3/3/2019Open Letter to Dave McGowan, CEO Medusa Mining.Dear Dave...

3/3/2019

Open Letter to 

Dave McGowan, 

CEO Medusa Mining.

Dear Dave McGowan,

Congratulations on the announcement  Friday of your appointment as CEO after 2 years with the company and 8 months as COO. 

What is needed now is for you to make a statement with an honest assessment of where the company is now and where you want to take the company in the coming year/s. ie to go beyond your comment on appointment on 1/3/2019 below which is absent any detailed company development plans or targets, offering just more standing still and going nowhere that we have had since 2011 when production was 101k oz of gold. There is zero institutional or public interest in Medusa because it has been marking time for 7 or 8 years now and counting. 

"An increased focus on planning and the recent completion of the E15 Service Shaft provides a stable operating base at our Co-O mine to build from. We will remain focused on safety, productivity and mine life extension at Co-O, while continuing exploration across our Philippines assets and assessing opportunities in the Asia Pacific region.”

Production. How has 3 months of operations of the new E15 shaft improved mine operations and production?

Is L8 shaft being used 100% for ore and waste (skip haulage) and is E15 shaft being used for ore haulage as well as men as envisaged by previous management?

Why is the guidance given of 90-100k oz no improvement on last year and less than eg the 108k oz in FY 2016 (without E15)? 

What is a realistic target for FY production? 

When is sub $1000 AISC ($850 by Boyd Timler) to be achieved and how? cf current high ball guidance of $1050-1150?

When can we see the benefits of 3.5 years of the building saga of E15 shaft and what improvement metrics eg FCF generation, production increase, AISC reduction etc

When will we see the ending of all FCF generated for the past 6 years ploughed into the mine and mill for nil improvement in production or profitability?

When can we expect to  see increases in FCF quarter on quarter consistently?

When can shareholders expect to see a return of dividend payments?

When is the gold in the tailings dams to be recovered and put through the mill which is running just over 50% capacity?

Under the present political and social climate, is there no future in The Philippines for new open pit mines incl development of Medusa's Bhananghilig?

If so, what is the point of spending scarce resources on continuing regional exploration in The Philippines if the likelyhood is that monetization will not be allowed.

If the recent Royal Crowne Vein discovery is economic will development be allowed by the Mines Dept, DENR?

Why was the early stage gold project in Myanmar terminated a year ago?

This was replaced by the Q'ld exploration projects. How is country risk assessed? Is SE Asia now too risky given increasing nationalism?

Why does the Interim Report 2018/19 make no reference to measures being taken as a result of the Directors Remuneration Report being voted down at the last AGM.

What measures have been taken?

When will Medusa's Australian public profile be raised from zero and home based PR begin, incl presentations by MML to institutions and at public forums in Auz?

Why is there a need for these questions to be asked? Because the company is very secretive - acting as though it is a private company rather than a public company owned by its shareholders, as onerous as that may be for some directors, and does not communicate with its shareholders on an adequate or timely basis.

Averages for 67 producing PM miners based on latest results. 

All statistics compiled by Chipperfrd:

PER ~ 27.8

PBV ~ 1.9
PSR ~ 3.0
PCF ~ 10.4
Ev/EBITDA ~ 8.9

Medusa:
PER ~ 2.1
PBV ~ 0.65
PSR ~ 0.44
PCF ~ 1.21
Ev/EBITDA ~ 0.93

PER (Price/Earnings Ratio), PBV (Price/Book Value), PSR (Price/Sales Ratio), PCF (Price/Cashflow),
Ev/EBITDA (Enterprise Value/Earnings Before Interest, Tax, Depreciation & Amortisation)

Why is Medusa the consistent most under-valued of all the producers across 67 producing PM miners? 

How is Medusa addressing this and creating shareholder value?

Director shareholdings are negligible. Director emoluments have consistently been rewards for poor performance. 

Are Director interests aligned with shareholders? No, not at all. 

For the past many years Medusa has been benefiting directors, managers, staff and contractors through wages and payments but not share holders. 

The Medusa share price has fallen 95% so most share.holders are sitting on large losses.

Why are failed Board members still in place after many years of failure?

There is zero institutional or public interest in Medusa because the company acts entirely in  its own interests and has made no material progress for 7 or 8 years

It is unlikely that the next AGM will look kindly on more of the same we have been treated to.. 

Fundamental changes are overdue. 

When and how will this be addressed? 

best wishes,