Medusa Share Discussion Threads

[roguetreader] 30/8/2016 08:00

Full year results now out

[chipperfrd] 26/8/2016 07:52

TF

In the notes to the 2015 FS we have:

1. (m) Rehab costs

Rehabilitation costs that are expected to be incurred are provided for as part of the cost of the exploration, evaluation, development, construction or production phases that give rise to the need for restoration. Accordingly, these costs are recognised gradually over the life of the facility as these phases occur. The costs include obligations relating to reclamation, waste site closure, plant closure and other costs associated with the rehabilitation of the site.

These estimates of the rehabilitation obligation are based on anticipated technology and legal requirements and future costs, which have been discounted to their present value. Any changes in the estimates are adjusted on a progressive basis. In determining the rehabilitation obligations, the entity has assumed no significant changes will occur in the relevant Federal, State or foreign legislation in relation to rehabilitation of such minerals projects in the future. At the reporting date, the group does not consider it has any significant unsatisfied obligations in respect to rehabilitation costs.

33 (c) Restricted Funds

(i) A rehabilitation fund of US$463,363 (2014: US$359,823) to be used at the end of life of mine for environmental rehabilitation.

(ii) Employee retirement fund US$1,100,879
(iii) Provident fund of US$266,673

So, like most miners, there is already a provision made in the balance sheet for closure, which appears to answer your question!

Chip

[stevea171] 25/8/2016 22:16

Tightfist. First 100 days of a new Government can be quite frenetic. Certainly seems to be the case with this one.

Have to see how things go in the medium term but what you suggest about making financial provision for mine closures would not be unlikely imo given the history and feelings running high about irresponsible mining in the Philippines now given a high profile voice in the person of environmentalist Gina Lopez.

[tightfist] 24/8/2016 09:01

Hi Steve,

Many thanks for sharing your info on the status of the Mindanao mine audits; reassurring that MML has probably passed (and ISO) though there will doubtless be some follow-up remedial action requirements. Now Lopez seems to be further raising the stakes with her definition of responsible mining - a "rehabilitated mine site" presumably requires a mine to have ceased operations!

In a worst-case scenario do you think this could evolve into a government requirement to accumulate cash on the balance sheet (or even in a government escrow account) to finance the ultimate closure process? Coincidentally, future closure cost provision has become a pressing issue for Stratex with their Turkish JV partner.

Hopefully we will see some clarity on this environmental topic in the imminent MML Full Year report.


Cheers, tightfist

[ilostthelot] 22/8/2016 23:30

Thank you Stevie. Let's hope once it's all official the share price will rerate.

[stevea171] 22/8/2016 10:40

As expected, it would seem Medusa has passed the country wide audit of all mining operations initiated by the new Government from July 1st. In total 8 + 2 mining operations (10) have been suspended as of mid August with Mindanao being the first island to be audited.

14/8/2016. "The DENR intends to finish the audit of all 42 metallic mines within the month."

11/8/2016. To date, the DENR has already suspended 8 mining firms since the audit on all existing mines in the country began in July:

BenguetCorp Nickel Mines Incorporated
Eramen Minerals Incorporated
LNL Archipelago Minerals Incorporated
Zambales Diversified Metals Corporation
Berong Nickel
Citinickel
Claver Minerals
Ore Asia Mining Development Corporation

The audit is expected to end by mid-August. (READ: Duterte: 'Amend, suspend, revoke' environmental permits, if needed)

On Thursday, Environment Secretary Gina Lopez said even with the ongoing audit, she has not yet seen a model of responsible mining. "I know one thing: For after a hundred years of mining in this country, we don't even have one – not even one – rehabilitated mine site.

The Department of Environment and Natural Resources (DENR) is set to issue suspension orders to two mining companies operating in Homonhon Island in Guiuan, Eastern Samar on Friday, August 12.

The DENR's ongoing audit revealed that Mt Sinai Mining Exploration and Development Corporation and Emir Mineral Resources Corporation committed several violations, enough to warrant suspension of their operations, Environment Undersecretary Leo Jasareno said in a news briefing on Thursday, August 11.

hxxp://www.rappler.com/nation/142699-suspension-mining-companies-homonhon-island

[ilostthelot] 16/8/2016 21:47

Justin The other gold miner I hold is AAZ it is listed on AIM. Worth a glance over if you're still looking for other Gold mining options in the UK market.

