Medusa Share Discussion Threads

[deka1] 13/10/2015 07:29

TF hi and thanks for your numbers mate,i agree with you the head grade is going to go up , an increase of 1 grm a ton increases prod ozs by about 12%
so 2000 tons per day through the mill at 8.5 grams would do it.
That would give around 126kozs for the year.

[tightfist] 12/10/2015 22:33

Hi deka,

My Q1 output number before last Thursday is very similar to yours - I have 20% more days (MML seem to calculate based upon 25dpm averaged across the year) but 16% less head grade (blending L5- ore with L6+ ore and development ore).

Maybe the cunning part is how they ramp-up over Q2-Q4. I foresee head grade increasing by +7% and mill throughput increasing +10% (to 90% utilisation) from Q1 through to Q4 as the L8 shaft becomes increasingly available for higher grade ore haulage. At 94% Recovery that would deliver 125 kOz.

Having listened to RG last week, I think they may beat my grade assumptions. IMHO I don't think they intend running the mill at 100% unless/until PoG rises, at which point they would increase the ore off-take from the L5- levels.


Cheers, tightfist

[deka1] 12/10/2015 12:16

Looks like 2000 tons a day through the mill at 7.5 grams on 5 days work and 94% RECOVERY and 50 weeks prod aint gona cut it, that would bring in around 115kozs,
so they got to mill more than 2000 tons a day or up the grades higher than 7.5,or add another working day upto 6 days a week.
unless I screwed me numbers up somewhere.

I would welcome anyone else's numbers lol

[deka1] 12/10/2015 09:16

Have a safe trip back chip,look forward to your take on things as usual .

[chipperfrd] 12/10/2015 07:52

Tightfist, Justin, Steve et al, thank you for the updates. I am back from my wanderings this Thursday and look forward to 'dusting off the spreadsheets'!

Good wishes to all MML holders.
Chip

[deka1] 12/10/2015 07:10

TF hi and thanks for the feedback , and mml up 19% last night .


Other costs are progressively being addressed - eg Explosives are being re-negotiated, etc. The Mill is running very well on 4.5 days per week.

When will the mill be running 7 days a week, I wonder.

[roguetreader] 11/10/2015 23:19

Tightfist, Justin, Steve et al
Much appreciated updates
RT

[goldminer70] 11/10/2015 21:56

Tightfist
Very good report. Thank you.
Goldminer70

[tightfist] 11/10/2015 21:20

Here are my notes from last Thursday's Evening meeting with Medusa: Rob Gregory gave the presentation; NED Robert Weinberg (RW) was in the audience and just responded to a question on London re-listing. Rob came over as a very grounded individual, well aware of the issues whilst being very positive about developments.

Here are the key points from the presentation and a long discussion with RG and a handful of investors afterwards, apparently including Justin. It was the first time I had met RG and I found him both very open and realistic.


Life of Mine; Shafts Development
The Reserves situation was sensitively described; RG believes there will be 10-12 years LoM in the current mining area, and ~15 more year's down-dip in the prospective L16 zone.
The Service Shaft installation is on-track and spend now stands at $6m. The positioning, design and quotation for L16 is now complete, pending the confirmatory drilling programme. L16 will be a large shaft, capable of 2,700 tpd from considerable depth. It will be a four-year project, completing in 6 years time, at an indicative cost of $50m.

Grades Trend
Aside from the rising Stope ore grade trend in the presentation, Development Ore is averaging 6g/t. Upper level grades confirmed as heavily depleted by selective mining; something they will not do again. Optimistic that new deeper levels beyond Level 8 will be higher grade (but cautious about vein widths?).

Operations
RG confirmed that Co-O is "a very busy mine" and there are a lot of logistics challenges down there. He was extremely upbeat about the opportunities that will be enabled by the Service Shaft parallel access - "such a difference it will make" - especially supervision. Currently shift change ties-up L8 shaft for 90 minutes for personnel movement.

RG enthused about Stope ore inventory build-up, 45,000 Oz in 8 months - is this reflected in the financials - is this inventory recognised on the balance sheet? I guess this equates to 10+% of mining cost in the last 8 months which is not reflected in Au production.

AISC
There was optimism that further progress will be seen after the $80 medium-term Capex impact drops out, pending L16 expenditure commencement. Under questioning RG was cautiously bullish about significant AISC reduction, an ASPIRATIONAL $800/Oz was mooted.

Cost Reduction
RG sees opportunity, the mine has hithertoe not been aggressively cost optimised. For example, the two new ventilation fans (total 310kW) should enable retirement of 3 compressors totalling 900kW consumption, grid electricity is not cheap in the Phillipines; kWh costs were stated.

Other costs are progressively being addressed - eg Explosives are being re-negotiated, etc. The Mill is running very well on 4.5 days per week.

