Medusa Mining - one for the ISA!!

Tuesday, Apr 28 2009 by
15

Came across Medusa Mining at the Master Investor Show last Saturday and was most impressed. I listened to two presentations by the MD Geoffrey  Davis and had a long chat with Roy Daniel the F.D.on 25th April. This company is dual listed, on the ASX and on AIM, and its shares can therefore be put into a Shares ISA. The company owns the CO-O mine in East Mindanao, in the Philippines and became profitable this year. It is a low cost gold producer with an average production cost of some $210/oz. It is currently producing gold at an annual rate of 50,000 ozs. But this is already planned to be geared up to 100,000 oz/annum by early in 2010. I bought my first tranche of Medusa shares today plus a lot more for my mythical £1M fund on here - which I'm pleased to say is doing well! The company announced a new high grade vein discovery on 1st December 2008 after which the shares have raced away!! Seehttp://www.medusamining.com.au/newsroom/asx/081201_coo.pdf
The company web site is at http://www.medusamining.com.au
Well worth a look in my opinion!!


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Medusa Mining Limited is primarily engaged in mineral exploration, evaluation, development and mining/production of gold. The Company’s Co-O Mine is a rail or tracked mine utilizing battery driven electric locomotives and 1.2 to 1.5 tons mine cars. The mine operates using two adits, four inclined 60 degree internal shafts, two vertical external shafts (Ventilation and L8 shafts) and two inclined external shafts (Agsao and Baguio shafts ). The Tambis project comprising the Bananghilig Gold Deposit is operated under a Mining Agreement with Philex Gold Philippines Inc. over Mineral Production Sharing Agreement (MPSA) 344-2010-XIII, which covers 6,262 hectares. The Lingig copper discovery is located within the Das-Agan Project consisting of Mineral Production Sharing Agreement (MPSA) 343-2010-XIII and situated in Surigao Del Sur province in east Mindanao. more »

Share Price ()
105.75p
Change
4.5  4.4%
P/E (fwd)
4.8
Yield (fwd)
n/a
Mkt Cap (£m)
210.9



  Is Medusa Mining fundamentally strong or weak? Find out More »


57 Posts on this Thread show/hide all

marben100 26th Sep '10 38 of 57
1

There's a video webcast (18 mins) of Geoff Davis' September presentation availabe here: http://www.gowebcasting.com/events/denver-gold-group/2010/09/20/medusa-mining-ltd/play/stream/1039

H/T to "deltrotter" on ADVFN for highlighting it.

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p3dr036 25th Jan '11 40 of 57

Another excellent report - whch the market seems to be ignoring!

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Fangorn 25th Jan '11 41 of 57

Market seems to be punishing most resource stocks today, MML isn't the only one. a 40% Jorc upgrade sees OTC drop 20%! Vgm down...AGQ down....all rather depressing but seeing as one bought in at far lower levels nothing to get overly worried about, at the moment.

Seriously considering topping up on VGM, OTC, RRR, and AGQ myself with some surplus funds. A

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p3dr036 25th Jan '11 42 of 57
2

Yes, it's a general trend all over the precious metals stocks.

But I find particularly unreal when MML reveals continuing and excellent figures is stil hit with profit taking.

Regarding VGM - I've already topped up three times this month.
I also topped up once with AGQ and hold OTC and RRR.
Looking at Rambler, Ascot Mining and Athol Gold.

Cheers

Peter

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Fangorn 25th Jan '11 43 of 57

It's amazing how the market seems to be over reacting(perhaps just alot of scared PI's jumping ship). I'd be very interested to know how many of them have been punting resource stocks on a T+20 basis. Don't do so myself, T+3 only here.

Am mainly interested in the likes of AGQ, RRR, OTc for a long term hold, as well as the oilies. a recent Oiley purchase hasnt been doing too well though(Deo petroleum), and I'm currently looking for some more San leon as and when the time is right.

Will take a look at those you mention, Athol gold,Ramblers and Ascot. Am currently taking a look at some really off the run cos,namely XTR, and VGm for a bit of excitement!

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p3dr036 26th Jan '11 44 of 57

Don't know if you have read this article from The Fool which came out today.
I don't agree with it at all. But the writer does state an opinion re what they call a "Gold Bubble" which is worth considering if only to disagree with!.

http://www.fool.co.uk/news/investing/2011/01/26/the-sure-thing-thats-falling-like-a-stone.aspx?source=ufwflwlnk0000001

I agree with the part of the article says gold can't go on rising forever. Nothing does.
But I do feel that there are another couple of years more at least for the present upward surge in precious metal prices to continue.

VGM should [I hope] get going again soon. The over-reaction and misunderstanding of the worth of the recent company update should pass and the upcoming listing on the ASX will [I hope] prove unstoppable.

