looking very good, page-8

looking stuck -short term Here you go mate this report is a bit old but the figures (not the dates)still stack up,
You can see the full file on MIC's web page (google it)
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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 apotential 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)