Medusa Share Discussion Threads

[chipperfrd] 24/7/2015 11:25

Time to put my head above the parapet for an estimate of the June quarter in advance of the report next week.

Tonnes hauled and milled, Grade and recovery are obviously variables that cannot be predicted with any certainty. However, with this quarter being the first full quarter with L8 at the 1,400tpd level and with the other shafts contributing further capacity of 1,000tpd it would appear reasonable that tonnes hauled and milled will be somewhere between the Dec-14 qtr level of 160kt and the current maximum of 180kt - so I am plumping for c. 170kt.

Grade over the Mar Qtr was 5.84g/t so I am estimating c. 5.9g/t for the June Qtr.

Recovery was 94% for the March Qtr so I am assuming a similar plant performance over the June Qtr.

That would therefore translate to c. 30,316 oz of gold production compared to the 26,859 oz produced in the Dec-14 Qtr.

Average PoG over the Qtr was US$1,189/oz so revenue will have been c. US$36m.

Cash costs have averaged US$331/oz over 20 quarters and US$407/oz over the last 8 quarters - so I am opting for c. US$405/oz for the June Qtr. Which makes operational costs total c. US$12.277m.

So Gross margin of c. 66% with Operational Cash Generation of c. US$23.8m.

Investment Outflows would look to be as follows:
Exploration c. US$3.1m
Capital Works c. US$5m (incl the new service shaft)
Development c. US$9.3m
Corporate c. US$1.8m

Making a total outflow of US$19.2m

So OPCF - Outflows = c. US$4.6m of free cash flow.

Cash at 31-March was US$15.5m so cash held at 30-June is c. US$20.1m.

Debt at 31-Dec was US$8m so net cash can be estimated at c. US$12.07m. It remains to be seen if they have further paid down debt, but either way, the net cash figure should hold.

June qtr AIC (All-In Costs, incl non-recurring items) = c. US$1,038/oz.

For the full year (assuming the above figures are relatively correct) the totals will be as follows:

Production ~ 102,133 oz
Cash costs ~ US$39.8m
Revenue ~ US$124.2m
OPCF ~ US$84.3m
Outflows ~ US$69.9m
FCF ~ US$14.5m
Average cash costs ~ US$390/oz
Average AIC ~ US$1,075/oz
NPAT ~ US$49.7m
EPS ~ US$0.24
EPS ~ A$0.33 (at current Forex rate for US$/A$)

Chip

[deka1] 24/7/2015 10:24

cheers blue, brings tears to my eyes

[bluelynx] 24/7/2015 09:09

deka

Max Keizer Tweeted a chart showing the unmalnipulated price of gold and it was about US$2,400

[deka1] 24/7/2015 08:28

Bit of a rise into the close last night , finish 64c on a million trades.
PMs still looking sick, no idea where the bottom will be , 800 for gold still being bandied about by the heads.
That would be the end for most miners.I wonder what the prices of PMs would be I the real supply and demand , I think gold would be 2000, near its last high of the bull.

[arja] 24/7/2015 07:14

nice bounce to 64.5 at close as was oversold !

[arja] 24/7/2015 04:36

another small fall in gold price and MML down 5 at 61.5 after hitting 59. maybe the 2.0 ratip of debt to equity worries the market even though p/e only about 5 !
chart support is 50 . dad rimes for all gold stocks and even NCM hammered today after good figures !

[bluelynx] 23/7/2015 20:06

Remembered;

KEEP CALM AND CARRY ON!

Our time will come 😀

[bluelynx] 23/7/2015 18:52

Latest HUI sell off due to good USA job report, more lies I bet, and therefore it makes interest rate rise more likely, to my mind interest rates will not rise, if they do it will only be a very minor one for show only.

[bluelynx] 23/7/2015 18:03

deka and Steve

Thanks for your replies, I agree with them completely.

Just a thought that has crossed my mind is that since China announced its gold reserves, which were lies, which disappointed the market, the free fall really took off, or should I say fell off LOL, anyhow it appears to me that China could be working with the USA to push the gold price down. Then. China gets more cheap gold and they can use their large dollar reserves, which are increasing in value, to buy more gold win win for China. And the good old USA is happy with the strength of the dollar.

China can even buy distressed PM miners for peanuts!

