Medusa Share Discussion Threads

[glavey] 18/9/2015 04:17

nielsc,
You would be better asking II's who are significantly building them, I guess. They must feel it justified. No evidence of any short squeeze in the past from what I can see, unless you are thinking of building a significant long position yourself this time?

[tightfist] 17/9/2015 09:42

Hi Steve,

Thanks for extra info. Clearly minimalist drilling to sustain the licences is an obligation which few would query, unless times get really tough.
Now we are off to Hungary - if they will let us in!

Niels,

A big short squeeze looks long overdue to me. And I am looking forward to seeing how the Van Eck resolution is reported over the next few days, being that tomorrow is the 3rd Friday in a quarter month. There has been no announcement yet arising from the 12.1m (6%) total trade volume on 7th September.
I still have a hunch that these scenarios are somehow connected......

Cheers, tightfist

[nielsc] 17/9/2015 08:53

Glavey,

Is this not a bit late in the day to be opening new shorts. Setup for a great short squeeze then.

Cheers,
Niels

[arja] 17/9/2015 03:29

interesting post on hotcoppeer today deka1 and a different perspective . MML chart was looking better but not any more sadly .

"MML surprised most by not bouncing off the dbl bottom at 50c"

No it didn't because the figures they give out are misleading. I've gone over why several times already so not going to repeat, other than say what I did last time and that is this can go a lot lower than most expect!! I have 2 friends that bought above $2, I couldn't convince them to dump at $1.60's when I did, and they both are putting them into the 'bottom drawer.'
This company will start making money when the cash balance goes up, not before. They seem to call all sorts of things other than what they should be called, 'costs'.
They had $11m last year and still have about that amount, so they haven't been making money for a year, except they had about the same the year before. All the 'capital costs' are really just sustaining costs, just like development costs.

If they were developing another mine with all this capital expenditure, then that would be fine, but they are not, they are spending the money to stand still, in fact way behind where they stated they would be with all the extra costs, 200k oz was the call a couple of years ago, but never happened.

[arja] 17/9/2015 03:29

interesting post on hotcoppeer today deka1 and a different perspective . MML chart was looking better but not any more sadly .

"MML surprised most by not bouncing off the dbl bottom at 50c"

No it didn't because the figures they give out are misleading. I've gone over why several times already so not going to repeat, other than say what I did last time and that is this can go a lot lower than most expect!! I have 2 friends that bought above $2, I couldn't convince them to dump at $1.60's when I did, and they both are putting them into the 'bottom drawer.'
This company will start making money when the cash balance goes up, not before. They seem to call all sorts of things other than what they should be called, 'costs'.
They had $11m last year and still have about that amount, so they haven't been making money for a year, except they had about the same the year before. All the 'capital costs' are really just sustaining costs, just like development costs.

If they were developing another mine with all this capital expenditure, then that would be fine, but they are not, they are spending the money to stand still, in fact way behind where they stated they would be with all the extra costs, 200k oz was the call a couple of years ago, but never happened.

[glavey] 17/9/2015 02:56

Short position building.

[nielsc] 16/9/2015 22:33

Deka1,Good article.This anticipated rate rise is not happening. The gold price movement today is signalling that.Cheers,Niels

[deka1] 16/9/2015 21:29

Taken from RUGT


richgit
16 Sep'15 - 09:36 - 3696 of 3698 0 0


The Dilemma...

Sovereign Man.


Today the Fed’s balance sheet has ballooned to $4.5 trillion, nearly 5x as large. Yet its total capital has collapsed to just 1.3% of total assets. And falling.

This is a hugely important figure– think of it like the Fed’s “net worth”.

The Fed, just like anyone else, needs to have a positive net worth, i.e. the value of the Fed’s assets needs to exceed their liabilities.

In the Fed’s case, its liabilities are all the trillions of dollars in currency units that they’ve created, known as ‘Federal Reserve Notes’.

And its assets are things like US government bonds.

Over the last several years during its multiple quantitative easing programs, the Fed has essentially created trillions of Federal Reserve Notes (i.e. ‘money’) and used those funds to buy US government bonds.

