MML London Presentation Report 2

This is a second report of the Medusa presentation given by Rob Gregory, Operations Manager, in Mayfair last Thursday by a private investor. The first report " MML London Presentation" was posted here on 11/10.

He said he found Rob Gregory to be "very open and realistic".Here are the key points from the presentation and a long discussion with (RG) and a handful of investors afterwards.

Life of Mine; Shafts Development
The Reserves situation was sensitively described; RG believes there will be 10-12 years LoM in the current mining area, and ~15 more year's down-dip in the prospective L16 zone.
The Service Shaft installation is on-track and spend now stands at $6m. The positioning, design and quotation for L16 is now complete, pending the confirmatory drilling programme. L16 will be a large shaft, capable of 2,700 tpd from considerable depth. It will be a four-year project, completing in 6 years time, at an indicative cost of $50m.

Grades Trend
Aside from the rising Stope ore grade trend in the presentation, Development Ore is averaging 6g/t. Upper level grades confirmed as heavily depleted by selective mining; something they will not do again. Optimistic that new deeper levels beyond Level 8 will be higher grade (but cautious about vein widths?).

Operations
RG confirmed that Co-O is "a very busy mine" and there are a lot of logistics challenges down there. He was extremely upbeat about the opportunities that will be enabled by the Service Shaft parallel access - "such a difference it will make" - especially supervision. Currently shift change ties-up L8 shaft for 90 minutes for personnel movement.

RG enthused about Stope ore inventory build-up, 45,000 Oz in 8 months - is this reflected in the financials - is this inventory recognised on the balance sheet? I guess this equates to 10+% of mining cost in the last 8 months which is not reflected in Au production.

AISC
There was optimism that further progress will be seen after the $80 medium-term Capex impact drops out, pending L16 expenditure commencement. Under questioning RG was cautiously bullish about significant AISC reduction, an ASPIRATIONAL $800/Oz was mooted.

Cost Reduction
RG sees opportunity, the mine has hithertoe not been aggressively cost optimised. For example, the two new ventilation fans (total 310kW) should enable retirement of 3 compressors totalling 900kW consumption, grid electricity is not cheap in the Phillipines; kWh costs were stated.

Other costs are progressively being addressed - eg Explosives are being re-negotiated, etc. The Mill is running very well on 4.5 days per week.

CAPEX
The mid-term $15m spend completes in mid 2016, and chiefly comprises Service Shaft, Tailings Facility, Ventilation Upgrade, Tramming Loops.

Community
30-40,000 local people depend on Co-O for their livelihood and are big supporters of the mine; this helps ensure security in the Phillipines. Safety was a big positive emphasis too; Phillipines government is insisting on nationwide ISO14001 environmental standard accreditation by end 2016.

Share Price, Cash, Dividends
SP seen to be ridiculous at current level, most likely held back by slow cash pile growth. RG was pleased that the Van Eck overhang was being cleared. There was frustration amongst the audience (and seemingly with RG) regarding slow cash pile accumulation. Contractors payables claims regarding SAG mill have now been settled which clears the air. It's clear that a very substantial Cash Pile ($50m?) will be accumulated before resumption of dividends.

London Re-listing?
This question was raised in open forum. It was re-emphasised Robert Weinberg (RW), Non Exec, that there is NO intention to place any new shares, and hence that a re-listing was unnecessary.
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Gold at $1168 has now broken out above the 100 day moving average, DMA.
Silver at $15.90 is testing the 200 DMA.