reason of weakness?, page-6

Hi all

In response to my email (see below) the MD phoned yesterday and gave me some 20 minutes of his time to discuss why the MWE SP was 'weak'. Understandably, some of the MD's responses were guarded and limited so I have extrapolated from his comments and reached my own conclusions, so be aware! I advised the MD that I had read his recent comments published in The Australian ( see below) and he added that they mostly reflected his expressed views!!

Overall, I found the MD to be most positive about the future well being of MWE and that given the continued improving production, exploration and financial performance then the SP expectations of the shareholders will be delivered. On this point we did talk about the future price of copper etc and readers should note the article contents below of a likely glut in 2014.

The MD did confirm that he tookover a broken/damaged company and that his starting position (now 1 year ago) was from the penalty box and that it would take time to regain shareholder trust and support. His strategy is to allow performance achievements to do the talking.

On the specific points raised in my email:

a. there is no knowledge of a takeover or early signs of one being prepared;
b. there is no knoweldge of a stressed major shareholder, indeed one of the problems is that the top 40 shareholders hold 90% of the stock and they are not selling;
c. the major milestones for the company are on track including the Kapulo commissioning;
Country Risk. The DRC is a difficult country to work in with the Government frequently changing the investment rules (not too unlike Australia). A bigger risk was the listing location (see article below Miners Retreat from Toronto Exchange).
ASX Listing. The subject was actively being examined by the Board but there were technical and legal issues that had to be resolved. Presently, there was no time line possible for a relisting on the ASX. I am of the view that the MD is keen is make it happen sooner than later.
Lifting the SP. There will be anouncements in coming weeks on drilling programs, drilling results and other company achievements that should lift the SP. A change to mine life should be an outcome and that should lift the PE and SP.
On Lufukwe, the strike length is some 14 klms and will take another year to drill out and quantify. First results should start to flow in coming weeks.
in summary, while my discussions with the MD were more explanatory than informative, he did make it very clear that he was happy to hear from shareholders and to receive feedback. He is just as frustrated about the SP as we are and is working very hard with his team (of whom he is very proud) to have the company's very valuable assets create wealth for all of us.

Please ensure that you reall all of the article below.

Cheers

R1

"xxxx

We met when you did your presentation in Brisbane recently. During our conversations I advised that I regularly posted on HotCopper under the tag of Roger1. Recent posts have lead to a number of discussions with five shareholders as to why the MWE SP is so low. Country Risk was raised as a likely cause but we dismissed that as TGS has risen by some 50% over the past month. Generally, we are in agreement that if MWE has fully and accurately disclosed all of the information available on grades, production, exploration, financial status etc then the possible causes of the low SP are likely to be:

a. a takeover is being considered and the price manipulated to reduce the offer price to shareholders; or

b. there is a distressed shareholder who is having to off load his holdings at any price; or

c. there is a probability of further slippages to the Kapulo production commissioning date (it does have a history of incrementally moving to the right).

I will leave you to consider the group's thinking and maybe provide feedback on your thoughts. My reason for sending this email is to highlight the opportunity to MWE if 'b' above is correct. If there is a distressed shareholder with a large holding then MWE should consider buying out the holding and using it to re-list on the ASX.

While I accept that it is likely the SP is just reflecting market conditions, it is also a great time for larger companies to be cherry picking under valued, quality, smaller companies with great potential.

In the mean time, I keep my fingers crossed that Lufukwe will become a major copper asset.

http://www.theaustralian.com.au/business/mining-energy/miners-retreat-from-toronto-exchange-one-time-portal-to-riches/story-e6frg9df-1226733835410#sthash.SX32uQBt.dpuf

Miners retreat from Toronto exchange, one-time portal to riches

THE love affair between Australian miners and the Toronto Stock Exchange
appears to be well and truly over, with the bleak conditions in the market driving
companies to drop their dual listings and return to their home bourse. Several
Australian miners have either left or are preparing to leave Toronto amid
complaints about the low levels of investor interest in the resources sector,
high levels of compliance, the steep cost of maintaining a listing and the failure
of companies to attract the share price re-rating they had expected.

The TSX for years ranked as the largest single exchange for mining ventures
and acted as a major gateway for Australian-based companies looking to tap
into the North American capital pool. The market also attracted Australian
companies that believed they would enjoy better valuations in the eyes of
Canadian and American investors. However, executives told The Australian
that investors in North America were increasingly uninterested in resource
stocks. In recent months, gold major Newcrest Mining, copper producer
Tiger Resources and embattled nickel miner Mirabela Nickel have all walked
away from their Toronto listings. Perth-based Western Areas gave up its TSX
listing last year. Copper miner Mawson West, which only delisted from
Australia in 2009 in favour of a TSX listing, is actively investigating the
prospect of abandoning Canada in favour of a return to the Australian
Securities Exchange while African gold play Perseus Mining is also thought
to be weighing up the benefits of its North American listing.

Mawson West managing director Bruce McFadzean told The Australian
that the appetite for speculative resource stocks that used to be the hallmark
of the Canadian market had disappeared. "The Canadian market has really
taken a significant hit in the resources sector specifically," Mr McFadzean
said. "A lot of the funds there have either shut down completely through
redemptions or they've changed their criteria for investing so they only
invest in the opportunities with low risk. "Mawson West's case for a return
to Australia has been boosted by the comparative performance of Tiger,
which like Mawson West operates a copper mine in the Democratic Republic
of Congo. Shares in Tiger are up 37.5 per cent since the company left Toronto
at the end of April, while Mawson West shares have fallen by more than
36 per cent over the same time. Mr McFadzean said he had seen data showing
that liquidity among junior resource stocks in Australia was now twice that of
Canada, effectively reversing the norm of previous years.

Australia's S&P/ASX 200 Resources index is down 6.1 per cent for the year to
date, compared with a 36.3 per cent drop in Canada's S&P/TSX Metals &
Mining index.

Western Areas chief financial officer Joseph Belladonna said
the company had spent seven years working to support its Toronto dual-listing
and establishing a following among North American investors, but had been
unable to crack the market. "We never really had a critical mass of stock over
there to get the price re-rating we'd really hoped for based on that North
American listing, " Mr Belladonna said. "We just never had the trading
volumes to justify the trading costs.

"Newcrest said its decision to cancel its Canadian listing had been made on
the basis that "the anticipated benefits of the TSX listing have not been
realised to date".


http://www.bloomberg.com/news/2013-10-13/copper-supply-glut-seen-tripling-as-prices-sink-10-commodities.html

The worldwide glut of copper supply is poised to almost triple in 2014, driving prices to the lowest in at least three years at a time when the International Monetary Fund says economic growth will be weaker than forecast.
The surplus will reach a 13-year high of 272,000 metric tons, according to data from Barclays Plc and the International Copper Study Group in Lisbon. Codelco and Freeport-McMoRan (FCX) Copper & Gold Inc., the biggest producers, are among those scheduled to add supply next year. The metal will drop as low as $6,450 a ton in 2014, or 10 percent less than last week’s close, the median of 22 analyst estimates compiled by Bloomberg shows.