Medusa Share Discussion Threads

[polaris] 03/11/2017 09:07

Hi All,

I read the recent Qly with some interest as i have not been invested here for some time. There are green shoots but there are also a few things flagged that may still sour developments over the coming 12 months.

The pump replacements/repairs for flooding on L5 may be an issue for haulage as it limits Agsao and Baguio shafts. The new pumps on L8 will help with dewatering at the lower levels but i still don't like the wording that flooding is "rare". That implies it still floods and the work to access L9 and 10 will be impacted by this.

The major winder maintenance will prevent shaft use for some time - not clear for how long - and this will have a knock on effect on production in the current (next?) Q.

The production guidance remains as stated before Q1 FY and i think this reflects the amount of disruptive shaft sinking and maintenance work that remains. Once this is complete then MML should become a different beast, but shareholders have become used to setbacks over the last several years and i remain skeptical.

Reserves are steadily falling but this is probably just a reflection of the type of mining rather than any longer term issues.

Finally, each L is 50m deeper. At some point mining will potentially become uneconomical due to the flooding and haulage requirements.

I do not hold for now but i do think there may be a window of 2-3 years where the share price can outperform. I'm not convinced MML is yet out of the woods.

regards,

Paul

[tightfist] 31/10/2017 22:52

Many thanks Chip, that is a very interesting IMHO assessment. I will look to add a few thoughts and comments during the next few days.

Going down to the Stratex General Meeting in the morning..... Will the CEO be given his P45?!


Best wishes, tightfist

[augustusgloop] 31/10/2017 22:47

chipperfrd 31 Oct '17 - 10:56 - 37342 of 37348    0   0


I do have a relatively straight forward valuation comparison method for a range of stocks that I keep updated in Table#2 of my PM comparison board. That is purely based on 5 financial metrics and is therefore free of any opinion or forward assumptions, although, no doubt, some would still accuse me of bias in those stock comparisons.

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

An alternative interpretation of these financial metrics is:

The cheaper the Company looks is an indication that the professionals have a greater belief that the forward forecasts of the Management are false / that the management will use the resource to feather their own nests rather than rewarding shareholders.

So by buying the 'cheap companies' - you are effectively betting that the professionals are wrong in their interpretation that the management are liars / thieves.

[deka1] 31/10/2017 20:50

Chip Thank you very much for the info, its greatly appreciated by all of us.

[chipperfrd] 31/10/2017 20:26

Dek/TF,

I have not been following MML closely over 2017 because of the L8 issues and the protracted build of the E15 shaft. I decided to just wait things out until L8 was sorted and E15 was completed. I have quite a wide ranging portfolio of other PM stocks to focus on as well as other non-market interests to keep me busy so have remained relatively sanguine regarding, what I consider to be, the heavy under-valuation of MML. So please excuse my lack of recency and need for a degree of refreshing with regard to the stock.

As ever, there has to be some assumptions made when trying to make forward estimates and this is, in my view, somewhat complicated by trying to assess just how much E15 is likely to improve on the current position.

MML have already stated that E15 will not be completed and commissioned by the end of the March 18 quarter so I have taken the decision (for my own model) to assume the improvements will not be fully felt until the September 18 quarter. Any increases during June 18 will therefore be a bonus.

MML have also stated that L8 is currently unavailable for ore haulage for a minimum of 8 hours/day but elsewhere they are predicting c. 15-16% efficiency improvements once E15 is operational, so applying a simple c. 30% uplift to hoisting capacity does not appear to be advisable. Therefore, in the short term, I have decided to apply a 16% uplift in milling and to then adjust when actuals are available. Hence my current assumption for quarterly milled ore is 166kt which I hope turns out to be excessively conservative.

I am using the reserve grade of 6.54g/t as it provides for the ongoing blend of stope and development ore arrived at by the independent consultancy. For recovery I am assuming the current 94.6% as it has been consistently in that area for many quarters.

For PoG I am using a forward average of US$1,274/oz for no better reason than it being my last recorded value on Friday. Clearly it can go anywhere given it's heavy manipulation.

So then it becomes a matter of deriving estimated numbers for the P&L and also assessing the likely figures for overall cash-flow for the 2018-19 FY.

Using current cash costs of c. US$565/oz, G&A of c. US$1.3m/qtr, D&A of c. US$3.9m/qtr, and tax at 30%, I get an NPAT of US$12.7m/qtr, which equates to an EPS of 6.2c/share/qtr (c.4.7p/qtr at current forex).

Over the FY that would be EPS c. US$0.246 (£0.187). At a x10 PER that would infer a share price target of US$2.46 (£1.87 at current forex) or c. A$3.21.
note: I consider a x10 PER for a PM stock to be on the low side given the far larger multiples accorded for N.American stocks, so I think x10 allows for some heightened perception of political risks, et al.

