MON - Monarch Gold Mining

[jman2007]

Gold Reserves as follows (including Mt Magnet purchase)

Mt Magnet 2 700 000
Davyhurst 1 500 000
Riverina 200 000
Mt Ida 143 000
Bellevue 120 000
Minjar 400 000
Total 5 063 000 oz
(manually added as I can't find my calculator)
Please advise if you don't agree! I guess I should have qualified my statement with the purchase of Mt Magnet. Sorry!

Fair enough Grace,

The figures seem to balance out ok, I didn't realise you included a supposition that the global inventory included Mt Magnet resources, which imo is not a sure thing just yet. Bear in mind Hill50 wont contribute to earnings for at least 2 years however.

It is worded fairly unambiguously in the MON announcement that the $35M cap raising is to fund the Harmony aquisitions, I guess this week we will find out for sure, one way or the other. Current costs of $977/oz are very steep, way above industry peers. I suspect Davyhurst has had problems, but would need to talk to someone from the company to verify this obviously.

Thanks
jman

 

[Miner]

Fair enough Grace,

The figures seem to balance out ok, I didn't realise you included a supposition that the global inventory included Mt Magnet resources, which imo is not a sure thing just yet. Bear in mind Hill50 wont contribute to earnings for at least 2 years however.

It is worded fairly unambiguously in the MON announcement that the $35M cap raising is to fund the Harmony aquisitions, I guess this week we will find out for sure, one way or the other. Current costs of $977/oz are very steep, way above industry peers. I suspect Davyhurst has had problems, but would need to talk to someone from the company to verify this obviously.

Thanks
jman

Dear JMan

Would you please do this forum a favour to relay what is the outcome of your discussion with MON company rep.


Regards

 

[jman2007]

Dear JMan

Would you please do this forum a favour to relay what is the outcome of your discussion with MON company rep.


Regards

Yeah no worries,

I can do that, I'll try to get it done this week and share the news with the forum.

jman

 

[jman2007]

Went along to the 2008 RIU Explorers Conference in Fremantle today. Kiernan from MON gave a presentation this morning and I managed to get a copy of it. Probably nothing of interest that investors didn't already know, it was purely from an operational and strategic viewpoint. No-one asked about the status of the cap-raising, and with a public audience he wouldn't have been able to comment anyway.

I spoke to the CFO today about Davyhurst and he didn't really know much about the operational side. He promised to get someone from the mine to call me back, but it hasn't happened yet. I think he thought I was a broker.

MON have been in suspension from official quotation for a really long time now, I really do wonder how robust the financials for the Harmony purchase are atm.

Thoughts?

jman

 

[Lucky_Country]

MK has been busy over the last week speeches in Sydney, Dubia and Fremantle thats the hold up with the capital raising.
MON should be profitable very soon and once the capital raising is finished Im hoping for a flow of good news.

 

[grace]

MK has been busy over the last week speeches in Sydney, Dubia and Fremantle thats the hold up with the capital raising.
MON should be profitable very soon and once the capital raising is finished Im hoping for a flow of good news.

Yes, he must be suffering from jet lag by now. Guess that was all to coincide with the capital raising wouldn't you think? I would hope that one week would be sufficient. Didn't he mention that capital raising has been underwritten in the past - one of his presentations? Can anyone comment?

 

[porkpie324]

I remember reading on a previous presentation that the Hong Kong based Noble Group underwrite capitol raisings and that MK was about meet with them, also I think that MON was planning to list on the TSX, porkpie

 

[jman2007]

Ok,

Firstly I find the proposed notion that MK's speaking circuit obligations are holding up a $35M proposed cap rasing absolutely ridiculous.

Secondly if MON are planning on listing on the TSX then they had better think again, because the TSX has absolutely gone to s$$t recently from what my associates who trade on it say (although I myself do not). I also know investors who believe that MK is now in serious trouble with his financials for the Harmony purchase, if I was a creditor I would be asking him what kind of security he is prepared to put up..... and who is going to lend money for an operation like Hill50 that isn't even going to do anything for two years?!

