MDL - Mineral Deposits

[Ajax]

I am concerned about the following item in the condensed consolidated statement of comprehensive income for the half-year ended 31 December 2009

"Gold hedge unrealised losses (36,909)"

i.e. $36.909 million unrealised losses in the 6 month period.

The financial report for the half year to 31 December 2009 contains the following comments

"Going concern
The group recorded a net loss of $17.441 million after income tax for the six month period ended 31 December 2009 and net cash provided by operating activities of $31.469 million, capital commitments of $1.514 million and cash reserves of $25.358 million at 31 December 2009. The
group had a net current asset deficiency of $2.302 million at 31 December 2009. In addition, certain undertakings in relations to the project finance facility remaining outstanding at the date of this report and hereby provide the bankers the right to demand repayment of the project finance facility before the scheduled repayment date of 30 June 2010.
To continue as a going concern, the company and the consolidated entity require:
- generation of sufficient funds from operating activities which include gold production as forecast in current Life of Mine Plan; and
- the continued support of its bankers, creditors and major shareholders."

 

[So_Cynical]

I am concerned about the following item in the condensed consolidated statement of comprehensive income for the half-year ended 31 December 2009

"Gold hedge unrealised losses (36,909)"

i.e. $36.909 million unrealised losses in the 6 month period.

The financial report for the half year to 31 December 2009 contains the following comments

"Going concern
The group recorded a net loss of $17.441 million after income tax for the six month period ended 31 December 2009 and net cash provided by operating activities of $31.469 million, capital commitments of $1.514 million and cash reserves of $25.358 million at 31 December 2009. The
group had a net current asset deficiency of $2.302 million at 31 December 2009. In addition, certain undertakings in relations to the project finance facility remaining outstanding at the date of this report and hereby provide the bankers the right to demand repayment of the project finance facility before the scheduled repayment date of 30 June 2010.
To continue as a going concern, the company and the consolidated entity require:
- generation of sufficient funds from operating activities which include gold production as forecast in current Life of Mine Plan; and
- the continued support of its bankers, creditors and major shareholders."

LOL thats the legal (but true) crap they have to put in there...the very next page reads.

The directors believe the going concern basis of preparation to be appropriate given the following reasons:

• sufficient net cash inflows will be generated through both gold sales into the company’s current hedge commitments and any excess gold above its hedge position being sold at spot resulting in net cash inflows which allow the company to meet operating costs and retire the Macquarie Bank Limited (“MBL”) project finance facility.
  
  
• the directors are confident that they can fulfil the scheduled repayment obligations under the terms of the MBL project finance facility intended to be repaid by 30 June 2010.
  
  
• it is unlikely that MBL will require full repayment anytime before 30 June 2010; and
  
  
• alternatively the directors can raise capital through the issue of new shares on the Australian Securities Exchange or Toronto Stock

Then back on page 1 under FINANCIAL POSITION

• the Project Finance Facility at 31 December was $21 million (30 June 2009 – $38 million) with a repayment schedule now in place to fully pay out the balance by 30 June 2010; and
  
  
• As at 31 December 2009, the outstanding hedge position was 295.500 ounces of flat forward sales at $846 per ounce which, on mark-to-market (based on a gold price of $1,105 per ounce), equated to a negative position of $79.7 million (unrealised).

Everything's fine and dandy....Total Debt and Hedge position of about 100 mill, and lets keep in mind there sitting on 25 mill in cash...full half year report below.

http://www.mineraldeposits.com.au/user/files/Investor Centre/Financial Reports/2009/090141MDL.pdf

 

[Ajax]

Thanks for that post So Cynical,

so if they keep delivering gold then the hedge position ends in June or July 2010?

It's a real problem where financiers insist on companies hedging part of future production as a condition of providing finance.

Why don't companies buy put options instead?

 

[So_Cynical]

CBA - Commonwealth bank of Australia, notice of initial substantial holder released to the ASX today.

http://www.asx.com.au/asxpdf/20100323/pdf/31pf0wp4w41tf8.pdf

Just has to be good for the SP when Australia's biggest Bank puts there money into a company...especially when that company is a goldie operating in West Africa.

 

[So_Cynical]

After months of speculation the rumours have come true...MDL will split off the Mineral sands side of the business by spinning out the Grande Côte Project and financing it external to MDL through a separate IPO.

Of course its to be expected that share holders will get some sort of preference and or discount exposure to the IPO..the Grande Côte Project is suppose to be the biggest undeveloped mineral sands deposit in the world and with a mine life of 25 years, low costs and easy access to north Atlantic markets...would seem to be a good long term hold.

http://www.mineraldeposits.com.au/user/files//Announcements/2010/100025MDL.pdf

Meanwhile MDL trading near $1 a share again

 

[Wysiwyg]

Of course its to be expected that share holders will get some sort of preference and or discount exposure to the IPO..

Meanwhile MDL trading near $1 a share again

Should be the scenario.

AU production @ 170k / year on track with proposed expansion from "nominal 2 Mtpa to 3.5 Mtpa" throughput. Along with the mineral sands project aiming for a 2013 start up following the DFS completion this month.

Stock trending up and should remain so barring a significant decline with the gold price or markets.

 

[So_Cynical]

Closed out my MDL adventure today at the open and days high of $1.10 im down to just 2 Gold stocks now as i continue my portfolio re-focusing exercise...i call it an adventure because as the chart shows that's exactly what it was. :

I brought in just a couple of months after the market had topped (without a plan or a clue) and rode it all the way down, at least at the bottom i was smart enough to buy more, and lucky in that when the opportunity came to participate in a SSP at a healthy discount i had enough funds and belief to buy big.

Sold the most expensive shares (about 35% of the total) about a month later for a 3 or 4% loss and then waited until today to take my 80%+ profit and 50% CGT discount :bite: 952 days in the trade. hows that for patience! and sticking to a sell target....lol

Good luck to the holders going forward and lets hope they get a good deal when the gold IPO goes thru...certainly some upside potential, ill probably regret this now as come to think of it MDL management was very generous when they did that first SSP but then no so when the second one came along.
~

 

[So_Cynical]

Strange how some threads are very quiet for long lenghts of time.

Anyway MDL has moved along and is now in partnership with French Mining and Metals giant ERAMET, they will have their West African (Grande Côte) sand mining project in operation next year, 75% completed now, they have also acquired a Ilmenite Upgrading Facility (plant) in Norway that produces upgraded ilmenite (titanium slag) and high purity pig iron.

http://www.eramet.com/en

• 45 Mill in cash
• No Debt
• Market Cap of 145 Mill

Downside there is some potential for a cap raising to complete the Grande Côte project and i suppose that's a factor in the SP decline, could be an opportunity to, anyway have placed my first buy order in like 5 months...lots to like about MDL at the current price.

 

[So_Cynical]

I took a trade 12 days ago based on the double bottom and the fundamentals, Grande Côte project up and running even with some small output issues (early days) and the first shipments of concentrated ore...the business is a goer, with substantial vertical integration cost benefits.

Closed the trade today for a small profit but will be happy to jump in again on any SP weakness.
~

 

[peter2]

Price has been in a strong trend down for many years, but finally there's some evidence of a change to up.

The weekly chart shows a nice ascending triangle pattern with higher lows. Both volume indicators (OBV and TMF) are looking up. It's daily traded volume is low, so attention to money management is required.

 

[System]

On August 28th, 2018, Mineral Deposits Limited (MDL) was removed from the ASX's official list following compulsory acquisition of the Company's securities by ERAMET SA.