value proposition?

Well I am getting a little tired of the arguing on here about MUN so I thought that I would start a thread to discuss the facts about MUN and the good or bad value that it may represent at the moment. Siamese you are welcome to post on here but do you think that we can look foward from here, rather than backwards in to things that have happened over the last 12 months as they have been done to death. Here is my opinion on the current situation.

With a current market cap of only 38 million dollars I believe that MUN offers great value at its current price. As I have mentioned in the last week I have been accumulating at around $0.25 and will continue to buy if the price stays around there or goes lower. The last information I heard has MUN on track with production targets for the last 2 months since the quarterly, I believe that is around 2400 ounces per month at the moment. This is good news and means that at least some of the issues have been addressed. I think one of the things we need to remember is that extra work was done to the mine in the last quater including work on the the tailings dam and also a rom pad extention. Add to this exploration drilling at Crista and Jaqueria and ongoing development work at Torrecillis and it is easy to see why the company went through some cash! All I can say in that respect is that so far management have taken care of the tight finances well and I trust them to continue to do so. As far as my calculations go MUN will have a surplus of cash at the end of this quarter, we need to remember that although they are low on cash they have a profitable mine even if the cash cost is high at the moment.

So with all of this in mind I look to the future and ask myself do I think that MUN can hit their targets and my answer is yes. Within six months MUN should be ramping up production at Engenho by supplementing ore from the Crista deposit into the plant. This will give them a production target of approximately 42000 ounces for calendar 2010. As far as cash cost per ounce goes it will be lower thsn it is now by a decent margin due to the fact that open pits cost less to mine and the grade at Crista from what I have heard is around 6 grams per tonne which is almost double what Engenho is. So basically the point of the story is that Engenho will turn in to a mine that will provide quite a bit of free cash flow in the very near future.

Now to the second project Torrecillis. This has been in development for a number of months now and trial mining has been delivering grades of over 20 grams per tonne which by any standard is pretty awesome. A high level scoping syudy was also completed during the last quarter which confirmed the numbers on Torrecillis. An expected Capital expenditure of 35 million US will give us a mine that produces 100,000 ounces a year at a cash cost of around $400 US. This project as far as Im concerned is an absolute cracker and probably the number one asset in the stable. This is what will get MUN to 150,000 ounces per year.

Mundo's third project Jaqueria is currently being drilled and drilling is expected to be completed in February. One hole has been completed and from what I have heard the geo's are pretty happy with what they have found. Jaqueria is expected to contribute a further 60,000 ounces per year at a grade of around 7-10 grams per tonne.

I wont talk about Tocantins because it has had limited exploration but I expect that it will be drillied sometime in the near future when a little more free cash starts to flow. All I will say is that it is huge and it is on a greenstone belt which makes for a number of mid to large gold discoveries possible.

So after taking the facts in to consideration I believe that MUN is great value at its current price. No it is not without risk as the cash is low but if things go right from here you will see a company with a share price many multiples of what it is now within a year or two. Fat prophets put a sell on MUN because they believe that they will need a capital raising. I personally dont think that they will at least not in the shrt term so I believe that FP have made a bad call. Realistically nothing has changed, apart from them offloading their shares, since they had them as a buy at $0.40 two months ago. ago.

Everybody's risk profile is different but I dont think anyone can argue that there is no value in the company at the current price, so I say do your own research and make an informed decision, dont just listen to people up-ramp and down-ramp here on hotcopper. Best of luck to everyone (even you SP)