After reading the 6-months report I noticed a few things which are important for the coming 2 years: Mr. Teo in my opinion is trying to bring MML to a higher standard. As a CEO of another big Australian company he is bringing in more "standard procedures" into the running of the company. First he is taking more time to select (at least it looks like it) a proper new CEO for MML. To my opinion this is only step one. When a new strong and skilled CEO is onboard there probably will enter new other people as well. So this will bring the management team to a level where it should be. Next to the management question you can see that he is working on the future as well. The decision to go not only to level 8 with the new shaft but two levels deeper is a rational decision because the time to make such a decision is now. I would only like to see some more quidance about the costs of this extra investment and the time it is going to take to get the AISC down to a level of US$ 825 - 875. Also you can see from the framework of the semi-annual report that it is a report which most people can read quite easily. also a development I like. The only thing I am really missing is a more in-depth part about the coming years and production levels, costs and life of mine. Those things. I got the feeling that this will come once the new CEO is onboard and working for some time. When this is reached then we really have a MML which operates on a higher level.
For the mean time what I see concerning the SP is that the " weak hands" have been chopped of by the rise in the POG. When the POG went through the US 1.200 level the stopped selling and the first buyers (the strong hands) came in. Where will this bring us. The first phase is the normalization of the valuation of the company and with it the SP. In a few years time when the company is producing at a level of 140.000 to 175.000 OZ and with a AISc of around US 850,- and a POG above US 1.200 we all can do the maths and MML will produce much higher levels of FCF and will pay a dividend again (I personally back the policy of funding the current investments with own free cash-flow and not taking onboard new debt. this is exactly what MML is doing right now). By then the rough diamond has become a nicely cut diamond. Its value will then be on par with competitors.
MML Price at posting:
69.0¢ Sentiment: Buy Disclosure: Held
