Ann: June 2016 Quarterly Report-MML.AX, page-8

I would class this quarterly result as "mixed".

It was nice to see production and the grade improve (was quite worried after Q3).

Again it is nice Boyd hits his stated objectives. Builds trust in his competence. Nice work Boyd.

That said, I was disappointed and concerned by the cash costs (and AISC).

I had expected the cash cost to fall back below the $494 reported in Q3 with the increase in production volumes in the quarter, yet it has drifted higher to $512!

Second half cash costs of $503 is particularly disappointing when last year they averaged a cash cost of $385 and it's a big miss on their guidance of $400 to $450...

This sort of thing gets me worried about how realistic it is to expect that MML will have significantly lower costs by the time its capex projects are complete. Especially when AISC comes in at $999 (the upper end of their guidance), yet they had to spend $1.7m less on exploration than originally budgeted to hit that FY16 guidance.

I'm also concerned by the guidance for FY17.

I was expecting 110k to 120k and AISC of $900 to $1000 (ie another year of grinding out small operational improvements before a breakout year in FY18).

Instead their FY17 guidance of 105k to 115k and AISC of $1000 to $1100 is basically saying that even after all the work done in FY16 Co-O that will potentially produce less and will definitely cost more per ounce than in FY16...

I doubt many on these forums would say that FY16 was the year we expected for MML, but at least they still managed to increase production by 10k and kept AISC under control, so this sort of guidance is disappointing.

So it's difficult for me to get excited about investing more in MML with the added sovereign risk and the operation seeming to need to go backwards before it can go forwards in FY18.

Makes me think MML might make for a better investment the first half of 2017 once the quarterlies start to look better and closer to the start of FY18 when the real operational gains will be made.

This 4 - 8 months on the sidelines or in other gold stocks which are moving forward operationally will also give investors more time to wait to see what the Philippines government does...