Hi Alpha,MBG is a company I have made some money on over the...

Hi Alpha,

MBG is a company I have made some money on over the years though I no longer hold an interest.

Huntley has just done a report on it in his Smaller Companies Guide. He's a bit negative about their gold prospect as you'll see...


MBG has increased its reserve
base at the Ardlethan tin mine
from 4,353 tonnes of con-
tained tin to 12,829 tonnes of
tin by including the old
Ardlethan tailings dumps for
the first time. These dumps
were produced as a result of
previous mining activity.
MBG will conduct a detailed
feasibility study in 2003 to
determine the economic
potential of retreating these
tailings using modern equip-
ment. The resource base has
also climbed from 5,236
tonnes to 11,876 tonnes.
The market was largely expecting this increase. Unfortunately, investors have yet to be inspired by
Ardlethan, which many see as too small a project to attract and keep their attention. Thus criticism seems a
little unfair given the projected cashflow and profitability of the mine.
On the other hand, the recent announcement that MBG is embarking on a feasibility study for its small
Lucky Draw gold project will do nothing to lift the company into a bigger league of miners. Lucky Draw
was mined by the RGC Group between 1988 and 1992 and currently contains a resource of just over
100,000 ounces. A preliminary assessment has identified 18,078 ounces that could be produced from the
tailings dam at an average cash cost of US$174 per ounce. There is regional exploration potential and this
will be assessed with a small exploration budget. Michelago Limited (MIC) owns 25% of the Lucky
Draw/Burraga project.
We believe MBG needs to identify a larger project to provide it with a growth profile after Ardlethan. The
tin mine is capable of generating a large surplus cashflow and it would be better for this to be earmarked for a
much larger venture as early as possible, to give the market something to anticipate. Lucky Draw may be
capable of generating a useful amount of cash, but many investors will see it as a distraction for management
when a larger project should be the primary target.