Medusa Share Discussion Threads

[deka1] 02/3/2016 13:10

Iknow where your coming from Polaris, something don't smell right with this B.O.D,
Chip hi, can you tell me if A Teo and any others have been with MML since the start, and were they connected in any way with the old outfit that Medusa bought the original old operation from , cheers .

[polaris] 02/3/2016 11:53

Hi all,

One thing to consider in this process is who the BoD are working for. What do i mean by that? They should be working in the shareholders interest by making the best possible choice to increase the value of the company and its standing. However, if the BoD have a personal interest in maybe taking the company private then there becomes a rather blurry line about how they will act in the shareholders interests rather than their own.

MML is undervalued compared to its peers based on the recent HY results. Yes, there has been a history of hiccups, which might explain some part of the low rating but even a conservative valuation would be in the 1.5-2 AUD range, based on production stats and current pog.

Another part could be that the current BoD is hindering the public face of the company for their own ends. Yes, this is only my opinion but why let your best operations guy go after the old CEO coming back to steady the ship and seemingly groom this guy for the position? Why delay the process of appointing a replacement even assuming RG was not the best candidate? Why keep all the shareholders guessing? The answer could be that this uncertainty prevents the price rising while the stealthy buyout is being arranged. Someone might be able to secure a buyout for under 1 AUD, depending on who the major shareholders are.

People like me make a reasonable return, as i am trading from the low valuation but it is hardly a decent return for the LTBH who will then never see the full benefits of the costly mine infrastructure upgrades.

There is something very odd going on but i would hope the new CEO has a track record in operations, preferably with vein mining, and the share price reacts accordingly.

regards,

Paul

[justinjjbuk] 01/3/2016 10:15

Hard Work

There is very likely to be a confidentiality agreement in place. If he did resign in December, he is probably on 'garden leave' for 3 months. The BoD would want 'radio silence' over that 3 months to try to advance the CEO search (I would probably do the same in their place). What I would have done differently from the BoD is to sort out the CEO succession much earlier given that GD was an interim CEO from the outset. But then again, the BoD seems itself to have been in a state of flux, so I guess it was a bit dysfunctional in making such decisions.

We shouldn't discount the possibility that with a successful turnaround under his belt RG could have had a better offer from a bigger outfit somewhere else, one that MML couldn't match. His options with MML are quite under water ($1 strike price) and the BoD may not have wanted to issue him a new tranche with a lower strike price. Remember that in December it looked like gold could break $1,000, so the background to any salary negotiations in December would be very different from today with gold over $1,200.

I guess all this is speculation (and we shouldn't discount the fact that something more prosaic may have happened: middle aged men in stressful jobs with lots of travelling do get heart problems and so on).

While all this management uncertainty is not good, we can take a bit of comfort from the fact that mine management does not appear rudderless at the minute. The current mine review is a complex operation that would have needed to be spec'ed out and will need constant supervision. So someone is making important decisions and executing them.

Justin

[deka1] 01/3/2016 09:25

Golden cross for gold
Last Friday, gold experienced a “golden cross,” a technical indicator that occurs when an asset’s 50-day moving average crosses above its 200-day moving average. It’s the first such movement in nearly two years and is a sign that gold might have further to climb.

[deka1] 01/3/2016 09:08

Hi Jim goldminer and I and others have emailed recently, numerous times , with no response, but nothing lost in emailing again mate .

[stevea171] 01/3/2016 09:05

Goldminer. Thanks. Yes, it's extremely unlikely he was thinking of resigning on his September trip to London.

Tightfist. Thanks. As well as the attributes "competent, straightforward and pleasant person" that you mention for RG, another that comes to mind is honest. Something it seems this BoD's know very little about .....

What routes to get the ship back on course?
In some companies a Director is nominated to have shareholder liason responsibilities. I'm not aware that any of these directors have been given that role. Roy Daniel has recently been appointed to the Board and is a long term Medusa person with a long association with GD. If we wish to express dissatisfaction with the Board I suppose we could contact him?