CAPEX
The mid-term $15m spend completes in mid 2016, and chiefly comprises Service Shaft, Tailings Facility, Ventilation Upgrade, Tramming Loops.

Community
30-40,000 local people depend on Co-O for their livelihood and are big supporters of the mine; this helps ensure security in the Phillipines. Safety was a big positive emphasis too; Phillipines government is insisting on nationwide ISO14001 environmental standard accreditation by end 2016.

Share Price, Cash, Dividends
SP seen to be ridiculous at current level, most likely held back by slow cash pile growth. RG was pleased that the Van Eck overhang was being cleared. There was frustration amongst the audience (and seemingly with RG) regarding slow cash pile accumulation. Contractors payables claims regarding SAG mill have now been settled which clears the air. It's clear that a very substantial Cash Pile ($50m?) will be accumulated before resumption of dividends.

London Re-listing?
This question was raised in open forum. It was re-emphasised (RW) that there is NO intention to place any new shares, and hence that a re-listing was unnecessary. However, RG previously had very good experience on AIM. It is now suspected that a lot of ASX trading arose by Funds trading on the more liquid ASX exchange, but underpinned/legitimised by an LSE listing. I gained the impression that the current Board is unlikely to change position, but never-say-never. One must wonder about share price Angel's ongoing interest?

Further Visits
For the past year RG has spent 50% of his time in the Phillipines focused on Stope practices, alongside three other additional mining engineer consultants. Going forward, RG intends visiting London every 6 months. GD will remain in place until Co-O is totally stable.


I hope that helps us all confirm our opinions. Cheers, tightfist

[bluelynx] 11/10/2015 20:26

Steve, Tightfist, Goldminer and others thanks very much for sharing information concerning the AGM and your thoughts. this is certainly a top quality Thread, it reminds of the Centamin Board around the time it was about 10 pence.

I have 3 Australian Gold mining stocks on my watch list and one is St Barbara it has gone up over 1200% in about 18 months, so as Steve states Medusa could follow suit if management fulfill their targets..

[justinjjbuk] 09/10/2015 23:53

Steve. Like you, I think this is a multi bagger. Even with gold at $1,150, I think we are a four or five bagger over 12 months. If gold moves about $1,200, then I think the upside is pretty stunning. You not only get better earnings and cash flow on the current mine, but you also can start to price in growth from the other prospects as the company will be throwing off enough cash to develop them with ease.

Note also the stock has been killed on the downside by repeated index exclusion trades. This vicious cycle will turn virtuous as the stock recovers. As the market cap expands, all the index funds that were forced sellers will turn to be forced buyers. That alone gives potential for PE and PCF multiple expansion. It's been a volatile ride, but hopefully volatility will now be on the upside.

[stevea171] 09/10/2015 22:14

CP42K. Over the next year Medusa should multi bag from 53.5c. If this were to happen I don't think that a small exchange rate conversion factor on buying or selling will have much impact on profit.
Imo Medusa should go back to above $2 or £1 in the next 12 months if current plans are successfully completed and the gold price does not go lower.

Longer term it could easily 10 bag or much more depending on when, if ever, the gold price breaks free from the manipulation ......

[deka1] 09/10/2015 21:41

Hurry up TF

[tightfist] 09/10/2015 21:10

Hi Everyone, I too went along last evening - and delivered the letter re: Relisting. I am travelling in Europe at the moment but will post my notes ASAP. The most useful part was in conversation with Rob afterwards.

Cheers, tightfist

[swallowsflysouth] 09/10/2015 18:29

It is interesting that MML return to London so frequently yet say they will not list here. Historically they said they wanted to be viewed as a international company hence their listing in London and Canada as well as Australia. I think they must still view MML in the longer term as a international company but wish to be prudent with costs in the short term. When profits are up they might think again about London.

Thank you for views on presentation

sfs

[deka1] 09/10/2015 18:25

Thanks for all the feedback guys,

[justinjjbuk] 09/10/2015 17:03

Steve. They were upbeat in April, but they have delivered. They hit their production number, grade has been improving and the service shaft has been moving forward. Rob Gregory back in April was flagging that ASCI was still at the high end. The kitchen sink write-down is really a function of the gold price and some pretty reckless capital expenditures in the past, but I wouldn't hold that against them.

As you say, I wouldn't expect Q1 to be a great catalyst. Production will be incrementally rising this year, so Q1 will by definition be at the lower end and the average gold price will probably be sub $1150. But things look like they could start coming together nicely in Q2. As I type, gold is flirting with $1160, which hopefully will break the bearish trend. From a risk return perspective, I think MML now looks compelling.

[cp42kx07] 09/10/2015 16:58

stevea171 / deka

You are correct regarding the ease of trading ASX stocks via (for example) TD, however there are the not inconsiderable FX costs to be factored in. These can add as much as 3% (2 x 1.5%).

