Medusa Share Discussion Threads

[chipperfrd] 05/5/2016 07:58

Morning Dek. I intend to be a holder for the long term as I still consider them to be well below fair value. One poorer quarter does not change the steady improvements that have been apparent now for the last 7 quarters.

I do have a load of other PM stocks (currently 25) and they all have different characteristics and investment potential. It is also quite possible/probable that I will change the balance of this portfolio with new stocks over time because it is a constantly changing investment landscape.

Does MML have the highest potential upside? Frankly I don't know. But as long as I continue to hold the view that it is under-valued, just as in my opinion all the others are under-valued on a long term view, I will maintain or add to my position.

All the best.
Chip

[deka1] 05/5/2016 07:05

Mornin RT,most of the old bunch of posters have sold out of MML,as posted on the other thread.
I can see why of course,but ya know this underground mining is a difficult business, its a find it as you go game ,and drilling is the only way to know for sure what you have and where it is.
The rest is interpretation of geological data , experience of underground formations,
and comparisons with other similar mining operations ,and of course a smattering of blind luck.
A lot of the delays have been down perhaps to the interpretation of the geology,
but trying to see through solid rock , to find out whats ahead aint easy,take the planned alimak nest site , when they reached that area it turned out to be unsuitable and have to re site it,so I don't blame the team for all of this present situation, alough they are the guys in charge, so they shoulder the responsibility .
believe the company will get it all together further down the road , and missing the end year lower end target by around 8% is disappointing , its not the end of the world imo.
I remain a holder, and good luck to you, we may be two of the few left lol.

[roguetreader] 04/5/2016 22:21

A quote from the Chairman of Beadell to Beadell shareholders in a shareholder letter published in 2014,

'In March, we reinforced our management team with
the appointment of Boyd Timler as Chief Operating
Officer. Boyd’s extensive experience and willingness
to spend a considerable amount of his time at Tucano
has been invaluable as we continue to build on our site
management team.'

Lets hope Boyd is equally enthusiastic about spending a considerable amount of his time in Mindanao and getting management credibility back on track.
RT

[bluelynx] 04/5/2016 17:01

Hi Atlantic

Yes, the management have had more than enough time to sort out the production problems, I suspect there are deep rooted problems with the mine geology which are limiting access to obtain high grade ore.

The risk reward with MML is on longer worth it in my opinion there are much better gold mining companies to invest in.

[chipperfrd] 04/5/2016 13:53

Good fortune 4marlin. See you around.

[atlantic57] 04/5/2016 13:47

Blue/ marlin i think you have made sensible decisions.

All of my major losses came from situations where the Management could not
be trusted.

i will look to exit tomorrow .

[bluelynx] 04/5/2016 12:21

Weĺl I have sold half my holding in MML, and it is very likely I will sell out completely. My trust in the management has been totally lost.

I have to say Austusgloop is and was correct. As least the rest of my gold holdings have double so dumping MML has been made much easier.

[4marlin] 04/5/2016 12:18

Decided to sell all my holding and am now out.
good luck to holders....I will keep a close watch.

[4marlin] 04/5/2016 12:07

I am out.
For me it is all about delivery.

[atlantic57] 04/5/2016 11:01

The share Price movement suggests that the market is agreeing with you august.

[augustusgloop] 04/5/2016 07:25

The latest drop in production numbers was entirely predictable.

Its exactly the same as happened last time Geoff Davies left -- he brought production forwards - so that he looked good and skimped on development.

History repeats.

[augustusgloop] 04/5/2016 07:23

bit of a realistic post by Justin on the MML numpty BB.

The AISC figures by MML are just pie in the sky.

You can easily work out what they truly are in an exceptional case like MML

Because production now is about the same as 6 years ago - they have simply been sustaining production.

6 years is sufficient to say that all these exceptionals are not exceptional.

Take the change in the cash position 6 years ago to now.
Add in the loans.
Take off the dividends.

Divide that number by the total number of ounces of gold produced in the 6 years.

Add that to the average gold sale price

That gives the genuine AISC that applied over those 6 years.


I can't be bothered working it out --- but I am confident that it will be somewhere just above $1,300 per ounce.

----------------------

They are now mining deeper - so I can't see why it would be less in the next 6 years than in the last 6 years.

There may well be a bonanza 3 year period, if they eventually finish these exceptional costs -- but then they will probably follow that up with another 3 years of exceptional development.

----------------

And don't say that the position is much better than it was 6 years ago, because of all the recent work.

6 years ago, did you expect them to need a new mill?
Did you expect them to need all this development.

Remember that the liars told you that it would all cost $70m.

[justinjjbuk] 03/5/2016 23:32

Wonder if the cancellation of unquoted securities notice relates to Rob Gregory's options.

[ilostthelot] 03/5/2016 11:01

Thank you Justin . I'll have a look at that Canadian miner EDV.

[justinjjbuk] 03/5/2016 10:44

Had same question on Hot Copper over what I like. Here is my reply there:

Going into the results season, I held 3 Aussie miners: MML, MLX and PRU. I also previously held RSG, but switched that into PRU after the merger. Also had been a holder of TRY and MOY, but took profits.

