MMC - Marengo Mining

[Pat]

Re: MGO - Marengo Mining

i know this isn't how you're meant to calculate it

but watching the sp drop 5% a day for the last 5 days has been depressing

You gotta set that emotion aside chicken8.
If your long term these are the bumps in the road that make trading exciting. Is MGO a buy to you chicken8? If so, why not top up? It's as if your buying now, perhaps you'll average down intime for the next leg up?

 

[chicken8]

Re: MGO - Marengo Mining

no funds left

need to sell some other stocks to be able to buy more MGO

but anything under 40c is really tempting

 

[chicken8]

Re: MGO - Marengo Mining

been really quiet here in the MGO thread

anyone got any fresh new information or any important upcoming dates?

 

[Ruprect]

Re: MGO - Marengo Mining

been really quiet here in the MGO thread

anyone got any fresh new information or any important upcoming dates?

G'day Chicken, yes a bit quiet, just holding firm on this one for the long term.

The next big thing we can look forward to here is the completion of the pre feasibility study, which should be at the end of this month - we will see an announcement soon after that with results.

Then, for the rest of this year i would expect that we will see firstly some more indication of drilling to expand the resource. MGO are already sitting on $28 billion in situ, minus gold and rhenium. As they claim, it is the biggest copper resource in the southern hemisphere.

The directors have indicated already that they are expecting the resource to be even bigger. So i would expect an announcement on a further upgrade probably heading towards the end of the first quarter, early second.

Then towards the end of the second, we will probably see a listing on the AIM or TSX. I personally hope and actually expect TSX, much better prospects there imo.

After that is completed, a move will be made to proceed with the bankable feasibility study.

Those last 2 are what will really drive the sp imo.

Re news, i did note in the Saturday Fin Review that Marengo might be a prime target for Chinese interests interested in Copper. It came as part of a broader article on the Chinese moves to aquire interests in australian resource companies, so the marengo issue might have been missed by many.

So, while the previous schedule looks good for MGO for the rest of this year, if the Chinese or any other major makes a play for MGO, this could come very good in the short term, much like CFE. All depends on whether the directors are open to selling off. As far as i can see, these guys look like the real deal, and wouldnt mind at all developing this. And i dont mind saying it, im very impressed with them.

(And chicken, i grew up in sth hurstville, in melb now, but good to find a local!)

 

[UPKA]

Re: MGO - Marengo Mining

there's an interesting read in today's SMH posted by Mick in the FNT thread, related to MGO as well,

http://www.smh.com.au/news/business/newcrest-may-cut-the-hedge-for-15b/2007/06/07/1181089236141.html

"One of those additional growth opportunities is the acquisition of a mystery gold/copper property in the Pacific Rim, first alluded to by Mr Smith in August last year.

It's just been a longer negotiation than a lot of people expected. I can assure you that we are putting all efforts into concluding that discussion. It is just a little too sensitive just at the moment to talk about any details," Mr Smith said of the mystery property.

Analysts assume the property is an advanced but overlooked gold/copper orebody to which Newcrest can apply its skill base as the operator of large-scale, low-grade operations."

this certainly looks interesting.

 

[sandra]

Re: MGO - Marengo Mining

UPKA
This may be of interest you,(www.news.com.au/heraldsun/business(newcrest mining is negotiating to take controlling stake in fijian copper and gold project worth more than 1.5 billion) Also just got off phone talking to company secretary of marengo, was told pre feasibility study should be released in 2weeks hope this helps

 

[geminidreams]

Re: MGO - Marengo Mining

I just read their web site. They are claiming one of the biggest copper deposits in the south west pacific (pretty localised claim).

500m tonnes @ 0.48% inferred is OK but not bonanza stuff. To exploit properly would need $1.5 to $2b.

Its a long way until you will see this project generating revenue. Probably the next bull market. Only real prospect is a takeover as even with a major JV it would be years to see revenue.

I read so many situations like this on these boards. In ground value means nothing if you dont have a mine or plant to produce revenue. The lead time on this will mean that 100 more advanced projects will come on line before this one and the in ground value will be a quarter of what it is now.

 

[UPKA]

Re: MGO - Marengo Mining

thanks for the info guys, the MD didnt think they need to bring the "big boys" in to start off the project, so they r pretty confident they can get enuf capital to get things started. plus there's a chinese nickel project abt 40km from Yandera, and a power station is near by, so the infrastruture is there, what they need now is to complete teh BFS, and hopefully get listed on TSE to rise some more capital.

the SP has dived abit since the last ann, bt not trading in big volumes, so js holders who arent prepared to wait anymore. even if the project will take a while be4 seeing them digging anything out, the SP is still trading at a heavily discounted price, so im still very confident in this stock.

