maxm0jo. TRY versus MML. Since the global gold miners bottomed...

maxm0jo.

TRY versus MML.

Since the global gold miners bottomed on 19th January 2016, TRY up 205%, MML up 89.2%. So I guess Mr Market has a view on the relative merits of the 2 names.

As I stated, I am not now actually in TRY. It ran so far, so fast that I felt too much was baked into the price going into the results. That said, I think CY16 Q1 was much better at TRY than MML. TRY was ramping up a new mine from a standing start in Q1. MML was operating a mine that has been trundling on for years. The recoveries were a bit below par at TRY but that is within my comfort window for TRY given this is a new operation. MML's grade decline was completely unexpected. TRY did see some cash burn but that was because it paid of $15m of debt. Short term it is also locked into a hedging regime that was conditional on its previous financing so got little upside from POG. MML had no debt to repay and was completely unhedged going into a quarter with a rapidly rising POG. Yet it still couldn't build cash on its balance sheet.

After TRY pays down its debt (over the next 12 months) and the hedges roll off, it will be a cash generating monster (and yes the LOM issues still need to be resolved). Will MML start to throw off cash once the service shaft is completed? Perhaps. But the delay in the service shaft is such that we will soon roll into the L16 shaft development. So my fear is that we will go from one cash sucking project (the service shaft) to another (L16 shaft) with barely an interlude in between.

Wieman01

Yes, trust was a big issue for me in Q1, but there are some cold hard facts in the Q1 report. Head grade slumped to 5.47. This wasn't supposed to happen. The service shaft development grows ever more tortuous. And the post-Co-O expansion opportunities have disappeared. I'm not sure that Boyd Timler can make all this stuff go away.

But at the end of the day I'm a bit of a tart. If Boyd Timler can turn the operation around and start waving wads of Aussie dollars at me, I will get back into bed with him