Truth be told, none of these names covered themselves with glory, with the exception perhaps of RSG. The reason I came out of RSG was that the CEO had previously been flagging that one of its 2 mines, Ravenswood, may be put on care and maintenance and not pass a LOM extension review (note its high AISC in the Q1 results). That would have made RSG a 1 mine (Syama, albeit a very good mine) company until Bibiani comes on stream way, way down the line. With POG above $1,300, I guess the Ravenswood LOM extension economics looks a bit better, yet this is still a risk.

PRU, like MML, had a bloody awful Q1. Unlike MML, I think their ore problems may be more transitory and with the merger they have a big, fat growth opportunity. Following my 4 criteria formula, however, I still kicked it out due to a) the negative quarter, b) terrible guidance and trust problems. It may be a takeover target (Randgold, EDV or RSG as suitors), but just looking for M&A plays is not my style.

MLX, likewise, bloody awful Q1, so out it went despite it having good value to me and lots of potential growth.

I made stacks of money on MOY, but took profits. Is still cheap but wonder what comes next once production up to 80k oz. On my watch list.

TRY still fulfils my 4 criteria. Only negative was that they didn't upgrade their reserve estimates at Q1 and so question mark still hangs over LOM and growth. I think this is more a question of lack of drilling results more than anything else. However, I took ample profits in this name before the results, but is on my watch list to go back in.

So I guess you are asking what I do like? Number one pick is Canadian name Endeavor Mining (EDV). Hat tip to GoldBear for putting me on to this. Like RSG and PRU, EDV is a West African specialist but unlike them has a spread of mines (4) with a new one just acquired and another big one to come on stream in 2017. Is still very cheap, bags of growth (550k oz to 900k oz over next 3 years), great Q1 just released (the conference call is live Webcast at 9:00 am Toronto time today), and the company does what it says on the side of the tin. Management just oozes class.

Going back to the Aus names, the reason I liked the small- mid-cap Aus goldies back in January was that they were soooooo much cheaper than the bigger cap names. But now that MOY, TRY and RSG have run up by over 200%, the gap with the majors has closed dramatically. NST, for example, is up only 30% and with gold at $1,300 is looking cheap. Multi-mine so less risky than the small caps, has a growth pipeline and management has been exceptional. You appear to be getting a big cap name with big cap risk, but with almost the same valuation as the small caps. NST is not as cheap as EDV, but not far off.

[atlantic57] 03/5/2016 10:29

Good balanced post Justin thanks for sharing.

[ilostthelot] 03/5/2016 10:23

Good post Justin. What other gold miners do you like ?


Its quite frustrating being one of the few miners going down in value at a time when so many are breaking upwards. Maybe see a test of 60c before a reversal in direction.

[chipperfrd] 03/5/2016 10:10

Justin,

Fair enough. We all need to direct our investment capital where we feel most confident of a decent return.

Thank you for posting your reasons and I trust you will visit again in the future to let us know how your investments are performing.

Good fortune
Chip

[4marlin] 03/5/2016 10:02

and that is, imo, very well put.
There are much better fish to fry out there.

[justinjjbuk] 03/5/2016 09:52

Guys. Been a long-term investor in MML, but have now reluctantly thrown in the towel. There are just too many better value opportunities out there, and with gold looking like it will decisively break above $1,300 I want the best bang for my buck. Will still check in to this forum as I am aways ready to change my investment opinion if the situation changes and also I like the friendly and intelligent commentary form Chip et al. I posted my rationale for divorcing MML on Hot Copper in reply to a poster I like there, CNCVenture, and will repeat it here. Good luck to all MML holders!

CNCVenture. After being a long-term holder in size in MML, the Q1 report was the straw that broke the camel's back for me and now I am out. There was so much to dislike in the CY16 Q1 numbers that I barely know where to begin.

Let's start with my 4 factor checklist for deciding whether I want to buy a company. Ideally, I want to see

1. Cheap Valuation

This is on a free cash flow basis, and ultimately this should be evidenced by cash build on the balance sheet. In CY Q4, I thought that MML had, at last, turned the corner as we had a healthy $3.4 million or so jump in cash. This quarter, cash barely moved and this despite the average POG jumping from $1,096 to $1,173.

When there is a big margin between POG and AISC and cash is not building on the balance sheet then you either have an extraordinary or some new project in development (no new mine in MML's case). But if quarter after quarter, cash build does not reflect the POG minus AISC margin, then you have to ask whether the AISC is truly "All-In". Extraordinaries that repeat relentlessly quarter after quarter are not 'extraordinary'.

2. Incremental Improvement in Quarterly Performance

Again this appears to be a case of one step forward, one step backward with MML. For CY15 Q3 and Q4, things looked like they were moving in the right direction: positive trends in ore mined, grade, recovery and so on. But for CY16 Q1, we seemed to have slammed the company into reverse gear. The grade decline was horrible. The report states that "the volume of development materials impacts on the L8 hoisting capacity, so was not unexpected' and "the level of broken stocks is cyclic and lags behind the mine development rates". But if mine development is cyclic and 'expected' (leading, in turn, to cyclic good and bad quarters in grade and gold production) then why wasn't this incorporated into the forecast annual production number?

