re: mbg- a gamble
Firstly, I took a gamble this morning and picked up 400000 at open at 4c. I also only started researching it yesterday.
Now i think there are a lot of 'shakings of heads' as to why this shareprice is in the dumps...after allm, Huntleys was recommending them in March, Warwick Grigor has a few good words to say about them, and good ol' (RIP?) Garimpeiro in the Age has a promsing article in MArch on them. Even the NSW govt got in the act and promoted their mining in a recent document.
So why the LOW LOW LOW shareprice? Well here are your reasons:
- High debt level of over 6 million - Malaysian company taking 30% has caused the stock to have a overhang now, and noone really trusts a Malaysian...not being racist, just referring to their history of business practices...what will they do now that the investment is performing badly - disrupted tin production in March quarter due to drought conditions, and other factors which caused a drop in head grade (RECTIFIED) - TIN price has been down in the dumps although its shooting up recently - TIN is not the most glamourous business now is it - rising AUD
So why did I buy them this morning after thinking the above?
Well firstly let me just reclarify it is a pure speculative bet...and here are the other reasons:
- the Malaysian company has provided a decent cash injection resulting in reductions of debt - the TIN price has increased 25% since commencement of production and now sits at $4600 or so per tonne - the last week production was a RECORD for the mine meaning they have rectified last quarters problems, and the high grade ore is now being drilled - MBG believe it or not (actually just believe it cos its true) have CURRENCY HEDGING in place. Although not all funds are hedged, the rising AUD impact has been largely offset by the hedging, and i expect AUD to rise higher. Yesterdays announcement said so far the hedging had a market value of over $1 million!!! - Huntleys, Warwick (see www.fareastcapital.com.au), Investorweb, Egoli (all respected share analysis companies) have all had good things to say about it. - The tin price has been forecast to hit $6000 by mid year, although i doubt it, id be happy with 5000 by end of yr - MBG is only one of only two listed tin cos, and the other one is stuffed - MBG has a few other tenements prospective for gold and base metals, some of which, to me, actually look quite good, better than i expected anyway - apparently that malaysian company, from where two directors of marlborough have appeared, as some interesting things planned for MBG, including getting them involved in a few offshore projects, which could pay off big time.
Having said all this, for the 3rd time i clarify, this was a gamble for me, and the price may actually be down where it is for a reason (apart from those mentioned earlier). Who knows what's going on behind the scenes.
Im also really annoyed they dont have a website...GRRRRRRRR...or do they? Please post if yu know of one.
Cdchi1
BTW the other Tin company, murchison has a website with lots of articles on tin, and heres the link if ur interested, which im sure ur not, cos i aint ;-)
ARDLETHAN PRODUCTION MARLBOROUGH RESOURCES (MBG) is pleased to advise that: Mining has been completed in the southern end of the Yithan Lead and successfully transferred to an area immediately north of the original mining area. 0 Ore being mined in this new northern area is of higher grade averaging about 2 kg. of tin per bank cubic metre. Production of tin has increased and 39 tonnes of concentrate (containing an estimated 23 tonnes of tin) were produced in the last week. That was a record week of tin production for the Ardlethan project this year. 0 Savings in operating costs are being pursued. More generally, the Company notes that: TIN PRICE Tin price in US dollars has continued to trend upwards as shown on the attached graph. The Company still has the floor price scheme with Barclay's Bank London at US 54,420 per tonne but with spot price now at US $4,775 Marlborough Resources is now selling all production at spot price, while it is higher than the floor price. . . 2 1 . . 1 9 / 0 5 03 MON 1 8 : 3 2 FAX 0 2 9 9 5 5 6 5 2 8 Page 2 EXCHANGE RATE The Company has in place a foreign exchange contract with the Commonwealth Bank of Australia for the next 2% years under which Marlborough sells US $200,000 per month into Australian dollars a t an exchange rate of US 55.6 cents t o the Australian dollar. This covers about 42% of the current revenue in US dollars. In addition, Marlborough Resources' contracts for smelting and further 8% of revenue. overseas freight are in US dollars so this i s a natural hedge for a The mark to market value of Marlborough Resources' foreign exchange hedge is currently about $1,700,000 favourable to Marlborough Resources. MT. McKENZlE JOINT VENTURE A further four holes will be drilled at Mt. McKenzie next month to follow up the earlier drilling program under the Jeteld farm-in agreement.
