Medusa Share Discussion Threads

[stevea171] 13/1/2017 17:49

Why Medusa Mining Limited shares have been CRUSHED today
James Mickleboro January 12, 2017

It hasn’t been a great start to the day for shareholders of gold miner Medusa Mining Limited (ASX: MML). In early trade its shares have sunk 15% to 45 cents.

The reason behind today’s decline is a production revision released after the market closed yesterday. As you might have guessed, that revision was not a positive one.

Previously management had targeted production of between 105,000 to 115,000 ounces of gold with an all-in sustaining cost of US$1,000 to US$1,100 per ounce.

With the spot gold price fetching US$1,191 an ounce currently, margins were already extremely tight for Medusa.

But due to issues at its mine and subsequent higher mine-shaft maintenance requirements, production will now be lower and costs higher.

Management has revised full year production to between 85,000 to 95,000 ounces of gold with all-in sustaining costs of between US$1,250 to US$1,350 per ounce. It now costs Medusa more to pull gold out of the ground, than it can sell that gold for on the spot market.

This is nothing short of a disaster for the company and I can’t say I’m surprised to see investors head to the exits in their droves this morning.

Whilst I wouldn’t be in a rush to invest in any of the gold miners at this point in time, investors that do want exposure to gold might be served well with investments in Resolute Mining Limited (ASX: RSG), Newcrest Mining Limited (ASX: NCM), or St Barbara Ltd (ASX: SBM).

These three low-cost gold miners have all-in sustaining costs of close to US$800 an ounce, meaning they remain highly profitable following the sharp drop in the gold price since November.

But with gold prices tipped to fall as rates rise in the United States, I would suggest investors grab hold of these hot growth stocks instead. I believe each has enormous growth potential and can be bought at a good price today.

hxxp://www.fool.com.au/2017/01/12/why-medusa-mining-limited-shares-have-been-crushed-today/

[atlantic57] 13/1/2017 16:25

Many thanks

[ilostthelot] 13/1/2017 16:19

Yeah BLK looks good from the little reading I've done from their website. Thanks again to Justin.

[stevea171] 13/1/2017 13:59

Atlantic. No problem. Blackham Resources BLK. hxxp://blackhamresources.com.au/
Just ASX. I have bought some.

[atlantic57] 13/1/2017 13:48

Stevea thank you for sharing that information .Does that Company list on the asx only
And if so what is the symbol.

[stevea171] 13/1/2017 10:45

Dek. Remember Mercator Gold at Meekatharra? Take a look at 6 million oz Blackham Resources at Wiluna. Australia's newest gold producer with a mill costing $2 million up front, first pour last quarter, and ramping up to 100k oz/year initially, 200k oz/year 2018. Mentioned by Justin.

PS. If gold really takes off this year, gold miners will be valued not just on production oz, ASIC, profits, etc but also gold in the ground and for a small cap this is a huge resource being added to with all new drilling.

[johnrxx99] 13/1/2017 08:32

Haven't posted for a long while since I sold out when they delisted from the UK. As I said at the time, bringing in local management is a death knell. I've lived in the Philippines for 10 years and know that the only thing Filipinos are interested in is money in the pocket. Successful businesses here are not run by locals unless trained in the West.

When the Aus management gave in to local pressure there was only one way this operation would go and 3 years later it is playing out as predicted. I'll go know and have only been looking in because of Chips input.

Good luck, you'll need it.

[alquid1] 12/1/2017 23:13

Yes, glad i'm out after hanging on too long. I reckon the 35c level is going to get tested.

Al

[polaris] 12/1/2017 19:42

Why does the announcement not surprise me? Have to say i am glad to be out and this would have been a new multi-year low had pog not shown the recent advances. The 20% or so reduction in production guidance means that MML is likely to burn cash this year, rather than add to the cash position as was expected. A very sorry state of affairs...

Paul

[ilostthelot] 12/1/2017 17:30

If they achieve an AISC of $900 after the lift shaft is complete this year, then yes it's a very cheap and definitely a buy from here.
But do you trust them to do that?

[stevea171] 12/1/2017 15:05

Justin. Thanks for your post yesterday. Agree with all you say about Medusa. Some really good alternative Auz miners there that I am actioning.

[deka1] 12/1/2017 11:24

rt hi, the buying strength after the open last night point to others in the market feeling the same way , we are not ALONE lol

[roguetreader] 12/1/2017 10:46

Cnc / Deka
I'm hoping you are correct. I have enough MML and won't be buying or selling. Having been in since 2009 at various levels I will sit with my core holding until the shaft work is complete. I may miss a large move up between now and then but I don't have the confidence at this point to buy further. All the best.
RT

[deka1] 12/1/2017 10:16

CNC hi, that's a good take imo,its the way I see things also.
The low 40s look like good support

[atlantic57] 12/1/2017 09:31

In the short term Mml is very dependent
On the gold price which is clearly difficult to predict .

[allyp] 12/1/2017 09:03

I don't mean to ramp, but it could well be peak pessimism here, and with Timler coming in officially he's chucking in the kitchen sink in terms of bad news, could clear the path in case anything positive comes out. Obviously it's been a while with this company, but there's at least some downside protection in that the rating is so low already.

If it stays above the recent low in December and nothing else disastrous happens then it could be a good double bottom.

[cncventure] 12/1/2017 09:02

I think I mentioned on these forums a few weeks ago that I saw MML going lower before they went higher... after Q1 a FY guidance miss was always my fear (I was half penciling it in and I'm sure I wasn't the only one).

This was the moment.

And whilst this report was horrific (bit worse than I feared) I still see it as a "temporary disappointment" (yes they've had a few) but I don't believe it's a "game changer".

But now that the uncertainty has been realised and quantified, with the gold price trending up again, 45c seemed like a reasonable entry point as MML gets closer to de-bottlenecking its mine.

By my calcs it probably reduces the NPV of the company by ~$10M to ~$15M (or about 7c in the share price), on their previous guidance (which weren't realistic after Q1 results). So today's sell off finding a bottom at 44c seemed appropriate.

More comforting is that with gold at $1200 I doubt the cash burn in Q2 and Q3 will be large enough to force them to tap the market or bankers for cash.

And it's my current expectation that Q4 should be FCF+ with the shaft being completed soon after at which point MML should be off to the races.

So I thought today was a good opportunity to accumulate a few while there was so much selling going on (and clearly I wasn't the only one thinking like that).

If the gold price pushes higher from here 44c will look like a bargain as we will all be the chasing the price higher trying to accumulate prior to the shaft completion.

[roguetreader] 12/1/2017 08:25

Deka
Agreed I was expecting a significant drop in price. However, I can still see it fading from here over coming days and weeks as the only possible short / medium term support is likely to be the gold price (not guaranteed)
RT

[deka1] 12/1/2017 06:55

Well! not as big a hit as I was expecting, opened down around 17% and closed down 8% on over 3 mil traded , so some one buying at the lower level, it was a constant rise from the opening low of 44c to close at 48ish , any comments guys ??

[ned] 12/1/2017 01:34

Judging by the share price plunge they could be about to let us in on a bit of news that those connected don't think much of!

edit
My mistake. News out on ramping down and connections long gone.

[ilostthelot] 11/1/2017 20:23

Yip they've been dreadful.

[atlantic57] 11/1/2017 18:56

Human relationships depend on trust.

A Business that consistently fails to deliver over 6 years is going to struggle
To earn the trust of its investors.

[4marlin] 11/1/2017 18:24

glad I got out several months ago, will keep tabs but not hopeful, imo.

[tightfist] 11/1/2017 18:18

Great news on the day PoG goes vertical!