I'm trying to add some balance to this thread. I have not known a company to stay in suspension for over a week, and deliver no news to the market. Most companies will be chomping at the bit to deliver a flow of positive releases for their financials, but delay to the utmost any negative sentiment, so what is going on here?!...

When I originally looked at MON I thought "great! over 500,000oz in resources and potential of 250,000+ p/a from 2010 onnwards". Now I am so glad I took the time to research them. Bottom line, imo the Harmony purchase is in serious trouble, but MK may be able to deal his way out of it. I don't believe he is insolvent, as some people are saying he is, but imo he is under severe financial strain.

Tread very carefully with this one. And feel free to disagree if you wish.
jman

Disclaimer: Do not take my advice as financial advice, as I am merely expressing my opinion as to what I believe is relevant in this situation. Always DYOR.

 

[Lucky_Country]

Feeling the strain for sure but the turning point could be coming soon with profitability at Davyhurst.
If he raises the capital required for Mt Magnet that would be a huge positive who would buy shares if the company was going broke ?
Plus MK has bought alot of shares recently so thats another positive imo.

 

[2BAD4U]

Could someone explain how this works. 20 Million shares placed at 50c, when in the last 12 months (and allowing for the share consolidation) MON's share price reached 50c ONCE and when they went into their trading halt were 65c.

More shares on issue and a lower price = less value for my holdings

Miner, I think you're right about MK screwing shareholders over. All I can say is they better come good on their production promises for the next quarter.

 

[porkpie324]

It's more than likely that MON being desperate for cash, thats the best deal MK could get for shareholders. porkpie

 

[jman2007]

It's more than likely that MON being desperate for cash, thats the best deal MK could get for shareholders. porkpie

Porkpie,

I tend to agree with you. This got absolutely smashed in the market today on the back of a curious and ill-timed announcement from MON. If I was a holder I would be absolutely furious with this crap.

Firstly, to quote MK before MON goes into a trading halt on the 4th of Feb he clearly states "Despite financial and credit, markets changing substansially in recent times, we are confident of the raising the $35 million to complete the condition precedents attached to the purchase process". At this stage, he seems to think he can raise $35M like you pull a rabbit out of a hat.

Ok, so investors are led to believe imo anyway, that the suspension is due to give MON enough time to raise these funds for the Mt Magnet Purchase agreement. THEN TODAY, they come out and announce that they have raised $10M for ongoing development at Davyhurst! C'mon, you have got to be kidding me. Essentially, what they seem to be saying is "Ok, we can't raise the $35M at the moment, and unless we give Davyhurst more money we will be in serious s%%t in less time than it takes to get mugged in Jo-berg". And at $977/oz you can see how it could happen, real quick.

I will continue to monitor this, but imo, this is a real knife-edge situation MON are in now.

jman

 

[Miner]

Could someone explain how this works. 20 Million shares placed at 50c, when in the last 12 months (and allowing for the share consolidation) MON's share price reached 50c ONCE and when they went into their trading halt were 65c.

More shares on issue and a lower price = less value for my holdings

Miner, I think you're right about MK screwing shareholders over. All I can say is they better come good on their production promises for the next quarter.

Sorry mate 2BAD4U.
I did not get any joy either. However I sold both MON (60 cents just before the trading halt ) at much discounted value to stop loss.
I did the same for IRL - same MK factor. I am holdng the iRLO however - nothing could below 4 cents !!!

Regards

 

[Lucky_Country]

Cant see MON going broke just not making as much profit as we would like is the worst case scenario.
us$900 oz gives them a fair bit of play with production costs and gold set too rise even futher.
Exploration upside will drive the sp and increased production should enable a good cashflow.
TSX listing well MON will wait for some good figures before going ahead with the listing but hopefully not a long wait !

