Kashmira, I guess it depends on your investing/trading style....

Kashmira,

I guess it depends on your investing/trading style.

From a TA point of view, the chart (since the beginning of their FY15) has been significantly impacted by the build of a large short position. From early September this increased from c. 0.63% (1.3m shares) to 10.52% (c. 21.85m shares) by 19th December. At 2 February it was still at 5.13% (c. 10.66m shares) and I estimate it needs a break-even price of c. A$0.81 to close. So arguably, there is a potential squeeze existing if those 10m shares need to be bought back in a hurry.

MML was not the only goldie to suffer the attentions of the hedge funds. Beadell peaked at 8.42% short. Kingsgate reached 14.36%. Regis reached 12.5% and Silverlake peaked at 8.66% short. I noticed the same activity on other global exchanges for PM stocks so this was certainly not specific to just MML.

Personally, I always focus on fundamentals and only use TA for confirmation purposes. And from that viewpoint I can only repeat my conclusions aired in my post here on the 4th February - ie. that MML is severely under-valued!

The share price on 30th June 2014 was A$1.88 on a FY14 EPS of c. 15c, giving a market multiple of c. 11x. Given the poor sentiment prevailing after a year of production hiccups/natural disasters/guidance misses/et al, it could be argued that a PER of 11x was about right for the stock at that time.

However, in the intervening 6 months, following a change of management, the mine performance has improved considerably (as I tried to demonstrate in my earlier post) but the share price was knocked down to a low of 49c and has since recovered a bit, but only into the 80's.

I estimate that full year FY15 EPS is currently targeting c. 24c, which would obviously indicate that the market price is currently indicating a forward PER of only c. 3.5x - which is clearly a severe under-valuation.

People may well have reservations regarding the gold price going forward, but MML still provided a credible performance over 2Q15 when the gold price averaged US$1204. So there would appear to be a high probability of MML maintaining a good, profitable performance even if 2015 ends up with a relatively flat gold performance at c. US$1200 (or even lower!).

All critical performance metrics have improved and, given the enhanced capacity of the L8 shaft, throughput rates are likely to improve further over 3Q15 & 4Q15 with a commensurate reduction in unit costs/oz. Worth noting that management are already planning a new L16 shaft in order to be ready for future production some 400m lower than is currently possible - so Life of Mine constraints are a non issue!

Hence my personal view on buying-in points in pretty straight-forward. I thought the stock was a gift down in the 50's and see no reason not to maintain my own buy stance all the way up to A$4.00 plus!

AIMHO of course.
CPDLC