Medusa Share Discussion Threads

[chipperfrd] 02/5/2016 16:24

andrewsr,

It is, perhaps, somewhat debatable what the total eventual haulage capacity may be when all the current additional waste is complete and when the service shaft finally relieves the L8 shaft from having to haul personnel at every shift change.

I have penciled-in c. 200kt/qtr as the eventual maximum but I am unsure as to what the sustainable tonnage of waste may still need to be hauled via L8. Clearly, they will limit waste haulage whenever possible.

It then becomes a function of diluted head grade as there will always be c. 30% of development ore which, by definition, is at a lower grade than pure stope ore.

MML quote reserves at a diluted head grade of c. 7.2g/t so the feasible maximum production level could be at c. 170-180koz/year (around 44koz/qtr). At a more conservative head grade of 6.8g/t the production drops to c. 160-170kozpa.

But due to the lower target level for the service shaft and the consequent re-targeting of it's completion to mid 2017, it is still around 15 months before the mine is likely to get up to full production potential.

Perhaps that is not such a bad thing as Gold may well be considerably higher by then and in the meantime they are still profitable at lower gold prices.
Chip

[ilostthelot] 02/5/2016 16:23

Chip -I'm open to being invested here for the longer term as well I believe the amount of money that's been spent on infrastructure & mine development will help Medusa make a lot of money in the years ahead coupled with a rising gold price.

Regards the service lift shaft you'd think that will reduce the blended grade while it and the mine is being developed.

[andrewsr] 02/5/2016 15:15

Presumably they will get back to 120-130,000 in the coming months. What will be the effect of the current service shaft works - is that expected to add to the 120-130,000 oz/pa? And Bananghilig .....? It looks as though Guinhalinan has been written off with poor drill results in the recent up-date.

[chipperfrd] 02/5/2016 13:22

ILTL,

I am taking a 3-year forward view as a minimum, so this last quarter's figures, although disappointing, are not really indicative (in my view) of the longer term investment case.

I expect the upside may well be limited over the shorter term but things may well look a whole lot better over the rest of 2016 - especially with a resurgent gold price.
Chip

[ilostthelot] 02/5/2016 13:09

Boyd Timler is not long in post. You're right though long enough to know about production problems and communicate that to us.
I've only just bought back in ,so happy to hold for at least 6 months hopefully they will finally get their act together in that time while gold is on the crest of a wave.

[edjge2] 02/5/2016 08:51

Been switching into asx pru during april. ASX market waking up. De ja vu here with CEO and comunication probs?
Weiss research suggesting retest 1180 gold but cannot really see it unless scaredom from FED of certain rate increase, USD index ramp above 94. Any ideas.

[ilostthelot] 02/5/2016 08:15

I'm guessing they'll be targeting 120,000/130,000 for next year's production target. When do they usually give guidance on that ? July?

[deka1] 30/4/2016 20:42

James Rickards, economic and monetary expert, joined Bloomberg’s Francine Lacqua on Tuesday to discuss the gold “chart of the decade”, his new book “The New Case for Gold,” why gold is money and why gold is going to $10,000 per ounce in the coming years.

Francine generously acknowledged how Rickards was “bullish on gold for quiet some time and actually you have been proven right … it is the chart of the decade”. She said that this, “has to do with inflation expectations, it has to do with currency but it is really, at the end of the day, just a haven so people pile into it – as much as they do yen …”




GOLD IS MONEY
Jim responded that, “Gold is a form of money and not an investment. As money it competes with other kinds of money — the dollar, euro, yen etc.. They’re like horses going around a racetrack – place your bets but you have a subjective preference for money.

As investors are losing confidence in central banks … that’s what’s been going on and been clearly revealed. Central bankers have told me that they don’t know what they’re doing and they sort of make it up as they go along. They experiment.

President Evans of the Chicago Fed has said this and others have said it privately. I spoke to Ben Bernanke and he described that everything he’s done was an experiment — meaning you don’t know what the outcome is. So, in that world where investors are losing confidence in central banks, gold does well.

Right now there are tens of trillions of dollars of sovereign debt with negative yields to maturity – bunds and JGBs. Gold has zero yield. Zero is higher than a negative 50 bps so gold is now the high yield asset in this environment.”


STOCKS HIGHER ON “FULL DOVE”

Regarding stocks, Rickards had this to say: “Both gold and stocks are going up, and the reason stocks are going up is because Janet Yellen is going “full dove.” There’s nothing the stock market doesn’t like about free money. Plus negative interest rates might be on the table for next year.

"That’s sort of bullish for stocks but it’s also bullish for gold. Sometimes gold and stocks go up together and sometimes they don’t. There’s no long term correlation, but right now in a world of easy money and negative yields it’s good for both stocks and gold.”


GOLD AT $10K/oz
When asked for his price target for gold, Rickards says, “I have a technical level for gold, it is $10,000 U.S. per ounce."

He said, "That amount gets bigger over time because it’s a ratio of physical gold to printed money. The amount of physical gold doesn’t go up very much, but printed money goes up a lot, so the dollar target goes up more over time because of all the money printing. Gold at $10,000 per ounce is the implied non-deflationary price. If you have to go back to a gold standard, or anything like it to restore confidence, that is the number you must have to avoid deflation. So $10,000 per ounce is mathematically derived and is not a guess

[chipperfrd] 29/4/2016 16:37

Too true!