There is also the more complex issue of the AUD / GBP rate which has weakened by some 20% over the last 2 years (pretty bad for long term UK holders, good for new ones).

As MML is a stock with USD income and USD / AUD / PHP costs I have been surprised that the share price has not appeared to benefit from the positive consequences of the FX rate moves.


CP

[stevea171] 09/10/2015 16:17

Justin. Thanks for that. Very encouraging. You asked exactly the right questions.

However GD and Rob were upbeat and confident in April and look what has happened since then. I fully expect a major improvement some time in the future but have no idea when all this 'legacy costs' will drop out and there will be some decent generation of free cash.

Q1 in a couple of weeks? - I doubt it. The gold price July to Sept has been the lowest we have seen in the past 5 or 6 years.
Q2 to perk up the Interim result? - Maybe. Hopefully yes!

[deka1] 09/10/2015 14:55

Steve yes I agree its not much different to using the lse,..if they get the aisc down to under 800,for year 16-17,even if gold stays around 1150 mark, they will be making more than 300 an ounce more.everything ccrossed .

[goodgrief] 09/10/2015 14:54

"Has Rob Gregory come to watch the Aussies in the World Cup? He looked like an ex-rugby player when I saw him last April."

Yes. Straight from the horse's mouth...

[justinjjbuk] 09/10/2015 14:52

I was also at the meeting and got a very positive impression. Key points:

- Change in stope protocol (payment method) has now reached the stage where new regime is rewarded by a jump in stope grades. He said there was a lag between introducing the new protocol and grade improvement which was one reason for the elevated AISC. Now this has run its course, AISC should trend from around $1,000 to $900 on this factor alone.
- In the annual report and on page 16 of the presentation, there is mention of high AISC for "the medium term". I was rather worried by the phrase and asked Bob Gregory what was meant by it. He replied that it meant until June 2016, when the new service change expense would fall out.
- As Tadtech mentions above, Gregory is now talking about a long-term AISC of $800. Seems very confident he can hit that number.
- I was a little worried that as soon as the service shaft was out the way, we would be looking at expenditures on the L16 shaft, so elevating AISC yet again. Gregory suggested that this would not be the case and they could phase in the L16 expense while keeping AISC at that long-term target.
- I challenged him on why if AISC is improving and production going up, we are not seeing cash accumulating on the balance sheet. He said that there had been some legacy one-off expenditures and we should see cash on hand rising from the interim results. He talked later about cash on had going up by about $2-3 million a quarter in the near term.
- Later in the bar, I mentioned his stock option holding and the $1 strike price he has. He is well aware that with confidence in Medusa lost in the past, the only way the market is going to take the company's recovery seriously is by seeing cash going up. This was very encouraging given my fear that as a company run by mining engineers, capital and cash management had been very poor in the past.
- Just like in April, I was really impressed with Gregory. He appears completely on top of the running of the mine, confident that the improvements to date will flow through and fully aware that the market will only reward the stock when it sees solid improvements in cash flow.
- I added to my position substantially last week at around 45 cents and am feeling very happy with that action after this meeting.
- Now if only the gold price will cooperate (or at the very least not go down), I think we could see some monster moves in the stock price by early 2016.

[stevea171] 09/10/2015 14:38

Tadtech. Thanks for your report. Were many people there? Many questions? Atmosphere? Afterwards?

With online brokers like TD you can buy MML and put them in an ISA if you want very easily. It's not much different from buying/selling on LSE except for the time difference.

[goldminer70] 09/10/2015 14:23

Thank you Tadtech.
They seem quite adamant about the London listing, which makes me wonder why they keep coming over. I was surpised they came over last April and this week. Has Rob Gregory come to watch the Aussies in the World Cup? He looked like an ex-rugby player when I saw him last April.
Do we have any expertise of a Company Secretary.
What is the way forward?
Is there any way we can have any imput at the AGM?
How much does it cost for an AIM listing.
Is it possible to know how many shareholders there are behind nominee holding. Like most of us my few shares aren't listed on the list of shareholders.

It seems a little perverse that they will come to London to raise some cash but not to expand the franchise of shareholders. They seem fairly closely connected to me.

It does seem that if they raise production and lower the AISC the share price can only rise significantly above the present lowly level

[tadtech] 09/10/2015 13:22

For those interested I attended the presentation last night and asked the question concerning re-listing in London, the answer was no. They seem to be sticking to the points made above and in particular they suggest only a small number of UK investors (7%) and cost. They felt liquidity in on the ASX was fine.

The only proviso to the above was if the needed to raise significant cash and then they would consider London as a cash raise target.

The good news was that they feel the AISC will drop significantly from the current circa $1100 to below $800 over time. It was stated that the mine has become far more efficient mainly due to a new service shaft and costs are falling accordingly. They are looking at every opportunity to cut costs further.

In general the presentation was pretty upbeat, if it had been UK listed I would be a buyer at current levels.