mml presentation

I attended one of the MML presentations in London yesterday. It’s well worth hearing Geoff and Peter present imo. Here are the notes/comments I made:

They are very confident that Co-O will produce 3-7m oz – the mine has produced 450k oz and current resource is 1.9m oz so nearly at the lower end already. Historically, MML convert 80% of theirs resource to reserves. Co-O will qualify for a new four year tax concession from 2013 following the new mill/expansion. Anoling could contribute 50k oz pa by 2013, which is a nice little boost – this is new to me but encouraging. Geoff compared the exploration potential of the Philippines as the same as Western Australia 30 years ago so they have a lot to get on with!

Bananghilig – next drilling results should be in January and a resource upgrade produced around mid 2012. The BFS will follow this by end of 2012. They are confident that they will drill up 1m oz to enable them to mine 200k oz pa. The really interesting part is that they are trying to do this “under the radar” to avoid any unwanted attention from other companies. It’s possible they can mine more than 200k oz pa and the resource will grow well beyond 1m oz so it’s all about generating cashflow asap, which is a sensible strategy. $200m construction costs are similar to CGA mining’s open pit project and company believe this is achievable – estimated cash costs would be around $500/oz – so $350/oz combined with Co-O. The mine will qualify for a four year tax concession and can then be extended by a two additional years.

Once MML has enough cash to self fund Co-O and Bananghilig (around $250m in total) they will review the dividend policy (i.e increase it!). Likely to be early 2014 but could be earlier if gold price stays high.

Copper – aiming to define resources and then monetise in the future. Reiterated they are a gold company and don’t’ want to fund a $2bn copper project by raising debt and equity. Antofagasta and Vale are looking around in the Philippines so this could add real value to MML. Goldfields and Newcrest are working on gold projects.

They are disappointed about the low volume of shares traded on the LSE but have no plans to delist. Interestingly, I 70% of shares are held by institutions and 25% of these are London based institutions.

Overall, the presentation reiterated my view that there is a lot of growth to come from MML. Peter felt that the market is just valuing MML on Co-O at present, which I agree with. I get the impression that MML have been pretty cautious with their timelines for increasing production so it’s possible that they might even be able to ramp up production quicker. I thanked Geoff and Peter for doing such a good job.

They are presenting in London, Scotland, Amsterdam and Paris and some of these are new shareholders/potential shareholders.