Medusa Share Discussion Threads

[bluelynx] 29/7/2015 22:07

deka

Excellent interview with Dr Paul Craig Roberts, he explains things in an easily understandable fashion, I just hope he is wrong concerning that the FED can keep its total control of all Markets!

My hope is that there will be a big recession in the US and therefore a large fall in the value of the US Dollar.

[deka1] 29/7/2015 20:27

Cheers blue,

[deka1] 29/7/2015 20:24

DR Paul Craig Roberts , ya gota watch this, its excellent , its all a very good watch , gold discussed 30 mins in

[bluelynx] 29/7/2015 19:52

I am not sure if others on this BB are aware of the Medusa Mining BB below.

[arja] 29/7/2015 13:50

50 is next chart support which needs to hold . I really have not a clue about fundamentals of gold companies but it does seem that the true state of the company is hidden or hard to ascertain. Needs that gold price to make a decisive turnaround.

[adyfc] 29/7/2015 07:55

Your not allowed to say anything bad about Geoff, he's their hero.Even when the mine is mothballed it will all be PHB's fault.

[stevea171] 28/7/2015 22:11

Dek. Events are moving very quickly as we move towards some kind of resolution to the global financial and political lawlessness, manipulation and criminality.

How to plan for a PM miner in these circumstances .... ??!!

[deka1] 28/7/2015 17:49

Guys hows this for a simple explanation , the presentation was completed ready to present in Sydney on the 29th , last week before the big smack down in gold,
No time to change things re cutting costs, so have to run with it, but expect to see those cost cutting measures implemented in a month or so and an RNS saying so, they gota do something .
I think these questions will be brought up by people a the presentation anyway
so perhaps we will hear something sooner.

[stevea171] 28/7/2015 17:03

Chip. Yes, I'm sure most would agree they have made good progress with many of the issues since September.

Medusa's investment plans were likely made months ago when $1200 gold could have been about the bottom before reversing much higher. At that time they were logical, needed and sensible and most shareholders would have agreed they were affordable.

The new reality is that the gold price has been manipulated down to sub $1100 and instead of bouncing back up to $1120-1150 by now it is being held below $1100 for most of the past week apart from an initial bounce which was snuffed out very quickly. So now no one knows what the next move in gold will be.

Imo Medusa's spending plans have gone from being comfortable 2 months ago to being on the cusp at the present gold price to being unaffordable if the gold price continues down in the coming weeks.

The share price fell 8% today the first full trading day after the release of Q4 results yesterday. The share price has fallen from 84c to 57c (32%) in just 7 trading days with not a single up day. No gold or silver stock that I follow has performed a fraction as disastrously as Medusa during this period.

Perception can be as important as reality. The market is saying (mainly Aussie) investors are not prepared to stick with Medusa, regardless if the P/E is 2, 1 or lower! A fickle lot to be sure! I am not selling but it is to be hoped that these presentations to institutions in Sydney go well and there is some support for the share price this week or else we could see a second capitulation back to sub 50c despite all the progress that has been made in the past 9 months.

[chipperfrd] 28/7/2015 16:16

Steve,

Investors might conclude that the company is burning cash - but it's not borne out by the figures. What more can I say!

As for the inward investment - what choice do they have?

The service shaft was essential to put right the poor decision taken by previous management that required switching between material and manpower haulage every shift - which was grossly inefficient.

Improving ventilation and mine de-watering is fundamental for efficient long-term operation of an underground mine - so has to be done.

The deep drilling from level 8 is a necessary pre-condition for testing the resources down to level 16 before committing to the L16 shaft, which itself, is a fundamental part of long-term sustainable production from the mine.

Perhaps they could pare back a bit on non Co-O exploration. June expenditure on exploration was c. 8% of revenue. If gold remains sub $1100 then perhaps they will eliminate all discretionary exploration. But we need to remember that the average for the June quarter was nearly $100 higher, so management have only had just over a week to adjust to the Sunday night smash - time will tell if they do indeed start to defer some non Co-O activities.

Development spending is non-discretionary as they need to maintain 100 stopes in order to eventually 'fill the mill' and reduce unit costs.

Capital works have not 'blown out' in spite of the service shaft activity and are still well below the opening quarter of FY15. So they do appear to have kept costs under good control whilst working through the various measures needed to improve operations at the mine.

Perhaps some further savings might be possible in G&A, but I doubt it would make a significant impact.

In my view they have made considerable progress over the year and the information provided has improved with every quarter. Like all producers they have no control over the gold price and in spite of all that they have achieved the sentiment for MML on the ASX is still pretty dire - so not sure what else they can do about that other than keep plugging on until the figures speak for themselves - which they already do IMO. What other gold stocks are on a PER of less than 2 when they are clearly growing production at an incremental rate!
Chip

[stevea171] 28/7/2015 14:12

Chip. Thanks for your detailed calculations.

Nevertheless, because of the absence of reporting quarterly debt and a net cash figure which some (most?) companies provide, the conclusion to be drawn by some will be similar to mine. ie the company is burning cash and with a falling gold price the company could need a fund raising later this year. Hence small investors bailing out even at these silly prices.

Geoff should have made clear how he is going to pay for all this investment in 2016 when most companies have cut investment to the bone, and certainly are not increasing investment. In normal times the plans would be fine but these are times where the gold price is in a one way street - down. That isn't to say that I think the gold price will continue to fall to $1000, $900, $800 etc. But it may do!

I think this gold suppression is likely to be broken by September/October and gold will go on a moon shot but no one in their right mind would bank on it or put a mining company at risk of running out of cash before the good times return ......