[leedskier] 10/8/2016 16:07

This morning the only metals commodity rising was copper.NY has reversed that. Copper is falling but gold and silver are rising!

[tightfist] 10/8/2016 10:50

Hi Justin,
We will both be looking Boyd Timler in the eyes on the 8th to sense his confidence and commitment, especially regarding achieving $800 AISC. I don’t think he has yet put any of his own money into MML stock which seems to be a deep-rooted cultural issue on the Medusa board? Mind you his Terms of Appointment (05/04/2016) are hardly endearing. I guess he is anticipating a large award of A$1 options at the AGM provided the share price doesn’t run away in the meantime.....

O/T: Re: Serabi, we should see solid H1 Financial results within the next week. Certainly SRB are now loosing much of the tailwind of the Brasilian Real weakness.
It would be interesting to have insight to the dynamics between CEO Hodgson and the majority holder Fratelli. The 14th April announcement on potential acquisitions seemed to me a little curious and much about NOT undertaking acquistions? ..

Cheers, tightfist

[chipperfrd] 10/8/2016 07:57

Yes, and a doubling of the dividend! I have owned them since 2001 and it is a share that just keeps on giving.
Chip

[leedskier] 10/8/2016 07:36

CEY reports this morning an AISC of $750.

[justinjjbuk] 10/8/2016 00:22

Steve/Tightfist

Will try make it along on the 8th September. Will be good to look at the whites of Boyd Timler's eyes and ask whether he really believes AISC will fall to $800 dollars post the completion of the service shaft.

Tightfist: Actually held Serabi for a time. What made me come out was Mike Hodgson's comments about cost pressures in Brazil due to currency appreciation and also talk of an acquisition. Although he talks about not overpaying, he doesn't have much cash on the balance sheet, so any new venture would require some kind of capital raise. He's done a good job taking the company to 40k oz pa, but not sure where he goes from here.

[tightfist] 05/8/2016 19:05

Hi Steve,

Many thanks for your very informative postings through MNN, especially the informal report of BT's words in Kalgoorlie. Hopefully these views will become the formalised party-line before 6th September which could possibly create some share price momentum provided BT builds personal credibility.

One can finally see a developing line-of-sight to reliably filling the SAG Mill at 2,500tpd with the L8 shaft starting rising later this year and hitting 1,700tpd in mid CY 2017, Agsao reaching 300tpd from L8 (when?) and the balance of 500tpd continuing to be hauled from above L6, albeit at lower grade. On that basis 140,000 Oz looks readily achievable, but the $800 AISC is maybe more stretching though it is the same target number cited by RG last year.

Philsaga industrial relations appears a little fraught but is it par-for-the-course in the Phillipines? At least representation for the next five years seems to be resolved OK.

Thanks Justin for your comparator inputs on other Goldies. Golden Queen looks an interesting research topic; have you taken a look at Serabi (LSE & TSX); will be debt free by the end of 2016, low cost producer, growth potential by branching out at Sao Chico and Palito and with spare mill capacity now on hand. CEO Mike Hodgson keeps delivering to his word and is a great communicator, see brr media.

I hope you decide to attend in September and participate with Boyd Timler, and it would be good to finally meet!

Cheers, tightfist

[stevea171] 05/8/2016 16:43

Hi Justin, thanks for your post. Good you're still in touch. Quite a bit of detail there so i'll take a look over the w/e when I have more time.

btw Did you notice there is to be another Medusa presentation in Mayfair on 8th September organised by Proactive? Same as previous if you're around and interested.

[justinjjbuk] 05/8/2016 12:00

Steve and all

Thought I would pop back to this board to share my thoughts. I am still out of MML, although it is increasingly attractive just because it has so underperformed its peers.

One of the Michael Quinn articles Steve posted above states that MML is valued at a quarter the valuation of SLR. Not sure where he got that multiple from. I have MML's market cap at A$150m and SLR at A$320m. Still, given that SLR's valuation is more than double MML's, its an interesting exercise to decide which is a better investment from here.

To start with, Timler puts MML's sustainable production currently at 110k (May presentation), which compares with SLR'a 130k. But SLR seems to have a more predictable growth path here, adding around 10k oz each year going forward (see their August presentation). For MML, we should see a jump when the service shaft completes, but after that it is difficult to see where any future growth in oz comes from.

