agm 5th may

MIC-Michelago
Has an AGM on the 5th May for shareholders to vote on the 82% acquisition of the Bio Gold project,
it appears that accumulation is happening prior to this meeting ,

More details at www.michelago.com.au

__________________________________________
below is not complete as it is a copy and paste from a pdf.file



MIC - Production Forecast to 300kozpa at AGM
Gold – US$425/oz next ?
COMMENT – 19 November 2003

Dear All
This comment is based mainly on our attendance at Michelago’s AGM at 3.30pm on 19 Nov 2003 in
Sydney, and an update on our viewpoint of the gold price.
Michelago (MIC) : Rated as a Spec Buy
MIC gave a calendar year production forecast in its 2003 AGM presentation, in accordance with
its target of attaining gold production of 300,000ozpa within the coming 5 years or so, as shown
below :
In response to questions on cash costs, MIC stated that they expected BioGold’s production costs
in 2004 to be about US$220/oz to US$230/oz, being based on purchasing concentrates from
producers at 55% to 75% of the gold price (depending on what state and type the concentrate is
sourced from).
The driver for MIC’s share price is probably the signing of the SFJV’s.
At this stage, the exploration JV’s are expected to be signed before Christmas, and the production
such as BioGold after Grant Thornton has completed its due diligence by the end of 2003. Biogold
could be approved in March (after the Chinese New

Year and the Summer festivals) or May 2004,
and any subsequent required financing in JQ04, which has resulted in the production estimate
shown in the above figure from about mid-2004 for an attributable 51%. It should be noted that
MIC does not have to have the SFJV signed in order to start exploration, from what we can
see, a number of other Chinese exposed gold companies are not waiting.
2
It was also commented that China is currently crawling with foreigners from a whole range of
countries and companies trying to do deals. However, based on what we saw on our visit there, it is
not that simple; time, influential contacts and relationships are extremely important – a position
which MIC’s management has already established.
As a general rule of thumb, a gold company producing 100,000ozpa for 5 years at a cash cost of
A$300/oz should have a market cap of about A$100m, however, MIC expects to be producing
almost 120,000ozpa from BioGold alone and that excludes the Biox expansion. So once the
BioGold SFJV has been signed and received, MIC theoretically has the capability of rising to a
market cap of at least A$120m or so.
A slide was also shown of MIC with 435m shares in issue which implies that a few more options
have been exercised. Post the 57m shares placed and 9.5m conversion of options, there were
409m shares, 15m to come from the CN’s, 2 x 50m tranches, and options (21.3 + 22.9 + 21.6 + 0.8
= 66.6) for a total of about 590m shares (if all the options are converted) which equates to a
potential share price in the vicinity of 20Ac.
Our current target for MIC shares is >>20Ac, and we rate Michelago as a SPEC BUY.
GOLD PRICE : In our last MIC Report of 3 October 2003, we stated that “in our opinion the
gold price should be capable of attaining and breaking through US$400/oz by the end of
December 2003”, based on the gold price appearing to be being driven by a number of factors starting with
the initial catalyst of mining companies reducing their gold hedging, and then the introduction of the Euro as a
paper currency at the beginning of 2003, the continued weakness in the US$ (due to a number of reasons)
and with general share market uncertainty prompted investors and funds to include gold and/or gold shares in
their portfolios again (historically gold used to comprise 5% of a portfolio). When combined with the increasing
wealth in China and their affinity for gold, and approach of the Chinese New Year in January 2004,
US$400/oz certainly appeared achievable and the gold price is now already in that vicinity.
However, the market has to re-learn how gold behaves in a pre-hedging environment, namely
daily volatile moves of US$5/oz, US$10/oz or even US$20/oz can be common, such that the
shares do not bounce around up 5%, down 5% etc per day.
After US$400/oz the next resistance level should be about US$425/oz as shown below :
(month-end figures in US$/oz, source : mainly www.ozmine.com.au)
250
275
300
325
350
375
400
425
450
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
Disclosure: Keith Goode, who is an Authorised Representative with Taylor Collison Ltd ACN 008 172 450,
and is a consultant with Eagle Research Advisory Pty Ltd ACN 098 051 677 compiled this comment.
At the date of this report Keith Goode and his associates held interests in shares issued by Michelago Limited.
Taylor Collison Limited underwrote a 50m SPP and placed 35m shares in July 2003, receiving fees of
$28,780. During 2001 Taylor Collison Limited undertook two further placements for 22.5m and 10m shares
respectively and received fees totalling $37,730.