Keeps me off the streets though ;-]

[alquid1] 29/4/2016 16:31

Thanks Chip....the joys of investing eh!!

AL

[chipperfrd] 29/4/2016 16:23

Commiserations Alquid1 !

All my CEY are free-carried so I have just been sitting on them to see where the market might take them - but I had not really expected them at this level so soon.

[alquid1] 29/4/2016 16:16

The worse thing about this for me is I was stopped out of CEY at 40p which is now racing away and MML seemingly going nowhere!

Al

[chipperfrd] 29/4/2016 15:59

Yes, pity about the quarterly when (finally) gold & silver are breaking out.

I am very keen to see the COT report tonight (ie last Tuesday's numbers). The week before the Commercials were short 747 tonnes of paper gold and 13,077 tonnes of paper silver. It must be hurting !!

At the end of March silver was still at US$14.87 and now it is close to US$18/oz and the Commercials have added c. 4,000 tonnes over that same period.

Interesting to see if they have added yet more paper supply into the surging paper demand. Looks like the SGE Yuan pricing on the physical market has made a big difference since the 19th.
Chip

[polaris] 29/4/2016 15:49

Typical MML - report below par results on a day where gold appears to finally be making a breakout! I was thinking that gold would be hammered back into the channel but it does finally look like $1280 has given...

[chipperfrd] 29/4/2016 14:33

speedsgh,

No, nothing via email to me either.

[speedsgh] 29/4/2016 14:11

Did anyone else receive an Enews Subscriber email alert from the company into their inbox notifying of a new announcement available for viewing on the ASX webiste? I had previously subscribed to this service via the Medusa website + to date have always received prompt emails whenever they have released new announcements. I have received nothing today in either of my email accounts that are subscribed regarding the results released today.

I do hope that this is a one-off + not presaging a further deliberate withdrawal in communications with shareholders.

[atlantic57] 29/4/2016 09:32

For me the continuing disapointment is the ability of management to communicate in a straightforward fashion with shareholders.

However the rising gold price will clearly soothe nerves.

[chipperfrd] 29/4/2016 09:13

Yes, disappointing. I had expected something much closer to the December quarter.

I notice that they have cooled on Guinhalinan after lower than expected drilling results. So the hunt is on to find another source of decent ore to supplement Co-O.

The CAR worked out at 1.14 instead of the c. 1.26 that I had expected. Still cash generative but not the level of growth that we were looking forward to.
Chip

[polaris] 29/4/2016 09:02

Hi all,

I took a quick look at the figures and have a few things to note.

Through Q3 FY2016, MML have produced 83149 oz gold. Lower target is now at 108k oz so we can expect next Q to be 25k as low end of target. This equates to around 8.5k oz production per month or a head grade around 6.2 g/t based on 135k oz throughput of dry ore at 94% recovery. We are already 1 month into the current Q and so i would think they have a pretty good idea how things are progressing. I would not put such a tight figure on the lower end without being sure it will be met!

next, HY figures showed cash costs of $436 on a gold price average of $1109, this Q is $494 on a gold price of $1173 so the profit per production oz remains about the same. AISC were $1033 and YTD at $972 are within the envelope of $900-1000. Current average price received through 3Q is $1125, giving a clear cash generation of around $150 per production oz. This will only increase in Q4 assuming stable gold and AISC cf. Q3.

The new head at MML has a lot of work to do to show that he can turn this around and make MML a steady ship once again. There have been too many 'blips' over the last 12-18 months.

I have this as a recovery play and i have an average price below today's close, but i am far from happy with where we stand. I was expecting to make the bottom end of the original forecast and to see MML break 1AUD over the coming weeks leading into the end of FY2016. That can still happen but it requires gold to breakout. I'm less convinced about that and, even should it occur, MML will lag due to lumpy performance.

regards,

Paul

[ilostthelot] 29/4/2016 08:57

Disappointed.
Some of the grades drilled at level 8 look good on the bright side.

They need to factor in delays and mine development more when giving yearly guidance and surprising to the upside.

[nielsc] 29/4/2016 08:52

polaris,

Thanks. That clears things up for me. Looks like the grade is down due to the increase in development "Mine development advance was up by 8% quarter on quarter".
I do hope that this work leads to a return to 30+k oz in the next financial year.

Cheers,
Niels

[polaris] 29/4/2016 08:47

Niels,

Broken ore is underground waiting to be hauled as they are limited by haulage. each Q they do more preparatory work is less higher grade ore that makes it to surface. This will then be blended to make sure that the plant operates with a reasonable throughput, hence the fall in the head grade of the ore from around 6.8 g/t last Q to around 5.5 g/t this Q.

regards,

Paul

[nielsc] 29/4/2016 08:47

Eintracht,

I thought it was just before 6am BST (3pm AEST) ?
So a reasonable bit of trading before the drop going by what you say.

Cheers,
Niels

[nielsc] 29/4/2016 08:26

Thankfully gold it putting on a good move and perhaps we will see the price above $1300. Shame that MML is not going to hit its yearly target. I hope this has nothing to do with the departure of RG?

Cheers,
Niels