The big plus for MML is that we 'hope' to get a big fall in AISC post service-shaft completion. SLR's AISC is quite high compared with its peer group (at around $950), and while it has come down a bit I am not sure if we can see much improvement going forward since it relies on mining numerous relatively low-grade pits. On the other hand, SLR will get some uptick in cash flow as all its forward sales roll over at the higher gold price.

Where I think SLR comes out on top of MML is in the optionality generated by its aggressive drilling programme. Now that SLR is debt free and has a big slug of cash on the balance sheet, boy is it drilling. And this is the same for all the Aus names in MML's peer group: DRM, RMS, MOY and so on. With gold where it is, they are all out there drilling like crazy and all of them have been successful in reporting decent finds. There was a time when I thought MML was a strong growth play (do you remember those presentations showing production going from 200k to 400k?). But at the minute, I can't see any opportunity for production growth for a few years at least beyond the one-off service shaft completion blip.

So we seem to have a trade off here between value (MML) against growth (SLR) and during a gold bull market I think you have to place your bets on growth.

That said, I don't own SLR because I think you can find better value than SLR with much better growth in other names.

Currently, I own RMS. It's just done an issue which it didn't really need to do since it is also debt free and has lots of cash on the balance sheet (so annoying the hell out of the Hot Copper holders), but is cheaper than SLR, throwing off more cash and growing faster.

I also like BDR because it exploration programme is raining gold. Also H2 is post rainy season in Brazil and I think we will see a massive jump in cash flow and the likely disappearance of its debt. With gold at $1360, the market is starting to reward ounces in the ground, and boy does BDR have a lot of ounces.

Unusual for me, I also own a name that isn't producing (yet): Silver Mines (SVL). They made an inspired purchase of Kingsgate's silver interests at the bottom of the market and have just done a capital raise to move toward production. With silver above $20, I think SVL looks cheap as a potential producer.

Another name which I like and made an inspired purchase is TGZ. Dual listed but only really trades in proper size on the Toronto Exchange. At current gold price, their Senegal mines are throwing off cash, which is allowing them to bring to production the Bukino Faso mine they got through buying GRY. Great value and growth.

I also have one of John Doody's names (his Gold Stock Analyst newsletter is very high quality): Golden Queen (GQM on TSX). This is a special situation as management have taken one California mine into production from which they aim to return all cash flow to shareholders (no new mine exploration). At current gold price, the stock is so cheap and I think is a potential 2 or 3 bagger as a pure value play.

Lastly, I have one LSE listed name: SHG. I really struggle to find value and growth on LSE. The bigger guys are all too expensive (especially compared with ASX and TSX listed names) and the smaller guys are often rather dodgy IMHO. But I think Shanta looks really interesting and good value with gold where it is. I know some of you guys post on it on ADVFN.

So in conclusion, although MML is getting cheaper and cheaper on a relative basis (since all its peer group has moved so much), I just don't see it outperforming any time soon. All the names I mentioned above have great catalysts over the next 6 moths, while not much will happen with MML until the service shaft nears completion. So my sense is that there is still a huge opportunity cost in holding MML. Better to put the money to work elsewhere and come back to MML in 6 mths's time.

Justin

[stevea171] 04/8/2016 20:46

Philsaga = Medusa Mining

Philsaga prevails in poll
Aug 01, 2016 By CHRIS V. PANGANIBAN Regional Editor-Caraga region

ROSARIO, Agusan del Sur—After a heated trading of barbs at the height of the election period, the moderate labor union of Philsaga Mining Corporation prevailed over the newly-formed militant Kilusang Mayo Uno in the hotly contested election for the rank and file company workers.

Philsaga Employees Labor Union (PSELU) garnered 964 votes as against 587 votes for Philsaga Mining Workers Union (PIMWU) which is under the militant labor front National Federation of Labor Unions-Kilusang Mayo Uno.

With their victory, PSELU will continue to serve for another five years to represent the labor front in an effort to foster harmonious relationship with Philsaga to uplift their living conditions and promote healthy and safe working environment.

There were 1,785 registered union workers who casted their votes on Friday at the covered court of the administration building.

PSLEU triumph eased the tension between the two contesting labor unions in the run up of the election which were marred by wild accusations to four union leaders who were allegedly involved in thief of company property.

In a statement, PIMWU said the allegations believed to be spread by Manobo tribal group having ancestral domain claims within Philsaga mining tenements were baseless since there was no formal complaint filed at the local police.

