Medusa Share Discussion Threads

[dindorfius] 28/2/2016 14:46

somebody called there from hotcopper discussion
results are supposed to come on monday

[tightfist] 28/2/2016 07:55

Hi rt, speedsigh,

Great summaries of the various viewpoints on MML.

Responding to speed, I am highly sceptical of AT, and his actions and communications. Something went badly wrong to stall the immediate appointment of RG and probably IMHO lead to the resignation of RW.

The Board structure is my over-arching concern; if the CEO role is to remain off the Board are they going to attract top-drawer CEO candidates? We certainly need an impressive appointment to help overcome market uncertainty and drive the company and rating/sp forward. I suppose there is still a glimmer of hope that RG remains in the wings to continue as COO, if he respects the CEO appointee.

Cheers, tightfist

[speedsgh] 26/2/2016 12:24

Yes, some great posts in last couple of days. Thanks to all.

I still am extremely uncomfortable at the lack of CEO/COO (the latter of which has still not been acknowledged by the company) + at having Andrew Teo with his hand on the MML tiller.

Who is undertaking the review of operations referred to in the CEO Appointment Update on 22 Jan?

Whilst I would agree that an appointment should not be rushed, the recruitment of the new CEO would appear to be dragging on.

Can we trust Andrew Teo + the remaining directors to make an appointment that is suitable to all interested parties (i.e. shareholders included) + not just their own self-interests?

I'm very comfortable with the situation ops-wise but for me these board/management issues remain the major threat hanging over the company.

[roguetreader] 26/2/2016 12:08

So to summarise some excellent posts in the last day or so from Justin, Steve, Chip and Tightfist:
- We like the resource and assets
- Operations and performance have improved significantly over the last year
- The share price is still massively undervalued
- Some have a lot less trust in the management than others
- All agree management need to prove themselves
Lets hope they step up to the plate with next weeks update :)
RT

[tightfist] 26/2/2016 10:22

Hi Justin,

Yes, we have to wait and see how the payables react to the large Capex items from SA (I suppose they emphasised SA suppliers to distance themselves from the Chinese supply issues with the SAG mill). I would have expected that that cash outflow will be in CY16Q2, possibly even later. I am guessing that the kit from SA will be around $4m, and the other steadier expenditure will now spread over a two year period (8 months expired so far) and total around $8-9m (up from $6m).
You obviously overheard Rob Gregory’s comment regarding disputed outstanding payables from the SAG mill; my understanding was that these were paid-off in Q1 to clear the decks.

Regarding costs, certainly the MML track record is to incur unplanned costs which invalidates earlier expectations. There are numerous examples, the most recent of which is the deepening of the Service Shaft; here, (whilst the underlying rationale is welcomed) the really unacceptable aspect is that an on-cost was not mentioned, let alone quantified, which seems quite a cavalier attitude – it is our money!

I am OK with the stated (historic) AISC figures but there are always caveats surrounding future expectations, which takes us back to the unplanned expenditures aspect. In fact, I do wonder if the historic numbers are somewhat pessimistic, in that they include exploration costs at Guin. & Ban. I am looking for the depth/strike drillings campaign at Co-O to provide significant LoM extension and represent my investment case. On the other hand if one was preparing a DCF, there is the considerable cost of L16 Shaft ($50m) to take into account during the next 6 Years, which equates to $90 AISC impact if executed over 4 years.

Regarding developments beyond Co-O I would not be at all comfortable to see that proceed until/unless a new CEO/COO has absolutely proved their mettle. Following the Co-O expansion debacle of poor planning and lousy execution I would rather settle for a share of dependable cash flow from Co-O operations, and sell-off the open-pit potential on other tenements. I can be as greedy as the next person, but a 5-10 bagger will do nicely thanks, especially when accompanied by 5% yield along the way.

For the time being I will “Pass” on management perceptions….


Cheers, tightfist

[chipperfrd] 26/2/2016 10:03

Capt Bligh,

Yes. It is looking good. I will probably put a comment on the comparison thread once I have worked through it all.
Chip

[capt bligh] 26/2/2016 08:52

chip I wonder if you saw the amara rns??

[atlantic57] 26/2/2016 06:59

Justin thank you for your informative and balanced posts.
A number of pundits are predicting that gold will go on a parabolic run in the next few years.
If this happens then medusa will indeed rocket .

However the old saying of when the tide goes out you see who is wearing swimming trunks.
A companies management structure and indeed balance sheet will be scrutinised very closely in
Bad times.

