Ann: Proposed Share Consolidation for MOD, page-13

Morning Guys,

I think both views are right here on consolidation.

ST there could be weakness as those trading the 'pips' exit due to narrowed spread and an entrenched retail view that SP's fall after consolidations.

SP's often fall post consolidations, in general, because of the nature of the companies that require them - i.e. poorly performing juniors who have previously sucked money from investors and issued massive numbers of shares for little wealth creation ... if the behaviour doesn't change then the process is simply set to repeat.

LT, however, a company such as MOD with an MC of $100m and cash of $18m should raise itself from the gutter of penny-dreadfuls and trim its capital structure down to a more institutionally attractive package.

I think that MOD has revamped its business from the past (mis)adventures (e.g. Sam's Creek in NZ) and now has a viable path towards creating a large Cu business in a very attractive jurisdiction.

In addition, I think that MOD, being exposed to Cu, is in a very good base metals sector. This is backed up by the latest GoRozen report (specialist commodity investors):



http://gorozen.com/

Some of the comments made within their latest report re India entering its "S-Curve" for commodity demand (like China did in 2003) are backed up in this latest report from Aurubis:



OK ... so the second largest Country on the planet by population is growing Cu demand by 7-8% per annum at a time when the 20-25 giant Cu mines supplying the bulk of the commodity globally are aging and tired and without a strong pipeline of mine development to replace these dying giants ... Mmmmm.

I'd also recommend macrovoices.com recent podcast interview with Marin Katusa. Yes, he is a Canadian spruikster, but he also has a wealth of sector knowledge that is valid ... just maybe don't follow some of his recommendations (but I do agree with his NSU call ... that is a simple no brainer T/O within 18 months given the backdrop above).

In time, I reckon MOD will also be taken out. I believe that they should focus on what they are currently doing well, if slowly - Drill out prospective resources to increase the R&R base and number of economic deposits across their tenements and make themselves attractive to a large Cu producer looking for opportunities to fill its empty development pipeline.

Cheers
John