The militant labor group debunked the claims that the company will shut if KMU will win citing similar fate of other local companies because of what was said to be excessive demand in the increase of wages being pushed in the collective bargaining agreement.

Leaders and members of municipal tribal councils in Rosario and Bunawan towns stayed outside of the company gate to express their support for the status quo of the labor union saying the entry of PIMWU-KMU might imperil their benefits from Philsaga from their monthly royalty shares.

Philsaga president Atty. Raul Villanueva has also appealed to the company workers for calm and sobriety to maintain the present labor front set up in the wake of the challenges Philsaga is presently facing brought about the tight policies now at hand to mining companies in the country under the new Duterte administration.

“We need to stand as one big family. Stop the complaints as none of you has been disadvantaged. We need to work to make Philsaga and Mindanao Mineral Processing and Refining Corporation as exceptional companies and avoid being closed due to union activities or by the national government,” Villanueva said in a memo to the workers.

hxxp://www.mindanaodailynews.com/philsaga-prevails-in-poll/

[leedskier] 04/8/2016 17:12

The Australians rather lost interest in investing in and developing precious metal mining companies from 2011 onwards.Bank interest rates there were relatively high, offering a better return than investing in mining especially as precious metals had entered a bear market, that was to run for four years.It was all becoming too much like hard work and high risk for too little return.Whether gold at current levels and the cut in interest rates in Australia to historically low levels, will be sufficient inventive to boost production at MML, remains to be seen.I guess it may depend on the gold price.

[stevea171] 04/8/2016 15:12

Past hubris, lies and BS.

Timler time at Medusa
Michael Quinn. 21 Mar 2016 (from Mining News)

NEW chief executive officer Boyd Timler is the latest executive charged with orchestrating the long promised, but as yet largely undelivered organic growth at Medusa Mining’s operations in the Philippines.

Timler has over 30 years-experience in the mining industry, most recently at Beadell Resources, and before that at various companies including Kinross, Placer Dome and Barrick.

Timler said he was looking forward to the challenge of delivering on the company’s “immense”; potential in the Philippines.

It’s a potential that has long been flagged.

In 2007 with Geoff Davis at the helm Medusa was targeting annualised production of 100,000oz from multiple mines in 2009.

“It is my opinion that the Co-O Mine will develop into one of the premier high-grade mines in the world,” then-chairman Kevin Tomlinson said at about the same time.

As it was, at the back end of 2009 the company said it was targeting the 100,000oz run-rate in the first half of 2010.

It also said it had a pipeline of projects for potential expansion to 300-400,000oz per year.

The company’s shares at that time had climbed to about $A3.50, having been 50c 12 months earlier – with the stock subsequently reaching levels of over $8 per share in 2011.

Medusa paid a maiden dividend in 2010 after making a net profit after tax of $US66 million in 2009/10.

New chairman Peter Jones told shareholders in late 2010 Medusa was planning to build a new mill capable of producing 200,000oz per year.

And with the promise of much more to come!

“Your board of directors together with management plans to continue this strong organic growth and cost performance profile, and has set an achievable corporate objective of producing between 300,000 and 400,000oz of gold within five years,” Jones said.

Jones left the company in 2011 as Medusa exited its TSX listing, and Davis transitioned to chairman – with Peter Hepburn-Brown becoming MD.

“Our aim is to become a mid-tier producer of 400,000 ounces of gold in late 2015 and we are steadily progressing to that objective, initially with the current expansion of the Co-O Mill capacity to produce 200,000 ounces per year, and through continued exploration success at the Bananghilig deposit, the construction of a second milling facility, again with a 200,000 ounce production capacity,” Davis told shareholders.

“We are positive that these two gold projects will not be the end of the gold story. As a well-known broker in London used to advise his clients ‘Medusa has the best piece of real estate on this planet’ and we intend to prove him right.”

In 2013, Medusa produced a little over 62,000oz at Co-O.

Still, Davis told shareholders the Bananghilig project had met all expectations, though he did throw in a little bit of caution.

“Gold price and market conditions are tempering the speed at which the company develops this deposit, but the development options are increasing with the recent discovery of the new, potentially higher grade B2 area adjacent to the current one million ounce resource,” Davis said.

Davis also announced his exit after nearly a dozen years at the company.

However after Hepburn-Brown resigned in August 2014, and Davis returned as interim CEO.