The new Operational Review?
Rather than mine Level 8, the mine plan seems to have been for a while to already be making winzes to Level 9, 10 etc and many more are planed. I don't know if this is a result of the low gold price and they are 'high grading' mainly along the GHV and leaving for now a lot of the smaller and less profitable veins that they intend to come back to when the gold price rises.
Imv this operational review will recommend spending a lot more money on mine development as well as Services Shaft (Level 8 + 2 = 10). L16 shaft ($50 million) will need to start as soon as some deep drilling results are in either this year or next.

[hard work] 01/3/2016 08:51

Would appreciate Justin's input into the discussion re RG...ie could their advisors have advised not to announce departure? Maybe there were things going on in the background none of us were aware of....maybe he talked the talk but not walked the walk (as far as MML is concerned anyway)...maybe there's a confidentiality agreement in place...who knows!

[jimbowen30] 01/3/2016 08:43

I met RG last year in London and was very impressed. I suggest we all email the company and ask why/if RG is no longer involved for starters! Despite this, nice to see the share price moving up...shame I didn't top up, but MML looks cheap, so perhaps not too late if MML is in the early stages of recovery?

[atlantic57] 01/3/2016 07:23

Great performance by medusa !

[leedskier] 01/3/2016 01:55

With yesterdays Interims and the price of gold rising, this is up 18% in Australia.

[tightfist] 29/2/2016 22:41

Steve,

A really superb summary; Rob also comes over as a competent, straightforward and pleasant person!! Reading between the lines, last October RG anticipated becoming the next CEO, but something went wrong. I guess he didn't curry favour with the Board/AT and had insufficient sponsorship when GD was standing down.

As PI's, what routes/contacts are open to us to get the ship back on a safer and more prosperous course?

Regarding the new Operational Review, it feels as though the BoD almost want an audit of Rob's work; was there a trust issue? Or is it an excuse in the making to rein-in the 2016 production guidance; with only 4 months to go accountability seems absent (re: paragraph 3) and those caveats are wearing thin.

Cheers, tightfist

[goldminer70] 29/2/2016 22:29

Steve
I agree with every word you say.
I don't think he would have come over in September if he was thinking of handing in his notice.
Goldminer70

[stevea171] 29/2/2016 21:20

Goldminer. Yes, RG went at year end imo also.

Chief Operating Officer.
Rob Gregory was appointed in September 2014 as a consultant to review operations of the Co-O mine and report to the Board 11/2014. This report on operational issues and improved efficiencies at Co-O was reviewed by the Board and after that the main recommendations advised to shareholders.

Rob Gregory is an Australian Mining Engineer with extensive mine development and operational experience in Australia, Indonesia, Philippines and China, both in open pit and underground mines. He has held managerial positions in junior and major mining companies.

His experience includes:
Responsible for the construction of the Tanjianshan Gold Project in Western China.

Vice President Mine Development for Climax Mining’s Didipio gold/copper project (now OceanaGold) on Luzon, the Philippines 1996-2000.

CEO of Rusina 2005-2010 when taken over by European Nickel (ENK). Nickel mine development at Acoje, Luzon, the Philippines.

MD of European Nickel 2010-2012 when taken over by DMCI Holdings and D&A Income. Operations in Turkey and the Philippines.

So before coming to Medusa he had plenty of recent experience in the Philippines and wider relevant experience.

With the announcement of Rob Gregory's executive appointment as Chief Operating Officer, November 2014, and subsequent travel to the UK (twice last year) and Switzerland for presentations to institutions and private investors accompanying Geoff, it was obvious he was GD's choice to take over as Medusa CEO when GD stepped down. He was instrumental in the mine efficiencies implemented over the past 18 months that have been a huge success.

He had all the qualifications and 12 months preparations to step immediately into GD's shoes last November and do a fantastic job. But no! This BoD's knew better than GD so passed him over and are likely to appoint someone who is lesser qualified and with zero knowledge of Medusa, operations, staff, institutional and private investors.

They also commission a new Operational review. The second in 16 months after the one carried out by RG in Autumn 2014. Why have two reviews so close together? Why not make use of the the person who carried out the 1st review if a second is considered necessary?

This CEO appointee will start from scratch and be beholden solely to this highly flawed BoD's who appointed him and to no one else. This BoD's are a disgrace with a track record of failure. It is them who should resign not Rob Gregory.

