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MAT - Matsa Resources

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YOUNG_TRADER

YOUNG_TRADER

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Hey guys, heres a real cheap goldie I found last week

code is MAT, formerly KAL

10c looks like bottom and there was a placement/cap raising just done at 10c so would think thats the floor, but in these mkts who knows, what is refreshing is unlike most goldies which have rallied 50% of their lows MAT is yet to run, perhaps that is due to a lack of coverage/awareness, perhaps it is due to the cap raising at 10c ie profit taking holding it back, perhaps its just because

Company has a rather largish gold resource (although low grade) in W.A. 26.5Mts@1.7g/t Au = 1.5M oz's Gold

at an EV of $15 - $30 oz Au = $22.5m - $45m
with 90m shares on issue = 25c - 50c value

But thats on rough EV

company is looking to toll treat its ore, they have done scoping studies on 2 of the deposits and estimate profit to be $27m - $50m (with cap ex of $2m) = 30c - 55c cash per share

At 11c I think its a real sleeper and due for a bounce at the very least, but I could be wrong, I thinki any news of toll treatment etc being discussed will be the catalyst for a re-rating

thoughts etc appreciated
 
Also been looking at the location of the deposit and it is surprisingly located in the southern past of the very golld rich Eastern Goldfields region http://www.matsa.com.au/our-projects/norseman-gold.php

20kms to the North is Avoca Resources with its flagship Trident Gold project

http://www.avocaresources.com.au/images/projects/trident-map.gif

interestingly AVO has been buying up alot of the grounds surrounding its Trident deposit (ie the purchase of Challice Golds grounds)http://www.avocaresources.com.au/projects.php and today has made a tilt at Dioro Gold whose main assets are the Frogs Leg and South Kalgoorie gold deposits located to the North of AVO's operations http://www.dioro.com.au/Operations.aspx

Immediately next door to MAT's prjoect are the Bulleen and Harelquin Gold Mines

Harlequin is owned and operated by Noresman Gold Plc http://www.norsemangold.com/key-projects/norseman-project/mining/exploration-potential/


The point is on a first glance I thought that perhaps MAT's gold was in the middle of nowhere ie isolated etc but given its proximity to existing operations (especially Noresman Gold Plc's) and AVO's rationalisation of the area, MAT does look confusingly cheap


Not much cash though like $2.5m, then again they reckon with toll treatment they can get up and going with as little as $1M Cap Ex, not sure how believable that is
 
Hi Y T

I'd love to think that you're right but my instinct tell me that MAT is a lost cause.
I once had 50,000 KAL, bought around 7c as a small spec on a promising low grade gold prospect. Following a quasi reverse takeover/re-organisation and a one for five share consolidation, that stake has shrunk considerably and the flow of encouraging news from the company has ceased, except to offer shares in an SPP at 10c - equivalent to 2c on the old basis.
I'm sceptical that a company which struggled in the good times can make a success of things in today's conditions. But as I said, I'd love to be proved wrong.
 
Not much cash though like $@.5m, then again they reckon with toll treatment they can get up and going with as little as $1M Cap Ex, not sure how believable that is. QUOTE.

That cash figure won't take account of the recent SPP which closed recently.
On 3 April, company announced that $1,873,000 had been raised between the SPP and a private placement.


__________________
 
Whoops was meant to be $2.5m cash little bit of an error there lol


Hmmmm interesting didn't fully follow the reverse take over etc

It was the Scoping Studies of the high grade open pit resources at Mt Henry and North Scotia that got my interest,

I am not a big fan of the overall development at Noresman, I know that at current gold prices the NPV is like $200m but I am not a fan of the $70m-$80m Cap Ex

I much much prefer the High Grade Open Pit Toll Treatment development option

You gotta remember the gold price is alot higher in AUD terms than it was when mkts were good, but yeah I think Kenna said most of the directors were dealers as opposed to diggers which will present a problem for a mining operation
 
Still very little interest in this goldie, think the company needs to do a roadshow or get broker coverage with a valuation or price target, but these days broker reports are only good for wipping your **** with, but it would be better than nothing I suppose

I still think this will get re-rated hard when the sign a toll treatment deal or even begin discussions, 11c - 16c = 50% 11c-22c = 100% not saying it will happen but just shows the upside and given the free cash flow from the high grade open pit operation could yield $27m - $50m= 30c - 55c there is plenty of upside with limited downside, though I could be wrong
 
The announcement of the Scoping Study on 1 April contained too many conditions and provisos to generate much market excitement at this stage, IMO.
We need to see some definite plan of action with timelines.