 

[Danash]

Re: MGO - Marengo Mining

Geminidreams

Whilst you may believe that the long held belief of Yandera having the potential to be one of the largest copper deposits in the South West Pacific is a (pretty localised claim), consider it in light of the Grasberg deposit located in the province of Papua, which contains the largest single copper reserve and the largest single gold reserve of any mine in the world. Not a bad compaison in my view.

Some other incorrect statements:

"500m tonnes @ 0.48% inferred is OK but not bonanza stuff".

Infact Yandera has 660mil tonnes @.48% with a substantial mineral inventory yet to be converted to the JORC resource. Potential to be multi billion tonne deposit as stated by MD in recent presentation.

"To exploit properly would need $1.5 to $2b"

More looking at 750mil -1 bil. Rio Blanco in Peru will cost 1.4bil and they are 200km inland @2500m-3000m above sea level with no infrastructure. Yandera will have associated infrastructure with Ramu Nickel 20km to the north with government provided hydro-electric power supply being built by PNG government. Also only at 1700m above sea level with surface mineralisation so a very low strip ratio.

Which ever way one looks at it a market cap of only 40 odd mill has MGO extremely undervalued compared to it's peers.

 

[geminidreams]

Re: MGO - Marengo Mining

Danash

My point precisely it is a minnow compared to Grasberg.

Telfer cost $1.5b to construct a 20m tonne/annum plant and today it would probably cost another couple of hundred million. I have recently reviewed a copper gold project at 4 million tonnes per annum that will start construction next year at a cost of $500m with good infrastructure near it.

At 20 mta this project would produce 80,000 tonnes of copper per annum (maybe a bit more if they can high grade the first couple of years) which is about half of Mt Isa's output which is also in the region stated.

If I tried hard I could probably find 40 or 50 bigger copper projects.

Im not saying the resource does not have value I am saying it will need a lot of capital and support to get up. There is obviously a lot of heat in the current market and people need to look at these projects with a bit of realism. A $40m cap company is going to struggle to finance $1.5b and with engineering and construction it is probably 5 years before there is any revenue with a lot of uncertainty regarding price of copper in the ensuing years.

There doesnt appear to be a lot of consideration of these issues in valuations at the moment, I thought I would just raise them. The stock may indeed perform well ..... until the bull market finishes and value goes back to production fundamentals.

For those who really want to make safe money on these situations wait until finance has been raised, the plant is about 4-6 months from completion and buy for an 18 month hold. Typically management focuses on the development, there is little exploration or other news so nothing to excite traders and people will lose interest. Once the mine is up and running and generating cash flow and profit, investors come in and rerate the stock, assuming management havent made a big stuff up and the mine is a dog.

Or do your own thing!

 

[Ruprect]

Re: MGO - Marengo Mining

I hate to say it Gemini, but going by your approach, we shouldnt invest in any explorer until they are ready to become a producer. Thus, we wouldnt buy fortescue for 8 cents, we'd wait until they completed fund raising and pay 100 or more times that amount.

There are plenty of decent explorers out there, but we all understand that they are speculative stocks, and we all understand that with any explorer, there is a long lead time from defining a resource to actually producing. The market cap of explorers reflects that fact.

Its just my opinion that MGO are undervalued, based on the size of the resource. I dont think you can put a final price on the cost of developing the mine, although 2 billion sounds very high. Either way, that is what a bankable feasibility study will work out. And they are moving to that towards the end of the year. But you need to remember that its whether the resource can be extracted economically, that depends on a variety of factors, mine cost only one of them.

Les Emery is not averse to selling MGO off, but has repeatedly said that he wants to provide value for shareholders, so they will take it as far as possible, and further define the resource. Its so far 660mt, Copper/Moly, with gold and rhenium excluded from the figure. And its about half JORC defined/half inferred. That will be updated, and the resource expanded. I would expect that MGO would finally be trying to define a 1 billion tonne resource.

As stated by the Fin Review last week, Marengo could well become a target for Chinese companies looking at acquisitions.

Thats not to say that they couldnt go it alone, plenty of explorers make it to producers. They obviously dont come up with the money to develop the mine themselves, thats what financing is for.

 

[arkady]

Re: MGO - Marengo Mining

What would the share value be based on the current resource, construction/production costs etc (called NPV??) ?

 

[geminidreams]

Re: MGO - Marengo Mining

Its been a while since I seriously looked at resource stocks even though I am a resource industry professional. Divorce is impoverishing and not living in Australia I havent kept up with the latest happenings until one of the dogs I have been holding went up about 10 times in the last couple of months.

I have stumbled onto this forum which I think is a great tool for people as long as they dont get too emotionally attached to their holdings.

I have used it to see what is attracting people about stocks and looking up the projects and management on the company websites which I did for this stock.

I dont offer an opinion on whether it is undervalued or overvalued. I happened to comment on it because I kept reading similar threads where people are valuing stocks on inground resources.

The reality is that unless someone comes in and buys the stock (Chinese or others) it is a very long wait before cash will dribble down into shareholders pockets.