Many thanks to Rob for all his efforts on our behalf.

[tightfist] 29/2/2016 20:31

Hi Goldminer,

Many thanks for your timely reminder of Rob's now invalid email address. As deka says my thoughts are just a hypothesis to put out there and be tested.

I see that on page 5 of today's report AT "thank our Shareholders for their continued patience" whilst awaiting the appointment of the new CEO; I suppose that is a recognition of (if not a response to) your letter. Thanks for your efforts in that regard.

Cheers, tightfist

[goldminer70] 29/2/2016 17:14

Rob Gregory's EMail address was [e-mail] We exchanged EMails in early December but now these are returned by the mailing system so I am sure he is no longer with Medusa and left in December.
Goldminer70

[speedsgh] 29/2/2016 11:32

tightfist - I would welcome it if the scenario you suggest transpires to be accurate. However I'm not holding my breath! ;o)

I will be more than happy if my concerns re current CEO/COO uncertainty prove to be unfounded.

[deka1] 29/2/2016 11:30

tf hi , a valid hypothesis ,could have hit the nail on the head mate

[tightfist] 29/2/2016 11:23

speedster, deka;

Re: RG, is there conceivably a third option whereby RG has been required to take a back seat in order to take part in an even-handed beauty contest for the CEO role? If he did not, it could look like a foregone conclusion and suppress the quality? of the candidates (and the enthusiasm of the search agency?).

(That scenario happened to me a few years ago when I was the best external candidate for a job that ultimately went to an insider. In that case the would-be top-end employer wasn't transparent about the recruitment process).

Just a thought! tightfist

[justinjjbuk] 29/2/2016 11:16

When looking at other Aussie miners, I noticed that quite a few replaced their CEOs during the downturn and a couple published the terms for the new CEOs. This included a three month notice period. If, as appears likely, Rob Gregory resigned in December, he would likely be working through such a notice period.

Accordingly, we would likely see a departure announcement by the end of March. In a perfect world, the BoD would try to announce the incoming CEO at the same time as they announce the outgoing COO. However,given all the references to wanting the short-listed candidates to have access to the mine review, I don't think this looks possible. Personally, I would be very surprised to see a CEO announced before the Apr-Jun quarter.

[speedsgh] 29/2/2016 11:03

deka1 - Yes, I noted that. Either they have a working COO whose name is no longer included on relevant announcements (e.g. quarterly reports) + whose email address no longer works; or they no longer have a COO + deem that the departure of RG is not worthy of sharing with their shareholders. V disappointing.

Ops-wise all looks v encouraging.

[deka1] 29/2/2016 02:56

n0 mention at all of Rob G

[chipperfrd] 29/2/2016 02:43

They have left their debt at US$6.2m and cash at US$9.5m is barely changed from 30/6/15. But working capital has improved significantly to US$42.9m from US$32.4m at the end of FY15.

Their current assets have risen by c. US$6m whilst their current liabilities have fallen by c. US$4.3m. Based on their reported cash plus unsold bullion, they were sitting on c. US$7m of gold awaiting sale at 31/12/15. Looks like that was a good call given the sharp rise in PoG over Jan & Feb.

At this rate their NPAT at FY16 end will be the best since 2011.

Six month free cash flow is -US$1.4m and Net cash flow is -US$1.2m. Largely due to reducing their current payables. Pity, as it would have been good to have recorded a small positive FCF.

As expected, they have recorded an EPS of A$15c and my estimate of 33c for the FY looks on target. At the current share price they are priced by the market at c. 1.4x earnings!

Again, as expected, their D&A has reduced significantly to US$9m because of the FY15 impairment. D&A is now almost half the FY15 level.

Gross profit margin was 50% and Net Margin was 45% for the 6 months.

Looks like the lower level mine review will be reported in March and (hopefully) they will finally report who is to be their next CEO/MD at the same time.
Chip

[eintracht] 29/2/2016 01:50

Results out.

[noirua] 28/2/2016 21:43

Aust gold production hits 12 year high -

By AAP | 28.02.2016 12:24 AM