In conjuring all that new money out of thin air, they created about $3.5 trillion worth of liabilities, which were offset by the $3.5 trillion worth of bonds they purchased.

In total, the Fed’s “net worth” hardly budged. And as a percentage of their total assets, their net worth really tanked.

This is known as leverage. And by any definition, the Fed is highly, dangerously leveraged.

In fact, when Lehman Brothers went under in 2008, its total capital was 3% of its balance sheet. The Fed’s is less than half of that.

Now, today the Fed is meeting to discuss the question– to raise, or not to raise interest rates?

And when I looked at the numbers, I realized something interesting is about to happen.

The universal law of bond markets is quite simple: bond prices and interest rates move inversely to one another.

In other words, when interest rates go up, bond prices go down.

Think about it like this: let’s say the prevailing interest rate in the marketplace is 5%, and I have a bond that pays 5%.

Right now if I wanted to sell it, my bond is worth $100.

But then tomorrow morning the Fed decides to raise interest rates from 5% to 10%. Yet my bond still pays 5%. Is it still worth $100?

No chance! Why would anyone pay me the same price for a 5% bond, when now they can go down the street and get 10%?

The only way I can sell my bond is if I drastically slash the price.

That’s what happens when interest rates go up– the value of existing bonds goes down.

Now think about the Fed. They’re sitting on $4.5 TRILLION worth of existing bonds, most of which they purchased when interest rates were basically zero.

So what happens if the Fed raises rates? The market value of their entire bond portfolio will fall.

And given the razor-thin capital the Fed has in reserve, they can only afford a tiny 1.3% loss on their bond portfolio before they too become insolvent.

So the grand irony of today’s Fed meeting is that by raising interest rates, the Federal Reserve will be creating its own insolvency.

And that, ladies and gentlemen, pretty much sums up the absurdity of our financial system.

[roguetreader] 16/9/2015 19:37

Tightfist / Steve
Appreciate the posts and info
RT

[stevea171] 16/9/2015 17:39

Tightfist.

"The methodology has to be balanced with various obligations that we have...."

In this category, Rob Gregory referred to the fact there are work and drilling obligations in various licences that need to be carried out or potentially forfit the licences. AFAIA this is not documented by the company but may give rise to some of this exploration work.
eg Rob thought that one or two drills may be required in the Bananghilig licence in order to retain it but he wasn't sure of all the details of this licence or all the other licences. GD as the geologist would be more aware of the details of all the licences.

Enjoy your trip!

[deka1] 16/9/2015 14:42

Thanks for the posts steve/ Tfist, interesting

[adyfc] 16/9/2015 13:21

"as well as other considerations and priorities."

Like how to keep the fat wages rolling in 'till the games up.

[tightfist] 16/9/2015 11:04

Hi Steve,

Many thanks for your face-to-face perspective on Rob Gregory's role; [it's a real pity that I could not make it to the Mayfair Pro-Active meeting]. With my assumption he is being groomed for the CEO role, and following the PHB farce, I was anticipating that Geoff will be opportunistic in building Rob's profile, part of which was visiting London & Zurich. Maybe I am being impatient and need to wait for a video of a November AGM. [With what I had invested I have previously played with the idea of actually flying out and attending the AGM].

We are agreed that Cash Generation is key, hence my comment about wanting to see the Annual Report. I would like to see them in the short term put 100% activities/focus into Co-O and put Ban., Guin., Saugon on total hold. As we debated here a few weeks ago, how low could PoG go before cash generation drys-up?, within a true austerity programme.

[stevea171] 15/9/2015 22:58

Tightfist. I was with Rob Gregory for quite some time before and after the Mayfair presentation in May. He made clear then his role was not to be understudy to take over from GD but he was 100% fully occupied with his role as operations manager and spending weeks at a time on site at the mine on a regular basis.

He has limited means of communicating with shareholders as this is the role of GD as CEO in the RNS's, quarterly reports etc. When he is in Perth he would report to GD and the Board and will probably give a progress report at the AGM in November.

For me cash generation is key. Medusa needs to be generating cash every quarter above all else despite the current low gold price. If they can produce 125k oz of gold this year well and good but not at the expense of being loss making giving rise to cash flow problems .....