I have learned to my cost that Mr Market is always right.

[justinjjbuk] 26/2/2016 00:27

Completely separately, is a little frustrating that we are CEO-less at this market juncture. I notice that lots of the Aussie mid and small cap producers are putting out presentations trumpeting their restructuring efforts, falling AISCs and disappearing debt. And their share prices are being rewarded for such efforts. But it looks like we will have complete radio-silence from MML (apart from required filings) until the new CEO is on board in the summer.

[justinjjbuk] 26/2/2016 00:21

Chip

I rather agree with you, although with a share price of 60 cents it seems that Mr Market doesn't.

Indeed, the pessimists on this thread point to MML's serial propensity to disappoint. And, in truth, they have a point. However, in the last quarterly report MML actually did what it said on the side of the tin. The quarter before that we saw no cash build on the balance sheet (although some debt pay down), but Rob Gregory alluded to yet another extraordinary with respect to an outstanding mill completion payment.

As we stand, we have a nice testable hypothesis: the cynics will suggest that we only get a meagre cash build (POG uplift notwithstanding) going forward as the company's stated AISC is too low. Given that debt is now all paid off and there should be no surprises in the CapX schedule, the optimists (realists I hope!) like you and I suggest that MML's indicated AISC is the actual AISC we get, in which case we should see lots of cash accumulating on the balance sheet going forward.

We just have to wait a couple more quarters to see whose view is right. But, thankfully, the pessimist's case is already discounted within MML's share price, but the optimist's view isn't. Accordingly, I know which side of this trade I want to be :)

Justin

[chipperfrd] 25/2/2016 20:44

Golden cross on $gold due next week (barring another major take down). £gold has already had it's golden cross with an excellent follow-through rise.
Chip

[edjge2] 25/2/2016 18:17

Peak now matching previous 0.6 peak wonder if can break it.
Another go at 1250 gold coming up?

[chipperfrd] 25/2/2016 14:36

Justin,

Following on from my last post re what outflows are included in reported AISC:

I checked the financial statement of cash flows for FY15 and it exactly matched the sum of all exploration, capital works & development outflows reported in the 4 quarterly reports, ie US$60.3m.

For the previous year (FY14), the FR statement of CF had US$73.834m against the sum of US$75.9m reported across the 4 quarterly reports - so pretty close.

Therefore I expect to find that the 1H16 statement of cash flow will show US$28.4m of investment outflows i.a.w. those shown on the 2 quarterlies.

I also assume that CF from financing activities will show a further payment of outstanding bank loan - not that there was very much owing anyway as current borrowings were only US$3.822m as of 30th June. With another US$2.151m as non-current liabilities.

Obviously we will also check out current Trade & Other Payables (1H15 they were US$15.63m), but I really cannot see the argument for additional sums to be added into the AISC equation. Cost of Sales is straightforward and right at the top of the P&L along with G&A and ALL of MMLs investment outflows are included in their reported AISC number - so where are the mythical additional costs?
Chip

[stevea171] 25/2/2016 11:52

Q2 results released 29/1 within hours of the ASX deadline for release of quarterly results and just ahead of a w/e.

Reason: The almost compulsory negative surprise/s that comes with Quarterly reports, Annual reports etc. This time a 1 year delay to completion of the Service shaft with no disclosure of additional costs, effect on 2016/17 production guidance etc. No disclosure of such a significant event at the time the company changed its plans. Never any prior disclosure of any negative surprise that appears in these reports.

H1 results to be released 29/2 on the last day allowed by the ASX for Interim results reporting for a Mining Production company as laid down in Chapter 4 of the ASX Rule Book.

Reason: Yet another negative surprise or wholly innocent? In my experience, in most cases of a company being unable or unwilling to report in good time ahead of a deadline the reason is not positive.
eg What will be said about the missing management? Where is the CEO that was promised within 'weeks' of the AGM last year? Where is the COO? Why was RG's likely going not reported and why was he not appointed CEO in November when GD retired? Why does A Teo like PHB before him fail to reply to emails as reported by Goldminer, etc.

Chip (aka stamp on anyone who does not toe the positive propaganda line). Don't bother to give a 1,000-2,000 word explanation of how this is all good and how could anyone not see there is no meaning to times and dates of companies reporting, etc etc as you pulled last time. I, for one, am not interested and will not be wasting my time wading through it all or replying. The reason your forecasts have been mostly miles wrong for the past 4 years? is not to do with your method but because of the lies and non-timely disclosure of significant information by this company's management. We would like to believe this is all behind us now but it seems not .....