[stevea171] 23/7/2015 17:32

BL. You are certainly not alone in your disbelief in the state of the gold price and collapse of the gold miners. By my reckoning the latest take down has been going on for 2 months now, since mid May, with falls nearly every day despite many events happening which should be gold positive.

As you say, the take down has accelerated in the past week with the $50 waterfall drop last w/e and the falls continue every day. The dollar is being abandoned wholesale by China, Russia, and the other BRICS which would give cause to step up the bashing of gold but we don't really know what is going on behind the curtain .....

We know we are right to hold gold and silver & PM miners and will win in the end despite the stepped up psychological warfare being waged against us!!

Summary of MML position:

Record Q4 results to be announced next week?
100k oz for the year?
P/E ratio of 2.1 as calculated by Chip, the lowest of 73 gold/silver producers he follows.
Share price to multi bag when the gold price stabilizes and reverses.

PM's and the miners have been under the cosh for about 4 years now with the gold price currently bearing no resemblance to the cost and difficulty of finding, funding, developing a gold mine and ongoing costs of production for usually 10 years or more of a mine's life.

The genius's on Wall St, the Federal Reserve, BIS, Comex, etc who conspire to dump billions of dollars of paper gold in seconds to produce the waterfall drops in the paper price that we see with regular occurances care not about the business of producing physical gold only about protecting the $US and making gold look bad in comparison.

When this criminal fraud and manipulation will end no one knows but Medusa is better placed to ride out these times than most producers as it has completed expenditure on a brand new mill, has been cash flow positive for the past 3 quarters with a positive inflow of another $5 million likely for Q4 taking cash to around $20 million and insignificant debt, reducing to likely $5 million or so.

Productivity improvements are ongoing with the new mill now running at just about an optimal level and the mine which has some way to go but issues are being addressed progressively. In particular,

the de-bottlenecking at the base of L8 shaft is in progress

along with the progressive implementation of the new payment system for stope miners who are being paid for volume blasted rather than volume of ore removed from stopes which has led to over draw and dilution of head grade. This is about half way completed now as it has applied to all new stopes as they have been started since about April. With about 100 stopes in operation at all times, all remaining new stopes will go onto the new system before the end of the year.

The building of the new services shaft is making good progress and will lead to a major increase in lifting capacity to increase throughput and reduce cost per oz as running costs and overheads will be divided by c.130,000 oz next year cf 100k oz this year. Completion approx April 16.

Buffett:
"Be fearful when others are greedy. Be greedy when others are fearful."
"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well."

[deka1] 23/7/2015 17:27

Hi blue,i hold only MML,
yes very painful to watch the destruction of an industry because people with unlimited money are allowed by a absolutely rotten corrupt financial American system to do so, to make more money for the scum that operate it.
A lot of jobs a going to be lost before this is over, but over it will be,because even a fraudulent thing like the comex cant operate if there is no supply at all, so the smashing of the commodities has to stop before the whole system grinds to a halt, when will that be ? imo sooner rather than later, but what do I know,
good luck

[bluelynx] 23/7/2015 17:09

Today the POG is unchanged but for the sixth if seventh day in a row the HUI is down another large percentage, to my mind this is certainly Capitulation big style. Panic is in the air.

[bluelynx] 23/7/2015 16:47

Hi deka

I can't quite get my head around this collapsing gold price and the smashing of the Gold Miners, it is extremely painful to see. Especially as like a complete idiot I am 100% invested in gold miners. Having just put my last cash in a few day before this big sell off, but I guess I am proving that 'a fool and his money is easily parted' anyhow I feel I cannot sell now because it would be even more painful to sell at the bottom, surely we are very close to the bottom. This surely is capitulation. Valuations are now pricing in the complete destruction of the sector. Do you still hold your gold miners.

Good luck to all holders of gold miner's we certainly need it.

[deka1] 23/7/2015 16:27

Thanks to fangorn2 on rugt.


