining. Maskwa Property 100% 3 MINING RESEARCH During Q1/2005, Mustang announced the results of a mineral resource estimate completed by Roscoe Postal Associates Inc. on the company’s 100% owned Maskwa Ni-Cu project, located 140 kilometers northeast of Winnipeg, Manitoba. Based on core drilling completed in 2003 and 2004, a Measured and Indicated open-pit resource totals 5.23 million tonnes averaging 0.68% nickel and 0.15% copper to a vertical depth of 200 meters for a contained 79 million lbs of nickel and 17 million lbs of copper. An additional underground Measured and Indicated resource totals 790,000 tonnes averaging 1.11% nickel and 0.14% copper for an additional 19 million lbs of nickel and 2.5 million lbs of copper. In addition to the Measured and Indicated resource mentioned above, an inferred open-pit and underground resource totals 550,000 tonnes averaging 0.75% nickel and 0.11% copper. The up-dated resource estimate conforms to National Instrument 43-101 standards. The potential to expand the open-pitable resource along strike and to expand the underground resource at depth is considered excellent. Other Properties Mustang holds significant land positions in Ontario, the Bannockburn Ni Project near Timmins and the Manchester Lease Project, Sudbury. At Bannockburn, Mustang made a new grassroots nickel discovery during late 2003 near the Montcalm Ni Mine operated by Falconbridge and the past producing Redstone Mine. Narrow intersections of 2.0% to 2.5% Ni were encountered in the steeply dipping C-Zone within an ultramafic host and up to 0.35% Ni over 82 meters in a large near surface dunite body. At the Manchester Lease Property, Mustang has an option to earn a 70% interest with Inco as joint-venture partner on a 2.5 Km long offset dyke on the south range of the Sudbury Igneous Complex. Through acquisitions, Mustang continues to seek high quality base metal opportunities to further expand its portfolio of advanced stage projects and to create shareholder value. Previous Financings and Balance Sheet Mustang remains debt free with cash on hand totaling approximately Cdn$1.5 million. On January 5, 2005, the company closed a non-brokered financing consisting of 3.124 million units at a price of Cdn$0.425 per unit for gross proceeds of Cdn$1.328 million. Each unit is comprised of one share and one half of a share purchase warrant. Each full warrant entitles the holder to purchase one common share at Cdn$0.60 on or before January 5, 2007. On December 16, 2003, the Company closed a financing consisting of 4.464 million units at a price of Cdn$0.70 per unit for gross proceeds of Cdn$3.125 million. Each unit consisted of one share and one half of a share purchase warrant. Each full warrant entitled the holder to purchase one share at a price of Cdn$0.90 per share on or before January 16, 2005. Jennings Capital acted as agent for the financing. 4 Also on January 16, 2003, the Company closed a flow-through financing consisting of 4.099 million flowthrough units at Cdn$0.80 per unit for gross proceeds of Cdn$3.28 million. Each flow-through unit consisted of one flow through share and one half of a common share purchase warrant. Each full warrant entitled the holder to purchase one common share at Cdn$1.15/share on or before December 16, 2005. Jennings capital acted as agent for the financing. Management Robin E. Dunbar, MBA, President Director since 1996. Previously Vice President, a Canadian chartered bank. Kenneth J. Lapierre, P.Geo. Vice President Exploration Director since 1996. Twenty years experience in mining exploration. Brian J. Barr, LLB Chief financial Officer Director since 2000. President of Capital House Corp., a private investment company. Thomas W. Meredith Director since 1996. President of Vedron Gold Inc., a public mining exploration company. Edward J. Munden, M.Sc., MBA Director since 1999. Director of Capital House Corp., a private investment company. Gerald Harper, Phd., P.Eng. Director since 2004. President of Gamah International, a geological consulting company. Valuation & Recommendation With a defined resource at the Maskwa Property and a new Ni-Cu discovery at Mayville undergoing an aggressive drilling campaign, Mustang offers investors an excellent opportunity to participate in a high quality, well managed, well-financed Ni-Cu development vehicle. With continued success at Mayville and its potential to outline a 10 to 15 million tonne open-pitable resource and the established 5.2 million tonne measured and indicated resource at Maskwa, we believe Mustang Minerals will be in a position to report total resources in excess of 200 million lbs of contained Ni