investment case for mml

Interesting to see a reasonably strong bounce from the lows of two days ago.

I will be happy to add on any dips testing the lows again.

In FY11 MML averaged a selling price per oz of $1367USD, and achieved earnings of $110mm USD so even if the pog weakens further Co O is a highly profitable mine.

What first grabbed my attention with this company was the build in Current assets on the Balance Sheet(cash equilalents, inventory, receivables) from Fy10 to Fy11. CA increased from USD 73.3m to 128m over the period - as we know this wasn't the product of any cash or debt raising but resulted directly from conversion of EBITDA into cash flow. Remember this cash build occured at a average pog well under this current years average to date.

The next point that I liked was the ratio of current assets to current liabilities at June 30 2011. TCA 128.1m TCL 8.3m. Not only did this show that the cash balance would grow significantly as we moved into the next quarter(which it has) but it was also abundently clear that the 70m required for the expansion of Co O was already available in cash/receivables.

Co O is a "gold mine", the low C1 costs combined with no debt give me confidence in the event of the pog retreating.

I can't predict where the pog will go, but feel MML is one of the safer gold stocks to hold for the reasons above. Its a high margin, high ROE, no debt producer with some exciting exploration areas to invest the free cash flow from Co O.