re: Ann: Quarterly Activities Report December...
Hi Horsetrader,
I understand the points you are making.
The trouble with the market is that it gets very conditioned to the most recent events/multiples,prices/etc.
I enjoyed over 12 consecutive quarters of MML exceeding it's guidance and it's SP responded by providing a 20x uplift over that same period.
As far as I am concerned the mine is every bit as good as it was in 2008, in fact it's even better in terms of extra capacity and exploration.
Therefore the underlying fundamentals look extremely positive but are over-shadowed by a market that has been extremely negative for gold stocks since mid 2011 and are additionally compromised by the huge expansion of all aspects of Co-O.
In my view, doubling the mine and mill capacity whilst maintaining their previous production profile was always impossible (and management revised down their guidance accordingly over FY12). However, on top of major disruption to their operations whilst this work was ongoing, they have also had to cope with major weather events and the 3-month loss of a vital shaft due to a fire.
The result has been a series of recent down-grades to guidance but they have still managed to maintain production (on largely development ore) sufficient to fund over $80m of inward investment over CY12. In my view this shows a management team who have coped remarkably well over a very difficult period indeed!
As an investor I try and look forward over a minimum of 1 year and normally for multiple years beyond. And I try and invest where the risk/reward provides (on the balance of probability) an excellent return for my cash. So a company that has forged on through a difficult and complex expansion and that is now poised to benefit from all that work is an obvious choice.
MML has very low costs (labour and power costs being a huge advantage in the Philippines!). It has no debt or hedging. And it has excellent grades at Co-O with a proven team and infrastructure in place.
Ahead lies an improved tonnage of less diluted ore and corresponding higher gold production. There is also the prospect of an additional producing mine at Banaghilig once the BoD have approved the outcome of the feasibility study.
With regard to the possible impact on the Banaghilig project from the new mining law. That will obviously be factored into the overall economic case before a go-ahead for such a large inward investment is made. However, speaking as someone who invests widely in mines across the globe, it would have to be a pretty severe change to royalties/taxes/et al, before it became less invest-able than many other destinations I can think of!
But all this is just my personal view and I am sure you will make your own best decision as to the virtues of MML versus other attractive stocks.
Kind regards CPDLC
MML Price at posting:
$5.05 Sentiment: LT Buy Disclosure: Held
(20min delay)