something is happening.., page-3

At the recent AGM it was mentioned that two directors would resign at the end of December.

This has now happened. One of the directors (Scorer) was charged the responsibility of negotiating an exit of the remaining uranium assets at ERGO. Whilst uneconomic , when questioned at the AGM, the directors were of the view that the asset has strategic value, obviously this would be from DRD gaining 100% control of ERGO. Watch this space- if Scorer was successful then valuable capital will be released for further expansion eg gold 3 which will aim for production of 60k oz au pa.

Recently the company announced that gold 2 had been commisssioned. Expected date of first gold pour was not mentioned. Once fully operational MLI is earmarking producing 40k oz au pa at approx C1 cash cost of $us680 which will provide the company with the first signs of serious sustainable cash flow. The market has so far ignored the assets of MLI, possibly stemming from the bad decisions of previous management and also questioning the business model of making money from tailings. Once MLI can prove that money can be made then expect a re-rating as the gold assets are long life. (Note At the momment uranium assets at WERGO are uneconomical needing a U price of around US$140 -I was told at the AGM).

Whilst a C1 cost of $us680 is at the high end it is not that bad once you consider the current average cost amongst Australian producers is now around $620. Management appear to be well aware of the need to improve recovery rates , which is a key driver in deriving a first class profitable tailings operation.


At 30 June 2009 - MLI reported net assets of $142m. Even after the recent dilution this still equates to approx 13cps. One interesting aspect I found was that the accounts reported tangible assets of P,P & E which alone totalled $60m - the market cap today is only about $40m.

Blue Bay no doubt see the real underlying value in the assets of MLI and hence why they have taken such a large stake paying 4.5c which has yet to see break even. With gold 2 nearly operational will we soon see a re-rating? It is definately on the cards.

cheers