[chipperfrd] 28/7/2015 13:32

Steve,

I make it free cash generation of US$3.9m over the June qtr. ie.

Revenue of US$31.770m (26,542 oz @ US$1,197) although actual sold oz were 29,350, so cash received would have been 29,350 x 1197 = US$35.132m but probably best to stick with revenue based on actual production to match with earlier quarters.

Cash costs were 26,542 x US$390 = US$10.351m
Investment Outflows were US$17.5m
Total of US$27.851m

Therefore balance (FCF) of +US$3.919m

The March qtr was +US$3.4m

Therefore 2H FCF of US$7.319m yet cash held has only increased by approx US$1m since the interim report when they reported US$8m of debt. So it would look like they have paid off around US$6m of debt over 2H15.

If I assume identical production over 1Q16 and leave cash costs and investment outflows the same as 4Q15 but with gold averaging $1,095/oz then their free cash flow drops to US$1.2m - so no cash burn!

However, It sounds as though their waste tonnage will fall incrementally from now on (if their FY16 guidance is to be met) and production will rise with the correspondingly increased ore haulage to the mill. So I fully expect unit costs to also decline incrementally over the coming quarters with FCF remaining positive.

I am surprised that they would make any expenditure on Lingig but I am sure that GD would not support it unless they could both afford the costs and that there was some economic justification for returning there.
Chip

[stevea171] 28/7/2015 12:18

Chip. Medusa had an 'apparent' cash burn of $0.9 million in Q4. I say apparent because the Q4 report does not give details of movement in debt/creditors or a net cash position. This is when the gold price averaged just under $1200 and production was 26.5k oz.

The gold price is currently $100 lower than the Q4 average, so if Q1/2016 production is similar, expenditure is similar and the gold price averages $1095 for the quarter then cash burn this quarter would be approx $3.5 million. Imo this is unacceptable and is why the share price is being crucified.

Do you not think Geoff is being too complacent and needs to scale back on the company's spending plans for the coming year in areas that are discretionary? eg drilling at Lingig unless this is mandated to retain the licence.

[chipperfrd] 28/7/2015 12:15

I under-estimated the amount of waste that would use up haul capacity during the June quarter. ie c. 180kt of capacity but actual ore hauled was 146kt - so c.34kt of waste!

However, as the various improvements (ventilation, ore passes, service shaft, et al) are completed the amount of waste will decline and more ore can be hauled to the mill to increase utilisation and production.

I am pleased with the improvement to head grade. It looks like the changed contractual terms for all new stopes is now paying off.

Additional information and graphs is good. Pity they have not supplied net cash position because by my calculation they have been generating free cash flow yet cash held has not increased. I can only assume that they have been paying down the US$8m of debt that was reported at the interims.
Chip

[chipperfrd] 28/7/2015 11:21

Presentation available on website:

[stevea171] 28/7/2015 10:00

Dek. Seems the presentation is not yet loaded to Medusa's web site. I have put up the Hot Copper link to it on post 34647 now. Hope that works better.

Re shareholdings. From a slide:

SUBSTANTIAL SHAREHOLDERS (as at 30 June 2015)

 Van Eck Associates Corporation 6.47%
 Paradice Investment Management Pty Ltd 5.40%
 Dimensional Fund Advisors LP 5.00%

[deka1] 28/7/2015 09:27

Steve cant get that pres link to work , can you post the salient points please.

[stevea171] 28/7/2015 09:06

ANNOUNCEMENT 28 July 2015

INVESTOR PRESENTATION

Please find attached a PowerPoint Presentation which the Company will present in
• Sydney on 29, 30 & 31 July 2015;

hxxp://hotcopper.com.au/threads/ann-investor-presentation-july-2015.2560622/?vtrct=3&utm_expid=509771-17.U3wUhNlPTku4I_iccyMzSg.3&post_id=15706942&utm_referrer=hxxp%3A%2F%2Fhotcopper.com.au%2Fasx%2Fmml#.VbdC8bNViko
then click on download document

[arja] 28/7/2015 07:21

yes, down to 57 today and I keep kicking myself because i am not shorting it occasionally as can do so in OZ with a CFD . Surprising it was hit so hard today but chart support at 50 level !

[bluelynx] 27/7/2015 20:21

'Gold Capitulation'

[stevea171] 27/7/2015 15:50

Absurd Gold-Stock Levels
July 27, 2015 by The Doc

Stocks suffered a full-blown panic this past week!

This exceedingly-rare magnitude of selloff was triggered by extreme futures shorting intentionally executed to force a flash crash in gold. After gold’s major multi-year support failed in this Machiavellian onslaught, gold stocks plummeted. The levels of fear were so epic that this entire sector was slammed much deeper into fundamentally absurd price territory.

So through 10 consecutive daily losses, the HUI had collapsed a full-on panic-grade 25.3%! Naturally this total capitulation caused tremendous pain for those long gold stocks, leading to mass stoppings. And the HUI had fallen to 113, a mind-boggling 12.7-year low! Such levels were truly fundamentally absurd, wildly unjustified. They were completely the product of super-extreme fear-dominated herd psychology.

This first chart looks at the HUI gold-stock index and gold over the past dozen years or so. Gold stocks have totally disconnected from the metal which drives their profits, and hence ultimately stock prices. This extraordinary capitulation extreme offers once-in-a-lifetime opportunities to greatly multiply wealth for those hardened contrarians tough enough to buy low while everyone else flees in sheer terror.