 

[grace]

I for one am really cheesed off that there is more money to raise. I see TTY got some more too (but their share price went up - totally different).
ouch....this one is starting to hurt. I have a long way back up to breakeven. Hope they start feeding some better news to the market!

 

[jman2007]

I for one am really cheesed off that there is more money to raise. I see TTY got some more too (but their share price went up - totally different).
ouch....this one is starting to hurt. I have a long way back up to breakeven. Hope they start feeding some better news to the market!

Yeah a tough day at the office for MON holders Grace,

One of the senior Geos at work has done a lot of exploration around Davyhurst in the past, he says he remembers the rocks being harder than the hobs of hell, and the grades being frustratingly spotty. Obviously MK thinks that they didn't grab all the resources that they could have however. Well, people know my opinion of this company by now, for my money, IGR are looking like the money shot in terms of gold plays though.

Good luck to MON holders

jman

 

[2BAD4U]

Story in todays West Australian Newspaper that MK isn't happy with only being able to raise $10 mil and is now talking about a rights issue.

Story Here

 

[jman2007]

Well MON needs to ask itself "where do we go to from here?"

Pretty much everything I suspected that was going on this week came to pass yesterday with the announcement. By Wed I was highly suspicious, and was sure MK's cap raising was in trouble, and by Thurs the writing was on the wall. The end result is that the institutional investors pretty much were able to screw MK over, but given MON's position, I think even he realised that he had to accept the discount price of 50c. You can be sure that these negotiations were protracted and tense, would have loved to have been a fly on the wall...

This is MK's response in the WA this morning: "That it hasn't worked out....I am not disappointed (yeah right), I am just accepting the reality and that is I will have to raise more money in Toronto. What I am disappointed at is the start-up with Monarch, it's four to six months behind where we should be (because of operational problems at davyhurst)."

The arrogance of this guy is breathtaking, having pretty much exhausted all avenues in Asutralia, he thinks he can jump on a plane to Toronto and simply raise another $50-60M on the TSX?? Give me a break, any Canadian investor will tell you what state the TSX is currently in.

What I don't get here is the decision to take on the Mt Magnet leases, why why why?? It seems to be that MON have got their long-term strategy wrong, and have spread their already thin financial resources even more, and dramatically increased their liabilities. A far more prudent approach would have been to concentrate on Davyhurst and get 1-2 years of production under their belts. They need to demonstrate to the market that they can turn Davyhurst into a viable and economic operation, and at the moment, there are more questions than answers I'm afraid.

It all hinges on Davyhurst, unless they can get their costs down then investors are going to continue to take a very dim view of MON imo. Exploration success around davyhurst?...well the area has been pretty well picked over by previous companies, barring a Salt Creek scale discovery, I don't consider that sp movements are going to hinge on exploration success, they need to focus on the operational side for the time being.

jman

 

[Lucky_Country]

MON definately need too get Davyhurst up running and profitable before they think of anything else.
That being said that should not be too far away hopefully then they can reassure the market and get the sp up then worry about raising capital.
On top of getting Davyhurst profitable they also need to tell the market of exploration sucess with an increased jorc.
Still feel MK has got something up his sleeve and may not be far away from revealling it.

 

[jman2007]

MON definately need too get Davyhurst up running and profitable before they think of anything else.
That being said that should not be too far away hopefully then they can reassure the market and get the sp up then worry about raising capital.
On top of getting Davyhurst profitable they also need to tell the market of exploration sucess with an increased jorc.
Still feel MK has got something up his sleeve and may not be far away from revealling it.

Well I hope for the shareholders sake that you are right Lucky_Country, whatever is going on at Davyhurst, whether it be grade, ore throughput or metallurgical issues they need to get a handle on it quickly. There is obviously great potential if MON can ramp up production, (albeit while keeping capex under control), as many companies would give their right arm for a milling facility. I would just hate to see them dilute their efforts too soon, and too quickly.

If MK does indeed have anything up his sleeve, such as a cheque for $50M, now would be the time to use it!....

jman