it's time of the year for profolio adjustment., page-7

" ...there must be a point where things turn around or go bust.."

My comments:

Why do so many investors feel the need to hold on to a company until it "goes bust?"

Quite a few companies I have invested in have sunk, but I haven't gone down with the sinking ship. I jumped ship in the safety of a lifeboat well in advance.

I made two big mistakes with MUN.

Mistake 1.

Purchasing MUN in the first place. What was I ever thinking about by purchasing shares in a minnow would be producer that was only intending initially to produce in the mid 30,000 ounces a year? I'd never invested in a minnow with such a small anticipated first year's gold production in the past.

Was it the projected millions of dollars free cash flow from this small amount of gold production that looked amazing - too good to be true? As we have seen that is exactly what happened as gold production and grade was well below expectations and costs astronomically higher.

Was it MUN's well promoted "Targeting initial low-cost, sustainable +250,000oz pa production base?"

But as we have seen taking ALL expenses into account MUN has been losing money and gold production remains miserable. And that with gold now over US$1200.

Mistake 2.

Waiting until around 30 cents to sell this hyped up underperformer. I should have sold as the price started to consistently fall from first gold production instead of believing the initial ASX announcements about how all was going to turn out fine.

As an example, I look back at what was released to the ASX on 28th. July 2008. It was a precursor of what was to come:

"Consistent with Mundo Minerals policy of ensuring effective financial management of the business, a temporary bank facility has been established. This short-term facility, which does not involve any gold hedging, will provide a short-term facility to assist with funding all operational costs at Engenho, ongoing development at the Torrecillas Gold Project in Peru, as well as exploration activities at the Tocantins Joint Venture and newly acquired Jaqueira Project in Brazil, as well all corporate overheads while the production cycle is properly established.."

Hey. Weren't we meant to be getting this tremendous positive cash flow to fund that? Instead a line of credit had been taken to meet costs. But as we soon found out a few thousand ounces of predicted gold just didn't happen to be where MUN was mining.

And when has the production cycle ever been "properly established" so that MUN made good money - even 50% free cash flow after expenses compared to pre mining predictions would have been wonderful in the light of what has happened.

Now with gold over US$1200 and MUN at a miserable 9.5 cents we have reached the stage where people are wondering "...there must be a point where things turn around or go bust.."

Let's hope things do turn around for MUN.

When investing serious money, my view is investment decisions need to be based on more than hope. I guess it is up to every investor to decide for themselves whether or not MUN is capable of turning things around.