Rambler Mining's attraction for me is that it will be in production shortly.
Cheers
Peter

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Fangorn 26th Jan '11 45 of 57
1

Yes I had a quick gander. Didn't get much inspiration out of it or most of the other dross that seems to hit my mail box these days - has the fool turned into nothing more than a ramping tipsheet? Whilst I agree Gold doesn't go up forever I do see the ever increasing inflation as a means of reducing the massive debts government s have built up as underpinning higher gold levels in the short term (ie 12-18months).

Ah I'll take an even closer look at Rambler if it is fast approaching production. Still messign around with a few bits. Caught the falling knife that was Ortac Resources this morning at 1.83. Hopefully that will play out well - a 33% odd drop over two days isn't merited imv.

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p3dr036 28th Jan '11 46 of 57

I'm very happy with Ortac, having bought in September last year at 0.75p! I sold half in October at 1.5p! So the ones I have left are "free"! So they are in the bottom drawer for the next year or two.
Good luck with them.
P

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Fangorn 28th Jan '11 47 of 57

Hasn't played out as I expected. Fortunate to have bought lower earlier last year at 1.2 so I'm not sweating, just yet!

Resources , particularly the small ones taking a beating over the last couple of days. Just sold my NFDS, decided that Boparan wasn't going to be topped,so more AGQ for me I reckon :)

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marben100 14th Feb '11 48 of 57
4

New presentation out from Medusa today. Good reading it makes too.

Medusa continues to deliver, with over 51,000oz produced in the first half of the FY ending June 2011. FY target increased from 100koz to 102koz. I'll be surprised if Medusa don't beat that target, with mill capacity increased from March onwards.

Particularly pleasing is to see a concrete timetable set out in slide 7 for increasing production levels from the current ~100koz p.a. to 400koz p.a. by mid-2015. Generally, I'd be sceptical of such forecasts but Medusa has an extraordinary track record of delivering on its promises, so I'd be confident. New development  work and explo work around the Co-O mine, shown later in the presentation, are supportive of this.

Concerning the gold price debate, something worth observing is that if Medusa can maintain its extraordinarily low operating costs, below $200/oz, and achieve the target production growth, the POG would have to fall to $500/oz before profits fell below current levels, at the target level of output. I.E. an NPAT ITRO $100m p.a.. Somehow, I can't see those sort of gold prices for the foreseeable future (given the inflation outlook). In the shorter term, I also suspect the POG will go higher, which is likely to have a corresponding effect on MML's SP.

All in all, I feel pretty comfortable at present holding MML as one of my larger investments.

Regards,

Mark

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p3dr036 14th Jul '11 49 of 57
10

It's been quite a while now since anyone posted on this thread. I've been having a look at what has been happening since then. Both MML's share price and the price of gold has varied considerably over that short term.

On 14 Feb, the date of the last post by Marben, MML's share price closed at 432p. Tonight it closed at 471p. But during that period of five months the share price has been as low as 379.5p [on15/3/11] and as high as 560p [on 31/5/11].

On 14/2/11 the gold price in London was around $1372/oz; on 15/3/11 it was $1400/oz; on 31/5/11 it was $1536 and today's London fix was $1590.

During this period, MML has continued quietly producing gold at a rate now exceeding 100,000 ozs per annum, at a cost below $200/oz - a cost that few, if any, other gold miner can match! In addition the company has been further developing the Co-O Mine and further exploring their surrounding assets.

MML is forecasting increases in annual gold production from its present 100,000 ozs/year to 400,000 ozs/year in a two-phase programme over the next 5 or so years [source :May Company Presentation]

Of course there has been a fall off in the share prices of virtually all precious metal mining companies during this year. But for the life of me I cannot understand why Medusa fell so much! The share price seems to be back on an upward path and, in my opinion, should rise above its level in May, once the next quarter's output figures are issued later this month.

I hold shares in Medusa Mining and regard it as a long term core HOLD!

Looking at the long term graph, particularly the recent pull back is fairly insignificant. I expect the share price to climb above

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tournesol 15th Jul '11 50 of 57
9

Why on earth has someone given the preceding post a thumbs down? Even if you disagree with the views expressed by p3dr036, you can hardly object to a clearly written and perfectly reasonable post, surely? And for that matter I can't see anything to object to in the substance.

T
no position

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edit

I guess it's the same person who's just given this a thumbs down too. Whoever, it is hasn't quite understood how discussion works.  It's all about exchanging differing views in a polite and civilised manner. You don;t heckle or boo when someone else says something you might disagree with. In fact you might even applaud if they say it well.

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BobGe 15th Jul '11 51 of 57
1

In reply to tournesol, post #50

Might be just a mousing error - the hands are quite close and it's happened before. Maybe would be a good idea if the 'thumbs down' highlighted red during hover (as the 'thumbs up' highlights blue).

MML - Interesting pricing of options awards in recent RNS

Medusa advises that it has today issued 575,000 unlisted options exercisable at $8.10 per option with an expiry date of 3 July 2014 ("Options").