:rolleyes:
 
Agree completely which is why the stock is languishing near all time lows and near where the recent placement/SPP was done

But once they firm up plans for getting that gold out of the ground the upside potential will start to be reflected in MAT by hopefully share price appreciation.

With that in mind I prefer to buy now and wait for a possible re-rating as opposed to buy on the re-rating and pay up, but thats just me

In a high gold price environment where all other gold companies are up 50% off their lows its hard to imagine a company with 1.5Moz's of gold trading at an EV of $5oz located so close to infrastructure and operating mines

I mean what is the finding/exploration cost per oz these days? $10 - $20an oz?


Time will tell
 
Well I'm probably the only one following this unloved gold stock but I still like what I see as highlighted by the qtrly


North Scotia resource upgrade and scoping study
show $15-20 Million cash surplus potential with
average grades of 6.8 to 7.3g/t.
• Mt Henry – Near surface resource scoping study add
further projected cash surplus potential of $12-30
Million.


According to that study, the current gold price of approximately
A$1,300/oz indicates that the project is
capable of producing a cash surplus of A$300
million, equating to an NPV of A$210 million
at a discount rate of 10%.



Small Scale Mining Operations Studies
As mentioned, two further scoping studies have
been initiated by the Company in order to
establish the potential for high grade gold
mining operations, utilising nearby milling
facilities.At Mt Henry the mining study show that Nodes
1&2 can be developed in two scenarios, which
take into account two or more, milling
scenarios. The low cost estimates show the
potential for 560,000 tonnes at 2.8g/t for
50,000 ounces of production with cash costs of
$660 per ounce. The high cost study shows
260,000 tonnes at 3.2g/t for 25,000 ounces of
production with cash costs of $730 per ounce.
At North Scotia the results from the scoping
study show between 90,000 and 120,000
tonnes production within open pit
optimisations at average grades of 6.8 to 7.3g/t
with cash operating costs estimated in the
range of $570 to $610 per ounce.
The Company has estimated the maximum
startup operational cash requirement to bring
the North Scotia Small Scale Mining operation
into production to be $1,000,000 including
$350,000 capital expense and a similar scenario
for Mount Henry.


Planned Activities
Activities in the next quarter will primarily focus
on work required to bring the North Scotia and
Mt Henry resources into production and
negotiate suitable terms for toll treatment at
third party facilities. This work will include
drilling to confirm resources and provide
metallurgical and geotechnical information.
Drilling activities commenced on the 21st of
April 2009.
 
Oh an almost forgot this bit



Finally, the Company has identified the
potential for both magnetite and hematite Iron
Ore within the Norseman project area and
intends to implement exploration to quantify
this as soon as possible. The presence of
extensive infrastructure in the region
significantly enhances the economic potential
should Iron Ore resources be defined.
 
Hey LN, any idea what these 'nearby treatment facilities' and 'third parties' are. Where's the spare capcity?

Looks to be respecting the .10 line pretty well. Accumulating there looks pretty safe, until it drops through...
 

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An encouraging report but still a long way to go to actually mining anything!
Talk of reviewing scoping studies and hiring consultants for amongst other things, preparing material for Notice of Intent to Mine, indicates to me that even the (possible)small scale mining operations are well in the future. How long does it take to get environmental approval?
I hope the company doesn't get blindsided by this iron ore business and spend money chasing that rainbow when the attention is supposed to be on gold.
Speaking of money, I see that almost $2m was raised in the quarter but cash only increased by $526k at quarter's end, ie over $1.4m spent in the period of which $559k went on "Administration". It won't be long before there is another cash call at that rate.
 
kennas said:
Hey LN, any idea what these 'nearby treatment facilities' and 'third parties' are. Where's the spare capcity?