Bankable feasibility towards year end, 2 years for design and financing (with probably substantial equity dilution) 2 years for construction, then commissioning and ramp up. No revenue for 5 - 6 years. Dividends probably 8 - 9 years.

Will the copper price be as high, do the current holders have this sort of patience? What risk discount is appropriate? For those that remember, Alumbrerra cost overruns and indifferent startup performance really hurt MIM back in 1998, I know I hurt badly from it.

As for Fortesque I remember Anaconda, the hype surrounding it and the technical risks that people were overlooking. I watched Twiggy bail out, the operation almost going bankrupt even with Anglo American and Glencore as major backers, the junk bond holders take a bath and the company be rescued by a resugent nickel price. Would I buy Fortescue? Nope!

For those who want to look at what this stock will take have a look at Ivanhoe Mines. Friedland tried flogging this for about 4 years until RTZ took their stake. Oyu Tolgoi is a much bigger resource with excellent high grades for the early mining years enhancing cash flow. For a 27m tonne per annum operation capex is estimated at $US1.15b which equates to about $A1.5b.

See http://www.ivanhoe-mines.com/i/pdf/2005-09-29_NR.pdf which provides an idea of what their NPV is for various scenarios. Proven and probable reserves of 1.15b tonnes at 1.27% Cu and 0.48 g/t Au with indicated 1.44b tonnes at 1.11% Cu and 0.28 g/t Au.

 

[arkady]

Re: MGO - Marengo Mining

I suppose if every mining company decided that it would take too long and be too expensive to startup a mining operation then we wouldn't have any gold, copper, nickel, iron, coal etc etc...........

Once the first week of July comes we should have a more in-depth information base as the Pre-Feasibility study is released. They are continuing drilling so further increases in resources would make mining Yandera more viable.

They also have the Bolubolu Gold project that may bring some good results this quarter.

 

[geminidreams]

Re: MGO - Marengo Mining

Of course if you are a miner with substantial cash flow you will finance a project of this size.

If you are an explorer you would normally bring in a JV partner. It is very rare for a project of this size to be brought on line without an experienced partner even though it is nominally quite a simple project.

Most smaller operators/explorer will look for projects they could bring on line for low capital requirements or bring in JV partners early into a project.

If you look at an explorer like Jabiru who are commissioning a project now that is small but high value it has been done by raising a lot of equity of the last two years with some finance.

The question for holders of this and others that are similar is what is the end game and how will it affect the companys value? Even though Jabiru has raised a lot of equity its share price has appreciated well as they are close to production and the project and revenue risk is lower.

Hopefully the directors of this company can provide similar value to the shareholders.

 

[arkady]

Re: MGO - Marengo Mining

It will definately be put back onto the shareholders for more funds over the years until the mine is online but if the resource is going to be as big as predicted by Les Emery (Director MGO) for a possible +1Billion Tonnes the share price should hold up.

MGO is looking for 100% ownership and if they get strong investor support this is to be more likely.

 

[arkady]

Re: MGO - Marengo Mining

I'm comparing MGO to FNT and seems like MGO is undervalued. Even after FNT settles down it should be around 15-16 cents. MGO has 3 times the in ground resource value of FNT (MGO $29 Billion vs FNT $9 Billion) yet is only 36 cents today!!???

 

[Pommiegranite]

Re: MGO - Marengo Mining

I'm comparing MGO to FNT and seems like MGO is undervalued. Even after FNT settles down it should be around 15-16 cents. MGO has 3 times the in ground resource value of FNT (MGO $29 Billion vs FNT $9 Billion) yet is only 36 cents today!!???

RULE 1 : please compare market caps and not share prices.


2 different stocks altogether..chalk and cheese.

 

[Ruprect]

Re: MGO - Marengo Mining

Market Cap comparison - MGO - $45 million - FNT - $26 Million

I actually think they have a lot of similarities. Both Copper/Moly/Gold or Copper/Gold/Moly, and at similar grades. And both exploring in PNG.

MGO has a much larger indicated/inferred resource than FNT, but much more work has been done on the Yanderra site, due to historical drilling by numerous companies including BHP. FNT has increased its resource at Kodu today, with more updates this year.

MGO are slightly ahead of FNT, with a pre feas due end of this month. FNT wont be too far behind imo.

I actually think they are both undervalued given the increasing demand of both copper and moly. Its all dependent on economic extraction. But in the short term, the in situ resource is extremely large for both MGO and FNT, with further resource upgrades this year for both companies. And both the Chinese and South Koreans are looking to secure long term supplies, adding to the potential for takeover/JV.

Note - I hold both.

 

[camaybay]

Re: MGO - Marengo Mining

From past experiences can someone outline what the possible outcome could be with a positive prefeasability report. It is a step in the develpoment equasion but does it really fire things up or become a part of process?
Cheers