The Options have been issued to selected Philippines based employees in recognition for dedicated service to date as well as providing an incentive for future dedicated and ongoing commitment and service to the Company.

http://www.investegate.co.uk/Article.aspx?id=201107040949336899J

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marben100 15th Jul '11 52 of 57
4

In reply to BobGe, post #51

MML - Interesting pricing of options awards in recent RNS

...well by 2014, we should have Co-O up to 200,000oz p.a. Assuming a static gold price at $1,500/oz and conservative costs for the enlarged operation at $250/oz leads to $250m (less G&A - currently around $10m p.a.) of operating cashflow p.a.

A market cap. of $1.5bn, implied by the $8.10 strike price doesn't seem too demanding for that level of cashflow - and that's before B'hilig comes into operation, and allows nothing for copper prospects at Tambis that the geologists (and some majors that have approached MML, according to Geoff) are getting quite excited about.

ISTM that the expiry date was well-chosen: a good incentive to get Co-O production up on schedule!

Cheers,

Mark

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StrollingMolby 29th Aug '11 53 of 57
2

Results released Down Under, available on the ASX link here:

http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=MML

Highlights

  Ccy 30-Jun-11 30-Jun-10 % change
Revenues USD $149.6m $94.6m +58%
EBITDA USD $120.7m $73.7m +64%
NPAT USD $110.4m $65.8m +68%
EPS (basic) USD $0.587 $0.378 +55%
Cash & bullion USD $102.1m $55.8m +83%
Dividend paid AUD $0.10 - -



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p3dr036 8th Sep '11 54 of 57
5

Well here we are, at £5.46, within a smidgeon of the £5.60 all time high!

MML continues to move ahead and Geoff Davis and his team continue to outperform and meet their targets!!

In my view Medusa Mining should continue on its profitable way and I would expect that shareholders will look back in a couple years and regard today's £5-odd/share as pretty cheap.

Medusa issued a shareholder presentation on 1st September - see http://www.medusamining.com.au/newsroom/asx/2011/110901_presentation.pdf

From this MML expects to quadruple gold output over the next few years from the current +100,000 ozs/year to some 400,000 by 2016. [see slide 5 of the presentation]

This growth is in two planned parts.
1. A doubling of the Co-O Mine output in the next couple of years with targeted production:
as follows:
FY 2012: 100,000 ounces at cash costs circa US$200 per ounce
FY 2013: 120,000 ounces at cash costs circa US$210 per ounce
FY 2014: 200,000 ounces at cash costs circa US$220 per ounce
[All these will come only from the Co-O Mine ]

2. By 2016 MML are also forecasting that they will have commissioned their Bananghilig Mine. They are expecting to add another 200,000 ounces from there, bringing MML's annual gold production to 400,000 ounces [slide 10 from the presentation].

The indicative costs for the Co-O further development is expected to be US$70M and the amount for the Bananghilig Mine is expected to be circa US$200M [slide 10 again].

All the capital costs for the development at both mines will come from MML's in-house cash flow and MML are not hedged in any way.

Finally there are other prospects which Medusa have up their sleeves in the East Mindanao area which are all relatively close to the Co-O mine. Their gold prospects are listed on slide 18 and there are a number of copper prospects which are listed on slide 21.

And MM: say they will continue to pay a dividend [slide 9]!

Can anyone find me another small/medium low cost gold producer which is ISA-able?
Can anyone find me another gold miner who is producing +100K ozs/year at a cost of >US$200/oz?

I don't think so!!

I reckon that Medusa offers its shareholders solid growth over coming years and I will not be selling!

Peter

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Fangorn 24th Oct '11 55 of 57

http://www.investegate.co.uk/article.aspx?id=201110240715016544Q&fe=1

QUARTERLY ACTIVITIES REPORT
PERIOD ENDED 30 SEPTEMBER 2011

Interesting read.

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barkingatshadows 25th Oct '11 56 of 57

In reply to Fangorn, post #55

what do you find so interesting?

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p3dr036 24th Nov '11 57 of 57
3

What I find interetsing is what I have posted on the other thread:
Quote
This is what I e-mailed to a friend a couple of days ago:
"ML closed at 330p tonight - down 24p on the day! This is a miner producing 100K ounces of gold each year At a cost which is below $200/oz! And pays a dividend!!
This is a miner that has always met its targets and has under-promised and over-performed.
A miner that is promising a gold output, by 2015, of 400K ozs per annum, which will be at a forecast cost circa $350/oz. One could expect a share price of perhaps £15-20 per share by then.
The share price is LOWER than a year ago.
DOH!!
===

To that, I would add:

Medusa is down over 200p from its peak of 560p a year ago. In that time it's mined circa 100,000 ozs of gold at sub $200/oz cost and has thus produced something like $145,000,000 in profits.

I can only assume that this is going to turn itself around at sometime as Medusa now seems seriously under-priced. I can only think myself lucky that I bought them at 80.5p in 2009!!

.

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