Ann: Quarterly Report March 2013 , page-30

Loki01

Agree with the points you raise in your last post, FY2012 was a messy year for MML with the interuptions so it is not a good example of the potential total costs of CoO if they reach their production targets. In fact I would argue FY2011 is a better one to examine to extract total costs.

Anyway, another way to test your FY2012 total cost figure is to extract it from the Cashflow statemment as opposed to the P &L. Payments to suppliers & employees was 30.34m, i would also make some allowance for Expl. expenditure that as pointed out by Jtrain is not expensed at all through the P&L (which is in accordance with accounting standards even though its not conservative or an accurate reflection of true costs). Lets take 80% of the 14.34m Exp. through the CFS and add it to the 30.34m, which gives us a total cost figure of 41.81m.

Regarding the correct number of ounces to use for conservativeness lets use the 55,466 sold. This gives you a total cost of $753 per ounce.

One way to examine the validity of my approach is to compare the costs expensed through the P & L with those paid through the CFS over a two year period (to mitigate timing issues). Total expenses through the P & L in FY11&12 is 72.342m, total paymnents to employees and suppliers through the CFS over the same period is 66.6m, part of the difference of course is the 4-5m per year of D&A that is included in the P&L - its in the same ballpark is my point.

Remember I have also allowed some Expl. expense on top of this in my total cost calculation.

Now if you do the same excercise for FY2011 you will come out with a total cost figure around $500 per ounce, slightly under from memory.

I would also advice anyone struggling with the potential profitability of MML to look thoroughly at the Fy11 accounts - specifically the Balance sheet and CFS and note the significant build in cash during this year which also if you back test it testifies to total costs being under $500 per ounce during FY11.

The issue with MML now is their habit of missing guidance, the real question is can they meet their production targets?? I have no doubt it is a very low cost producer, anyone claiming otherwise needs to examine closer.