MON - Monarch Gold Mining

[jman2007]

Had a quick skim thru the MON quaterly...

Still looks to be a cash burning machine, MK is well and truly on thin ice here. Only $630K left in the bank....is there a future for MON looking forward?... or will another one of MK's related companies come to the rescue here yet again?

Any comments from holders of this?

jman

 

[Miner]

Had a quick skim thru the MON quaterly...

Still looks to be a cash burning machine, MK is well and truly on thin ice here. Only $630K left in the bank....is there a future for MON looking forward?... or will another one of MK's related companies come to the rescue here yet again?

Any comments from holders of this?

jman

Jman
Did you look into IRL and its cash position ?
Probably equally bad
I read MK criticised the production manager and team behemently for poor performance just before the AGM . It would have been nice to hear some self criticism as well.

MK has more number of bad eggs under his leadership than successes.

Next 6 months will probably reveal more - bad or good news about his consolidation of companies

Cheers

 

[jman2007]

Jman
Did you look into IRL and its cash position ?
Probably equally bad
I read MK criticised the production manager and team behemently for poor performance just before the AGM . It would have been nice to hear some self criticism as well.

MK has more number of bad eggs under his leadership than successes.

Next 6 months will probably reveal more - bad or good news about his consolidation of companies

Cheers

Hey Miner,

No, I knew that IRL was another of his projects, but I haven't really paid much attention to it tbh.

In my humble opinion, they may have less than 6 months to turn MON around, or they turn their backs on Davyhurst and walk away from the whole thing. I can't see them being able to sustain their current performance from an operational point of view. Their gold pour during the last quater was a paltry 6749 oz!!... Which is actually less than the final 07 quater figure.

The thing about this style of mining is that it constantly places pressure on all facets of the business. The DH mill is sourcing feed from at least 5 different deposits, each presumably at different stages in their life cycle, and individually having fairly limited resources. There will be contsant pressure to secure more mill feed for DH through the development of addtional satellite deposits, which brings with it all the permitting and environmental legislative pressures. You never really get a break from it. Considering the number of variables, it only takes one to be slightly "out"...and this can have a massive impact on performance.

jman

 

[YOUNG_TRADER]

Hey Jman,

I haven't really looked into MON but take it from your posts the company is in a do or die situation atm?

Well after being badly burnt in VRE I would pass on the following points to watch out for

1. Does MON have debt? If so how much and when is it due?

2. Has the company hedged or forward sold gold? This can be really bad when they're failing to meet production targets, especially if the gold was hedged at prices lower than current spot levels. What can happen is the company failing to meet its forward obligations via production is forced to go into the Spot Mkt and buy gold at say $900/oz vs say hedge price of $700oz meaning they loose $200/oz for every hedged oz they have to supply from spot mkt


These 2 things are what I have found to be the usual suspects in Gold companies going broke

 

[Miner]

Hey Jman,

I haven't really looked into MON but take it from your posts the company is in a do or die situation atm?

Well after being badly burnt in VRE I would pass on the following points to watch out for

1. Does MON have debt? If so how much and when is it due?

2. Has the company hedged or forward sold gold? This can be really bad when they're failing to meet production targets, especially if the gold was hedged at prices lower than current spot levels. What can happen is the company failing to meet its forward obligations via production is forced to go into the Spot Mkt and buy gold at say $900/oz vs say hedge price of $700oz meaning they loose $200/oz for every hedged oz they have to supply from spot mkt


These 2 things are what I have found to be the usual suspects in Gold companies going broke

Dear YT

I dare to add anything to your post as you are very well informed and a positive contributor. However having worked in gold mines as well I would like to add few more things.

Management (maintenance, operation, metallurgical) is a significant contributor for a gold company going bad. In this instance MON decided to continue a moth ball plant even if gold was going very high.
Secondly nature of gold ore - I am not sure if the ore at MON is sulphide. In that case extraction will be very difficult and cost of production will be high.

I am not accounting the grade of ore purposely. That is a part of initial Feas study to consider. With VRE it is something more than what appeared in media. Bronwinz (not sure of the spell now) used to be always a trouble, It had water inundation and high cost of production, A problem child when I was in Sons of GWALIA (now SBM) . VRE gone gone worse, Ironically people like Keith Nelson of Inside Traders and his unique charting system strongly recommended VRE to be a buy only two days before it collapsed.

 

[refined silver]

2. Has the company hedged or forward sold gold?

It did have, but I understand all hedges have been closed out, and they are hedge free now.

Appreciate the comments from Miner, not my area, but very important.

I think they are very tight for cash, have only skimmed last weeks announcements, but gathered they had sold some assets which hopefully should free up cash.

They also recently changed their Mine manager and the press release sounded a bit too exuberant! The CEO claimed he was being re-united with a mine manager he had previously worked with so was very happy! The guy who was leaving had previously been manager at Beaconsfield Gold, when they were in all the news.

They need to get the mines profitable, they have good resources and properties, so to me, management is now the important factor.

 

[YOUNG_TRADER]

Hey guys,

My comments were of a very general nature only[/U.

As I said I haven't really looked at MON closely

Those 2 items I put foward were what I found to be the most common cause of Gold Companies going bankrupt, I'm sure there are others and that grade is no doubt a vital factor,

Sure hope they can turn this around though, I hate seeing companies go broke

 

[Lucky_Country]

I think one of the most important things with MON is where is the goldprice heading ?
If it goes up too $2000 oz then they have nothing too worry about if it is on a downward slide then ther are some real concerns.
MK has made a rod for his own back with his bold production statements now the market has no confidence in him acheiving them.