Looks to be respecting the .10 line pretty well. Accumulating there looks pretty safe, until it drops through...
Click to expand...

Hey Kenna, I already answered the question of where nearby treatment options are ;) (see below)

And yeah loos like 10c is being well respected as support

For me its just a matter of being patient and waiting for the boxes to get ticked

Old Blue agree completely but $1m cap ex aint much to get a $30M NPV Toll Treatment operation going, here's hoping :)




YOUNG_TRADER said:
Also been looking at the location of the deposit and it is surprisingly located in the southern past of the very golld rich Eastern Goldfields region http://www.matsa.com.au/our-projects/norseman-gold.php

20kms to the North is Avoca Resources with its flagship Trident Gold project

http://www.avocaresources.com.au/images/projects/trident-map.gif

interestingly AVO has been buying up alot of the grounds surrounding its Trident deposit (ie the purchase of Challice Golds grounds)http://www.avocaresources.com.au/projects.php and today has made a tilt at Dioro Gold whose main assets are the Frogs Leg and South Kalgoorie gold deposits located to the North of AVO's operations http://www.dioro.com.au/Operations.aspx

Immediately next door to MAT's prjoect are the Bulleen and Harelquin Gold Mines

Harlequin is owned and operated by Noresman Gold Plc http://www.norsemangold.com/key-projects/norseman-project/mining/exploration-potential/


The point is on a first glance I thought that perhaps MAT's gold was in the middle of nowhere ie isolated etc but given its proximity to existing operations (especially Noresman Gold Plc's) and AVO's rationalisation of the area, MAT does look confusingly cheap


Not much cash though like $2.5m, then again they reckon with toll treatment they can get up and going with as little as $1M Cap Ex, not sure how believable that is
Click to expand...
 
YOUNG_TRADER said:
Hey Kenna, I already answered the question of where nearby treatment options are ;) (see below)
Click to expand...
Ah, thanks LN. Good work. Sorry I missed that.

They must have an incredibly small MC to oz au price, maybe the smallest in the game. AZM is on around $14 which is the smallest I know of, and hence why I hold.

MAT have about 90m @ .11 = $9.9m / 1.5m oz au = $6.60 per ounce.

Bit of a disconnect on that part you'd think.
 
All good Kenna, with the amount of rum under your belt I'm surprised you can read at all :p:

Yeah Its so freaking cheap on an EV/0Z basis, it makes much more sense for someone like Avoca or one of those international goldies nearby to just swallow them up as I'm sure the exploration cost of discovering an oz Au is much higher than that


Anyhoo while it maybe sometime till they get toll treatment going I can't help but wonder where the SP will be once they get there, with a potential $30m - $50m Profit form the small scale NPV = 33c-55c all the way up to a total project NPV of $210m = $2.30

One would assume the closer they get to a production scenario the closer the SP will reach the potential profit scenarios, hence why I have bought now before the potential run up :)
 
Kenna + young trader, I must admit you guys are schooling me big time with your analysis and number crunching. Its very educational indeed. Keep it up for the rest of us newbies!
 
A little bit of interest in MAT today it seems,

Still ridiculously cheap IMO for the potential upside toll treatment could offer and support seems pretty strong at 10c both from placement/SPP point of view and trading/chart view

Lets see if it continues :)
 
Just noticed MAT is up a little bit

Good to see volume/interest picking up, still cheap on an EV basis to its peers

Need to firm up the toll treatment to get this really moving
 
Looks like its still stuck in that 10c-15c channel Kenna

Will take something special to get it going, an update about development options wouldn't go astray and would be welcomed by most

C'mon guys got strike while the gold price is good and stays good
 
doesnt this count as a potential break out. have there been any news or indicators that they might strike soon. i mean its been a month already...
 
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