Medusa produced less than 60,000oz in fiscal 2014.

The company finally reached its 2009 target of 100,000oz in fiscal 2015.

Davis retired again late last year as the company’s operation reached an annualised 120,000oz run-rate.

It’s now up to Timler.

[stevea171] 04/8/2016 14:26

Medusa’s mine to improve
Michael Quinn. 6 May 2016 (Mining News, subscription site)

NEWLY installed Medusa Mining CEO Boyd Timler expects the company’s long heralded Co-O gold operation in the Philippines to drop draining the cash after August this year.

The operation had all-in-sustaining-costs of $US1033 per ounce last quarter, meaning little cash heading the way of the company’s balance sheet despite cash costs of less than $500/oz.

However Timler indicated to the market completion of various capital projects at the mine would occur in the next few months.

“The ventilation upgrade is on track for completion in the June quarter and the majority of the long-lead service shaft costs will be sunk by August 2016 so there will be a noticeable drop off in sustaining capital costs and AISC, improving free operating cash flow after this date,” Timler said.

No AISC figure post current capital projects completion was nominated.

The Co-O operation is expected to produce about 25,000oz in the current quarter.

Following an independent review of the operation by independent consultants carried out late last year, Medusa is currently working on its budget for the next financial year, and its medium-to-long term strategy.

One change already implemented with the regards the latter is exploration beyond its operations, pre-development projects and the Philippines. That strategy though is still at the generative stage.

[stevea171] 04/8/2016 14:17

>>> "the Co-O operation has the potential to be a sustainable circa 130,000 ounce per annum producer with all-in-sustaining-costs in the order of $US800 per ounce." ???????

Medusa taking shape
Michael Quinn. 3 Aug 2016.

NEWISH Medusa Mining CEO Boyd Timler flew into the Australian gold capital of Kalgoorlie this week with a low cost production story in the Philippines that will finally take proper shape over the next nine months or so.

While he was unsurprisingly loathe to be drawn on forecasts at this early stage of his tenure, Timler indicated to MNN the Co-O operation has the potential to be a sustainable circa-130,000 ounce per annum producer with all-in-sustaining-costs in the order of $US800 per ounce.

That performance is possible once various capital projects are completed, including a service shaft, and ventilation and dewatering infrastructure.

The completion of such work will allow-for mine production to match the rated 2500 tonne per annum processing plant.

Resource and reserve drilling is also set to be ongoing over the next 12 months to allow mine planning 3-4 years in advance of current production.

Reading between the lines it seems as though the serially disappointing Co-O is in the process of being converted from an almost a hand-to-mouth style mine to the type-of professionally run mining operation befitting of a high quality deposit containing well over a million ounces.

Timler would seem the ideal man for the job given his multi-decade mining engineer career, and prior to that, a geology background in the early years of his professional life.

Timler wasn’t formally presenting at Diggers & Dealers, but given the interest in gold stories at the moment, he’d likely have had no problem attracting an informal audience during his one day in Kalgoorlie.

Especially given the disparity in market valuations between Medusa and other in the sector.

By way of very broad example, Kalgoorlie-based Silver Lake Resources is valued at about four-times that of Medusa.

While it is true Silver Lake is producing slightly more gold and is located in a safe-as-houses mining jurisdiction, the disparity does seem considerable.

hxxp://www.miningnews.net/operations/production/medusa-taking-shape/?adfesuccess=0

[nielsc] 04/8/2016 08:11

o/t

Spotted this article



"RBC analysts are forecasting an average annual gold price of $1,258 an ounce this year and $1,241 an ounce in 2017"


Going back a couple of weeks there was this article



"In a report published earlier this week, analysts at the Canadian bank said that they are increasing their 2017 and 2018 gold forecasts, expecting prices to rise to $1,500"


What I can conclude from this is RBC aren't a reliable source of information and they have gone from being long to being short. I can't really believe that graph of their modeled gold price in the first article. I would guess it has been modeled days or possibly a couple of weeks into the future and then their model is revised when they see the actual price gold is.

Cheers,
Niels

[deka1] 03/8/2016 20:21

Strange init Greenleaf

[greenleaf] 03/8/2016 17:35

Hi Deka

No idea where those Bloomberg prices are coming from

The Kitco chart is currently showing about 1356 (possibly slightly delayed?) and ig.com is showing about 1357

Cheers, greenleaf