It's a bit of a Catch-22 when it comes to promoting.. many of the very good geologists I know are quite tight lipped when it comes to upside and let the results speak for themselves. Then there are the promoters who just ramp their company constantly and whilst they may not have a great project, they get a good market cap. The pro/con of each is the quiet achiever doesn't create unrealistic expectations but can really struggle to raise money unless the market (not their deposit) is running piping hot for their commodity mix. The promoter creates a bubble but through the process can obtain enough cash to either ride out any shocks or acquire something half decent. At the junior end you need a bit of both as I've seen some cracking projects marooned through an inability to fund (and excessive caution) and I've seen people just waste a tonne of money chasing the latest fad marketed well by a spruiker.
At this market capitalisation lets be honest, it's all about hypotheticals. People here want to know the exact resource size and potential, when it will be mined and how much money it will make. Honestly, $16m market cap miners just aren't in that spot. Fortunately MGV has a lot of cash to get some good newsflow from more drill results, but it would be good for them to start talking hypotheticals - i.e. what are their options as they see them. I can see a lot of possibles based upon varying levels of success (toll treat / sell open cut ore to fund capex and development underground, drill out base metals and spin it off to raise capital to fund gold production, sell gold deposit to cashed up nearby peers and focus on base metals, etc etc). In terms of developing the project themselves, they'll need a bit more than 200koz. To get into full production from the get go by themselves will probably cost $30+m. Resource financiers need a good reserve tail and if they mine at say 25koz pa with an AISC of $1200, they'd make $10m per annum, which means capex paid off in 3+ years but to get the $30m upfront they'd need at least 125koz in Reserves (not Resources). I'm a bit hazy on Resource to Reserve conversion rates, but I'm guessing it will be less than 50% as they move underground. Anyway, this is not a negative, it's just chewing the fat on some options and at some point I'd be keen to hear if the company would seriously consider toll treating, selling ore, divesting assets rather than just drilling until their is a fully bankable Reserve.
MGV Price at posting:
7.7¢ Sentiment: Buy Disclosure: Held