[chipperfrd] 25/2/2016 11:09

Justin,

For the last 6 quarterlies the reported AISC has exactly matched my AISC calculation arising from ALL outflows (ie Exploration, Capital Works, Development & Corporate). So I have a reasonable degree of confidence in the figure.

Using extrapolation I am estimating US$8.4m for Capital Works over the next 6 months, plus US$5.4m on exploration, US$13.6m on development & US$3.2m for Corporate.

The 1H16 financials will certainly help to reinforce the above.
Chip

[abacus23] 24/2/2016 14:10

tighfist,

I'm going for a high tonight around 64.7c, close around 62c.

[tightfist] 24/2/2016 12:21

Hi Chip,

I have expressed the view for some while that resumption of dividends is required to markedly change sentiment (re-rating) afforded to MML and it’s good to see that you have a more progressive view than a few months ago. If PoG remains strong throughout 2016 (and a lot of cash is accumulated) I am hoping for a first move at the AGM this November – or maybe a modest share buy-back programme? (Notably Dividends would be worth virtually nothing to the BoD). Certainly Robert Weinberg wanted to put a marker down about the resumption of dividends, but his voice doesn’t count any more!


Justin,

Regarding your post #35870 expressing concern about possibly lumpy FCF. I am thinking that in Q3 the last big ticket Capex items (for Service Shaft winding and possibly the final parts of the extensive ventilation system) will be delivered to site, after that is it not mainly a steady plod for the next year with two stages of blind-sinking and then expanding the shaft laterally? Guestimate £1,5m/qtr? (Topped-off with commissioning costs).
On that basis I am looking for a reasonable consistency in cash accumulation through Summer 2017, notwithstanding the gyrations of PoG. Are you foreseeing other cash demands?

What chances 80c by the end of April anyone? Cheers, tightfist

[chipperfrd] 24/2/2016 09:26

Justin,

Thank you for the info on ASX watch lists. I have used that site hundreds of times, yet had never thought to explore 'myasx' and the fast lookup facility that was on offer.
Chip

[chipperfrd] 24/2/2016 09:08

cncventure,

Before the crash in the gold price MML had always stated that they intended to wait until adequate cash had been accumulated to develop Bananghilig into production. But, they may well take a different view now given the severe drop in their share price and the failure of the market to reward their obvious progress since the management changes in mid-2014.

Obviously, much depends on the forward direction of the gold price and completion of the mine throughput improvements initiated by Rob Gregory. However, even at current levels of gold the operations at Co-O would appear to offer a steady increase in free cash flow, and my own estimates are for cash of c. US$20-23m by mid-2016 and for c. US$70-80m by mid-2017 (at a flat PoG of US$1,200/oz).

Hence, I believe that they will have the opportunity to re-commence dividends at the end of FY17 and that this is a necessary action by management in order to restore market confidence that had been lost by failure to efficiently execute the Co-O expansion under the previous management.

Higher gold prices would obviously accelerate the cash build and reverse the negative sentiment to the sector that has prevailed over the last few years. Such positive changes might well influence the MML board to focus on growth by bringing Bananghilig into production, but I would still expect them to initiate dividends at the earliest opportunity.

As for the share price, at an estimated EPS of A$0.33 for FY16 they are only on a market multiple of c. 2x, which is a ridiculous under-valuation IMHO.
Chip

[cncventure] 24/2/2016 04:52

With the half yearly around the corner, the cash pile building and the gold price holding above $1200 for the last couple of weeks how long will it be before MML start paying dividends again?

And what effect do you think this will have on the share price?

[polaris] 23/2/2016 17:05

Hi all,

Well i got tempted back in with gold over $1200. I'm in the UK for a while so it gives me a reasonable trading window for the Oz market in the first hour or so of trading.

I was also expecting the half yearly results last night - maybe they will be next Tuesday?

regards,

Paul

[abacus23] 23/2/2016 16:45

Gold is going well today.

Can be break 62c?

Next stop 80's!

[jimbo55] 23/2/2016 13:57

Just to add to my last post, I currently live in Australia and would be amazed if the recent uptick in the Aussie Dollar lasts for long. Politicians of all hues over here make guys like David Cameron appear almost Churchillian by comparison, and that really is taking the analogy to places it should not go.

The following twitter feed provides some useful insight into both the Australian economy and the issues it's currently facing, along with the intellectual pygmies who attempt to run the place from Canberra:



Gridlock and special interest groups abound.