[tightfist] 15/9/2015 19:04

Hi Steve,

I am very aware that it was made clear that Geoff would step down earlier this year, and it was my personal working assumption that Rob would then be stepping up to the CEO role - and that (unlike the previous disasterous GD transition to PHB…) he would have demonstrated beforehand his capability both operationally AND with shareholders (particularly communications),..... Late last year his name seemed to crop-up more often, and now less so - that may just be my perception.

I agree that the company announcements since May have not been great - coming to mind are the reduction in L8 haulage due to competing Service Shaft spoil, underground capacity bottlenecking at the bottom of the L8 Shaft, on-target Q4/2015 production (rather than over-achievement), the mammoth $260m asset impairment that was very poorly communicated, and lastly the recent resources reduction. For me it's particularly notable that the "low cost producer" strap-line seems to being diluted in management reports and the confident annual replenishment of resources too?

Having said all that, the fundamentals including cash generation seem extraordinarily solid – but currently offset by dire Gold Sector sentiment. IMHO MML seems to be very undervalued but there is possible uncertainty regarding the Van Eck GDXJ ETF situation that seemingly has to be unwound this Friday, which you and I have both written about here previously.

I'll think a bit more about the Q1 report; during calendar year 2015 I have been too optimistic on the quarterly production figures. In the next two weeks we should see the 2015 Annual Report and I want to see more clarity regarding cash generation and particularly paying-down debts.

[stevea171] 15/9/2015 11:28

Tightfist. Plenty going on at the mine so I expect Rob Gregory has his hands full with the planning, coordination and being on site understanding the issues as they arise and trouble shooting. I imagine he will be at the AGM in Perth in November to give a presentation along with Geoff (as last year).

There seems no limit to the selling by mainly Aussie shareholders, so the share price could go even lower it seems. For me, all the company announcements since Mayfair in May have been either underwhelming or a disappointment as it has evolved into more 'jam tomorrow' reporting compounded by the falling gold price.

Can't see institutions supporting an MBO at these prices so hopefully not.

What kind of Q1 report are you expecting btw as we are only 2 weeks away from quarter end?

[tightfist] 15/9/2015 11:15

allyp,

Thanks for the Short interest link. I note that on 14th September the "Reported Gross SHORT Sales ASX + CHI-X" was 3.05m - according to Yahoo, the ASX TOTAL volume was only 3.22m.

Logically, either virtually all the trades on ASX were short, or the Chi-X Australia market is trading significant volumes. Any insight anyone?

hxxps://en.wikipedia.org/wiki/Chi-X_Global

Cheers, tightfist

[tightfist] 15/9/2015 11:01

Hi Chip,

Wishing you a safe journey, have a great time. Drop in at Co-O if you are down that way.....

Cheers, tightfist

[chipperfrd] 15/9/2015 10:15

Guys,

I am in Asia until mid October. Hope to keep a watch on things depending on Wi-Fi access.

All the best
Chip

[adyfc] 15/9/2015 10:13

Don't remember the share price at these level when Peter was in charge. Geoff has killed this company.

[allyp] 15/9/2015 10:06

I was trying to figure out the short interest here, but I'm not sure how to work it out. However I did find this


The daily short position for the 14th Sept, MML was by far the biggest at 1.46% of issued capital reported as short sold, in one day.

It would be interesting to know the full position.

[tightfist] 15/9/2015 09:44

Hi Steve,

Well now, this morning's lurch downwards to 38c marks a ten year low - just incredible. I really did think that we were off the bottom on 7th September; maybe we have nor seen the final ramifications of Van Eck's likely exit, but surely the brokers have acted to mitigate the situation?

I noticed the idle speculation here a couple of weeks ago regarding a potential MBO, and I am becoming increasingly curious how little we seem to hear about Rob Gregory - maybe I have missed something?

With ongoing cash generation I am still unconvinced about the need to further build the cash pile before resuming a (or even intimate a forthcoming) dividend, and the lack of director purchase support at this price level is verging on the absurd. All this surely suppresses the share price - maybe FWIW an affordable MBO is on the cards? Not that I would relish the prospect.....