This is also a very different story from that sold to us by the outgoing COO Rob Gregory. For him, the grade improvement up until end CY15 was a direct result of changed compensation practices. Now we have a big, fat question mark over whether this is true. Moreover, we have to ask the question: "Is the true average quarterly gold production run-rate for the mine (before the service shaft is finished) actually 25k oz rather than 30k oz?" That's a big change.

3. Realistic Guidance

Don't get me started! The golden rule of investor relations is 'promise low, deliver high'. It really is not that difficult. It wouldn't even define MML's production targets as 'stretch goals'. They appear to be born out of a parallel, imaginary universe.

This brings us to trust, of which I have none in MML. Rob Gregory and Geoff Davis seemed to be creating a good story with MML after the fiasco of the new mill installation. Then Geoff retired. But what on earth happened to COO Rob Gregory? He seems to have been disappeared like a character out of George Orwell's book '1984'. I will continue to follow MML and keenly await Boyd Timler's first presentation. But he has his work cut out: building credibility starting from zero.

4. Long-Term Growth Plan

For those who have followed MML as long as I have, it once aimed to become a low AISC 280k oz company: 140k oz at Co-O and 140k oz at Bananghilig.

Even after the service shaft is completed, I have to question whether Co-O will ever consistently get much above 100k oz per annum. My fear is that as the mine goes ever deeper, the mine engineering challenges will get ever more complex. The commentary surrounding the service shaft in this quarterly, suggests development has been hit by a range of problems. Once the service shaft is completed, the company will be looking to the L16 shaft. Can we expect that to come in on schedule and within budget. I don't think so, because MML's track record on project deliveky is so poor. And with higher complexity and more unforeseen problems, comes a higher AISC.

Is the true long term run rate of Co-O really 140k oz at an AISC of $800, or closer to 100k oz with AISC over $1,000?

And then we have the question of post-Co-O growth. The quarterly report contained two horrible pieces of information on that front. First, it looks like Guinhalinan is a no go (in their words, "poorer than expected results"). Second they have stared looking for "resource prospects outside of the current tenement portfolio". This suggests to me that Bananghilig is also a 'no go'.

But given that they only have $16 million cash on the balance sheet, I can't see them have the resources to go out and buy new prospects, let alone take them through to production. So, at best, MML will remain for many years a single mine 100-120k oz operation, with all the risks that a single mine entails.

Final Thoughts

As per some of the comments in this thread, will MML go up if POG roars above $1,300? Yes of course. But that is not the point. Investment is a question of opportunity cost. Will a dollar invested in MML outperform one in another name with gold above $1,300? In my view, it won't; and there are still a host of companies that meet my 4 point investment criteria.

[deka1] 03/5/2016 09:50

GOLD has had a few goes at the 1300 level in the last couple days , not held yet.

[deka1] 02/5/2016 22:11

You’ve heard of Custer’s last stand?

Well, this week could very well be the greenback’s last stand. Something strange has happened on the way to the greenback rally. The U.S. dollar has been locked in a range for the majority of April. Without getting into my time code and square out calculations in the near term on intraday charts, let’s just say the bottom of the range had better calculations than the upper part of the range. What that normally means is the instrument in question should break higher. In this case a higher dollar would’ve helped Europe who really needs the EUR/USD to stay as low as possible for as long as possible.

Advance GDP for the first quarter came in at .5%, which means this is the raw number before revise it. If the number crunchers are telling you it's .5%, I’d be willing to bet the real number is somewhere between -1.0 to -2.0%. That’s just one man’s opinion. Let me put it to you this way: In all the years I’ve been following this stuff, I can’t remember a time when the unemployment rate was near 5% with such anemic growth.

Many of us have been to business school and in Econ 101 they teach that the 5% number is considered full employment. So how could we possibly have 5% as the employment number and GDP hovering near 0%?

It just doesn’t add up. Taking this to the next level I’ve heard numerous sources say Obama is the first president to serve two terms and not have at least one full year with at least 3% growth. As if Europe weren’t enough to worry about, the U.S. economy is now getting wobbly.



What you are looking at is the upper portion of an Andrews channel for the greenback going back to December when my 26200-time code calculation nailed the absolute top. By the time you read this on Monday, the dollar will be hitting a series of important hourly golden spiral time windows.

Since the greenback is like an oil tanker and it doesn’t automatically reverse, I’ll give it the first half of the week to change direction. Ideally it turns Monday, but should do it by Tuesday. If it's Wednesday and they violated the midline, it’s possible—if not probable—that we are headed for levels not seen in two years.

Last week was also an important week where we lost some key areas. It’s now very probable we lost Apple. Due to bad iPhone sales and guidance, they got crushed in the aftermarket last Tuesday night. As you know, it’s not the first major tech giant to get taken to the woodshed. Just a week earlier it was Google. What should be concerning to many is the hit the semis took last week. Even biotech got hit last week.

[andrewsr] 02/5/2016 19:03

Thanks Chip, still seems like a strong hold for the medium term.