For cash flow:
Assuming current outlays: ie
Development c. US$22m pa
Exploration c. US$5.2m pa
Capital Works c. US$10.4m pa (although this should theoretically drop with E15 completion.

My current estimate of 2018-19 free cash flow is consequently US$30.0m.

But clearly there are many variables that might move in either direction so any set of estimates are very likely to be proven incorrect in one form or another.

These are very much my own estimates and are purely IMHO.
Chip

[deka1] 31/10/2017 16:10

Cheers chip look forward to seeing it mate,

[chipperfrd] 31/10/2017 15:09

Dek and TF,

I will try and have a go at adding my 2-pennyworth once I can find the time to collect my thoughts.
Chip

[tightfist] 31/10/2017 11:53

Hi Chip,

Good to see you still calling-by here; I will go back to the Gold thread and refresh, I also hold SRB (how sleepy!) and CEY.

Would much appreciate your IMHO thoughts on MML, it has seemed to be completely mispriced for so long (IMHO!) that even I have ceased trying to put a value on it. Do you sense that 140,000 Ozpa and $800 AISC are on the cards in a year or two down the line? I think they are the Co-O numbers that Boyd was flirting with in Summer 2016, and since then the prospects on Levels 9 & 10 seem to have got better.

Cheers, tighgtfist

[deka1] 31/10/2017 11:41

Thank you Chip.

[chipperfrd] 31/10/2017 10:56

Hi Dek!

Trouble with doing that is that I will then leave myself open for renewed accusations of being promotional and I really cannot be doing with all that aggro at my time of life :-)

I do have a relatively straight forward valuation comparison method for a range of stocks that I keep updated in Table#2 of my PM comparison board. That is purely based on 5 financial metrics and is therefore free of any opinion or forward assumptions, although, no doubt, some would still accuse me of bias in those stock comparisons.

On the other hand, because it's you, I guess I could just do my best to try and answer your question on my long-term basis of 'IMHO' and 'NAG', et al, and ignore any brickbats that get thrown.

I will have a think about it.

All the best.
Chip

[deka1] 31/10/2017 09:08

Chip hi, would you mind showing your possible target price for MML if they get to full production at 7g/t please.

[deka1] 31/10/2017 07:11

Cheers TF, I will have a look, and another high vol session last night and up 2c.

[tightfist] 30/10/2017 21:47

Yes deka, same outlook here. It's a game of patience awaiting the completion of the L8 shaft and a corresponding steady increase in ore haulage and it seems grade is also going to be on the rise as levels 9 & 10 are accessed via the winzes. Also costs (and especially unit costs) are starting to fall.

Of course, we have plenty of medium-term uncertainties to keep a lid on share price aspirations, but at least communications are improving markedly and suggest a degree of realism.

Does anyone have any current analyst forecasts for MML? (Over the last few years I have used Yahoo. It is several months since I took a look and I now see it offers no information).

Cheers, tightfist

[deka1] 26/10/2017 10:38

Hi TF, I am in the same boat as most holders on this board , ie so far under water the pressure is crushing me lol, but unless we are being lied to by the Co, and I don't believe we are , I will eventually surface , and see the blue sky again

[tightfist] 26/10/2017 09:02

As you say deka, not bad at all - the volume has held up at over 2 million - interest has not gone away yet....

[deka1] 26/10/2017 06:39

End of the week trading in OZ and MML off half a cent on near 2.5 mil trades.
Not bad at all after such a big rise.

[arja] 25/10/2017 18:15

amazing day on tuesday and especially for this stock. Interesting to see if it will kick on soon.

[tightfist] 25/10/2017 09:51

I am down the bottom with you Eintract! But reasonably confident that I will break the surface and then be off on a moon shot during the next few years.......

[eintracht] 25/10/2017 08:34

Under water ? I'm at the bottom of the Mariana Trench !!!

[ilostthelot] 25/10/2017 08:21

Looks to have turned around eh. Most still under water even after 33% rise.

[deka1] 25/10/2017 07:48

Well nothing taken off yet,

[deka1] 24/10/2017 21:45

Cheers eintracht , I agree some of that rise will be taken off the table.

[eintracht] 24/10/2017 21:31

Deka,
I think it will take 2 more solid quarters before investors fully trust the new management. Getting the quarterly out on time and the transparency along with the goof figure is a good start. But that is all it is a good start. Will be interesting to see how much of yesterday's 33% gain will be held on to. I doubt all of it will.

[deka1] 24/10/2017 16:14

Noirua do you think that confidence will begin to return now, after all some of the old team that were around then are no longer with the Co,the guy in charge now seems to be a lot more conservative in his approach.

[noirua] 24/10/2017 12:51

MML like ASX:RED are among a few gold producers that have failed to recover. MML should be around the $3.00 mark but promises of ultra low costs some years back have drained confidence and trust in the company.