Australia's largest stock trading and investment forum Australia's #1 stock forum

MML

Click for more information

2.41%

85.0¢ medusa mining limited

i would add to the above comments, that checking their cash...

First 62 Last

Share
Profile

Follow
loki01

10,469 Posts.

155

01/04/16

17:22

Post #: 17403670
Share

Originally posted by loki01 ↑

Fangk

No, as i said I would need to do some digging and my brain is not functioning.

About 18-24 months ago when my brain was functioning a lot better I posted a lot of commentary why we should disregard the profit figures posted by the company (there were a lot of posts by me, CPDLC and chuk on this issue - perhaps check it out) - it is to do with the fact that there is so much mine development costs that capitalising them and then depreciating them over time is not appropriate in this case. The significant costs that is tunnel building to access ore should not be capitalised in the case of MML because those tunnels are needed to access ore and once the ore in an area has been extracted then there is no more ore there and they have to keep building more tunnels and shafts (ie it is actually an ongoing cost that should be fully expensed each period as it is incurred).

Under the accounting standards these capitalised expenses may be counted as an asset in the accounts and expensed over time as depreciation, when in fact they are nolonger an asset in the sense there is no more income to be derived in the areas that has been mined.

MML recently wrote of a massive amount of their past capital expenditure on these tunnels and mines as a loss (have a look at their past accounts).

All of this is legitimate according to the Oz accounting standards but is meaningless in terms of what cash margins a company actually earns after all expenses incurred.

Hence I simply disregard the standard accounting profits and use ASIC as the chief guide. MML took a long time but finally in the last year provided AISC after many shareholder complaints that they were "cooking the books" (done legitimately by the accounting standards but useless on which to base ones investment decisions).

I have a strong belief that their AISC figures now provides a fair representation of all ongoing operational costs in generating their income, having spoken with the company - plus the fact that they are able to fund their development costs without seeking more funds from us or extensive borrowings (unlike so many other goldies).

People who think the that their profit figures are correct are deluding themselves. They will not be able to pay out dividends based on the way they currently construct their accounts. Any dividends paid will be from the operating margins that are the difference between gold price and AISC.

If you look at EVN's recent quarterly report you will see that they include some of their sustaining mine development costs in the AISC figure they generate but there is an additional component that they capitalise - so in a way MML's AISC figure is better than what EVN supplies.

Sorry but I have to end this here.

loki (a really lousy old accountant - only got my CPA when I was 60 years, never actually worked as one, and now my brain has gone bunk on me.)

Expand

i would add to the above comments, that checking their cash balance is vital - is it growing - where did the money go. Also can they meet their liabilities from operations?

So look at the current assets and current liabilities and any longer term liabilities, plus examine their cashflow statement.

loki

MML Price at posting: 77.0¢ Sentiment: None Disclosure: Held
1 Upvote

0 Great analysis

Reply

Top Stories

RSG

Resolute shares bounce back as second payment made to Mali government to secure workers' release

ADD

Parkes Au-Cu project to 'transform' Adavale Resources with key targets

HotCopper Highlights: Your most watched stocks for Week 48, 2024

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

Dale Gillham's weekly wrap: Bold moves in NZ, caution in Australia

MIN

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

WC8

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

ACW

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

Ice-cold winner: Cryopreserver Vitrafy escapes November's IPO struggles to end debut week higher

Week 48 Wrap: ASX flirts with 8,500pts; APRA declines mortgage loan easing; Trump's Bessent tied to Dem donor

There are more pages in this discussion • 3 more messages in this thread...

First 62 Last

Add MML (ASX) to my watchlist