and 200 million lbs of contained copper during 2006, with potential at both projects for significant resource expansion. Without the benefit of scoping studies and/or feasibility studies, a valuation of Mustang Minerals is difficult. However, based on the positive exploration results to date and the expectation of continued success of aggressive drilling programs at Mayville and Maskwa, we recommend purchase of Mustang Minerals to gain exposure to one of the best Ni-Cu exploration companies in Canada. Our 12 month target is Cdn$2.25. MINING RESEARCH Jennings Capital Inc. June 2005 Jennings Capital Inc. Research Disclosures Stock Ratings System: Speculative Buy: The stock is expected to provide a total return in excess of 10% over the current trading price over the next 12 months; however, there is material event risk associated with the investment. Strong Buy: The stock is expected to provide a total return in excess of 50% over the current trading price over the next 12 months. Buy: The stock is expected to provide a total return of 10% to 50% over the current trading price over the next 12 months. Hold: The stock is expected to provide a total return of 0% to 10% over the current trading price over the next 12 months. Sell: The stock is expected to provide a negative total return over the next 12 months. Quarterly Recommendation Hierarchy: Is a ranking distribution identifying the percentage of total, number, and the investment banking relationship (%) for all recommendation categories that can be found on the Jennings Capital Inc. website (www.JenningsCapital.com). Analyst Stock Holdings: Equity Research analysts, associates and members of their households are permitted to invest in securities covered by them. No Jennings Capital Inc. analyst, associate or employee involved in the preparation of an analyst report is permitted to effect a trade in the security of an issuer whereby there is an outstanding recommendation for a period of 30 calendar days before and 5 calendar days after issuance of the research report Analyst's Certification: As to each company covered in this report, each analyst certifies that the views expressed accurately reflect the analyst's personal views about the subject securities or issuers. Each analyst also certifies that the analyst has not, is not and will not receive, directly or indirectly, compensation in exchange for expressing specific recommendations or views in this report. Compensation: The compensation of the analyst and/or associate who prepared this research report is based upon in part, the overall revenues and profitability of Jennings Capital Inc. Analysts are compensated on a salary and bonus system. Some factors affecting compensation include the productivity and quality of research, support to institutional, retail and investment bankers, net revenues to the equity and investment banking revenue as well as compensation levels for analysts at competing brokerage dealers. Jennings Capital Inc. Relationships: Jennings Capital Inc. may receive or seek compensation for investment banking services from all issuers under research coverage within the next 3 months. Jennings Capital Inc. or its officers, employees or affiliates may execute transactions in securities mentioned in this report that may not be consistent with the report's conclusions. Company Specific Disclosures Disclosure Requirements Is this an issuer related or industry related publication? Issuer Industry Does the Analyst have a financial interest in securities of the subject issuer? Yes No If yes, nature of interest: Is Jennings Capital Inc. a market maker in the issuer's securities at the date of this report? Yes No Does Jennings Capital Inc. beneficially own more than 1% of any class of common equity of the issuer? Yes No Does Jennings Capital Inc. or the Analyst have any actual material conflicts of interest with the issuer? Yes No Explanation: Does the Analyst or household member serve as a Director or Officer or Advisory Board Member of the issuer? Yes No Has the Analyst received any compensation from the subject company in the 12 months? Yes No Has Jennings Capital Inc. managed or co-managed an offering of securities by the issuer in the past 12 months? Yes No Has Jennings Capital Inc. received compensation for investment banking and related services from the issuer in the past 12 months? Yes No Has the Analyst had an onsite visit with the Issuer? Yes No (The extent to which the analyst has viewed the material operations is available on request) Has the Analyst ever been compensated for travel expenses incurred as a result of an onsite visit with an Issuer? Yes No