NA Gold & Silver Equities: Stress Testing the Balance Sheets

Thanks to a subscriber for this report from RBC Capital Markets focusing on North American gold miners. Here is a section:

Stress test highlights $1,100/oz as a critical level
At $1,100/oz gold and $14.50/oz silver, the North American gold sector remains ex-growth. In addition to the cost-cutting measures that have occurred to date, producers will need to place their higher cost mines in harvest and accelerated closure mode or on care and maintenance. We would expect to see a reduction in management and board compensation and the use of private aircraft travel curtained. And below $1,100/oz, we believe some companies could see their lines of credit reduced or withdrawn, and companies with elevated levels of debt may be forced to hedge revenues, sell streams on mining assets, and/or raise distressed equity. At $1,100/oz, companies that would need to continue making cuts to discretionary and fixed costs to improve their balance sheets include AngloGold, Barrick Gold, Hochschild, IAMGOLD, Kinross, Pan American, Primero, Teranga, and Timmins.

At $1,000/oz gold and $13.25/oz silver, we would expect mine production to begin to contract as mines are placed on care and maintenance or moved into accelerated closure. In addition to the cost-cutting measures mentioned above, we believe a number of the gold producers would need to consider mergers to capture operating synergies or other financial benefits. At $1,000/oz, all of the gold/silver producers in our coverage universe would continue to make cuts to operating and discretionary costs and the most leveraged companies would seek alternative sources of equity.

At $1,200/oz gold and $15.75/oz silver, we believe most of the sector can sustain their current operating mines, but mines with AISC above $1,100/oz would likely go into “harvest mode” with significant development capital spending deferred. In addition, at $1,200/oz the producers can still implement cash-saving measures, with further cuts to G&A, exploration, and sustaining capital

[deka1] 23/7/2015 10:36

Been thinking, considering the smash down in the price, and the talking heads all very bearish on the gold miners and direction of gold down to-- some calling
800, the amount of selling of MML has not been an avalanche ,any thoughts anyone?.

[chipperfrd] 23/7/2015 09:46

TF,

You are welcome :-)

Worth a watch:

[tightfist] 23/7/2015 09:39

Chip,

Thanks for your most excellent post that throws some numbers around a survival (operating) PoG scenario. I am tied-up all day today, will get back to you tomorrow,

Cheers, tightfist

[chipperfrd] 23/7/2015 08:55

Dek,

MML is now trading at a PER of just 2.1x and has become the stock with the lowest market multiple of the 73 PM producers that I am tracking.

[gilotron] 23/7/2015 08:47

Mine is going deeper and you have 15m in the bank. Not much of a buffer.

[gilotron] 23/7/2015 08:45

The last reported costs were 1073$ so I'm not sure why you guys are patting yourself on the back.

[deka1] 22/7/2015 19:26

CHeers chip,i don't know how the silver miners can stay in business,silver has been trading around 14-15 for a long time now.

[chipperfrd] 22/7/2015 18:21

Hi Dek,

I did some work a while ago on working out the proportions of global production per individual miner - obviously it mainly concerned the really big boys - and was then able to come up with some idea of actual average break-even costs across the sector in terms of total global gold mine production.

However, many of the large companies also have large debts and correspondingly large interest and principal repayments which rather 'dent' their financials irrespective of their AISC figures. Some (most) of these were also trading on high P/E multiples.

But as I have yet to wade through some 70+ financial reports for the period up to June 30th I do not yet have up-to-date comparison figures available - all mine are currently only up to Dec 30th 2014 as I could not face doing all the work required for the quarterlies to March 2015.

Bit busy currently with family visiting from abroad and also enjoying things away from the market but expect to start grinding away at multiple financials and MD&As over the next 4 weeks or so. Hopefully I will then be in a position to update on the comparison results and overall average AISC across all those stocks. (note: my previous average AISC for the stocks I cover was c. $1,200/oz). It is A LOT WORSE for silver producers - about $18.6/oz, so most are well under water!!
Chip

[deka1] 22/7/2015 16:29

Thanks Chip, excellent post,i just hope gold can hold around or close to the 1100 mark or of course better, the people that are forcing gold lower all the time must know that the industry is close to collapse with such low profit margins for miners,there actions will cause misery for all the families/whole communities in some parts of the world where there is nothing else but the mines,,but they don't matter , only taking the money, Greed is good lol.

The bottom 20 miners on your list will be in real trouble if gold gets taken much lower,as you say old pal it could come down to the last man standing.

I wonder how much production would be lost if the bottom 10 on your list went under, ie how many tons off the global production numbers ,i suspect around 1.5mil/ozs------that's about 45 ton I think

Cheers Chip