 

[Dukey]

Have been having a squiz at the situation at MON since I hold TTY...

MK's recent address at AGM sheds some light:

http://www.monarchgold.com.au/documents/677.pdf

- received almost $9M from rights issue (around 20M shares issued), with $4.5M more to come (for 10M more shares).

- Minjar project sold for $7.5M cash and $3.5M shares in group to be listed later in the year... (wonder if this 'group' is another MK deal ?)

- Discussing the possible sale of bellevue project.

- expecting to become 'cash neutral' during May with production of 7200 oz.

.... So - cash situation should be OK, and zero debt as far as I can work out.
...maybe - just maybe - the long awaited turnaround is coming ...?

- good luck to anyone still holding, or holding TTY like me.

-dukey.

 

[prawn_86]

So - cash situation should be OK, and zero debt as far as I can work out.

MON were given a $7million loan from IRL, which was not disclosed.

I have no idea how much, if any, MON have repaid, however I am very cautious of the lack of disclosure from any MK company.

He is putting himself before the shareholders imo.

 

[Dukey]

MON were given a $7million loan from IRL, which was not disclosed.

I have no idea how much, if any, MON have repaid, however I am very cautious of the lack of disclosure from any MK company.

He is putting himself before the shareholders imo.

Interesting Prawn... MK's links & deals are certainly hard to keep up with.
... so how did you find out about this undisclosed loan? ... could it have been part of the recent share placement?

 

[prawn_86]

I used to hold IRL, but recently got out after being fed up wth managements total lack of care for disclosure.

I found it appaling that IRL would do a placement and then use $7mill of that placement to prop up MON. At the time that 7mill represented about 40% of IRLs market cap.

I found out through another holder, it was tucked away in the books somewhere, although it was stated as something like 'Financial asset' rather than directly referring to what it was and who the money had been loaned to. I then questioned IRLs MD about it and he confirmed it via email...

 

[Dukey]

Thanks prawn - I wouldn't have thought they could get away with hiding something like that these days... but then if no ones watching - who's to stop that kind of inside dealing going on??

Well - suffice to say I'll be out (of tty) soonish and avoiding this mob in the future!! too much 'mystery' for me.

 

[2BAD4U]

I got out of MON back in March but continue to watch them (curious to see if my analysis of them was right). My reasons for getting out were TTY were the only ones buying MON shares and this pattern seems to have continued. Look at all the announcements where TTY have increased their holding and compare the dates and volume. Without this support who knows where the price would be now.

I listened to a business address by MK a while ago and found him to be extremely arrogant. Personally I don't like his style and would not buy back into any of his companies. Thankfully I have made back the money I lost on these guys.

Good luck to everyone holding.

 

[jman2007]

1. Does MON have debt? If so how much and when is it due?

YT,

I think one of the problems here in determining their actual financial position is in the difficulty in tracing and understanding a lot of these transactions, and the manner in which they are disclosed. Without some good old fashioned detective work from Prawn, most people would probably be unaware of the IRL "loan" (myself included):

MON were given a $7million loan from IRL, which was not disclosed. I have no idea how much, if any, MON have repaid, however I am very cautious of the lack of disclosure from any MK company.

Don't get me wrong, I find it very disturbing to see a company struggling this way, and I take absolutely no satisfaction from seeing people's investments dwindle away. I think everyone's comments so far have been honest and matter-of-fact.

If they actually managed to find a Salt Creek-style discovery or similar, this would have a have a huge impact on their production forecast. Their exploration results so far haven't exactly set the world on fire, as a lot of their ground has been worked over by many companies before them, and much of the easy-to-get high grade ore has been ripped out. A lot of the host rock is as hard as the hobs of hell too, lots of basalt in that area.

I haven't seen any shred of evidence that would make me touch this company with a fifty-foot barge pole.

jman

 

[Rimtalay]

I quote from Koutsoukis on www.hotcopper.com.au

Hi All,

See attached email I received from MK, important number is 1400 oz per week which equates to 6,076oz/month compared to 2,569oz/month in 3/08 quarterly report. So production rampup is in process.


Thanks for email.
Riverina is happening according to schedule - no real delay.
Mt Ida is three or so months behind because of the previous owner's
management which we inherited and I should have shot them earlier than
we did. The mine has started stopping and will hit full production of
4,500 oz in June.
Mt Magnet Iron Ore - no as have them focusing on the gold currently.
Davyhurst last week poured 1400 oz
Not planning to give month by month blow as my focus is on getting it to
break even and then profitable. I answer enough emails now and don't
want to spend my time emailing as everyone will have their points to
make.
MK


Email header attached for confirmation:

"Michael Kiernan"
08/05/2008 07:36 PM
To

cc
"Juliet Morrin"
Subject
RE: Shareholder Query on Production

 

[Boyou]

Thanks for this posting.
I am a holder of Monarch.Obviously I am alarmed at the current SP slide...but I am also patient .
Interesting to read this paragraph
"Mt Ida is three or so months behind because of the previous owner's
management which we inherited and I should have shot them earlier than
we did. The mine has started stopping and will hit full production of
4,500 oz in June."

I do beleive MK is the sort of CEO who would shoot. What do you make of "started stopping"? Is it a misnomer?

Patience and perserverence for all the faithfull!

 

[Rimtalay]

Hi Boyou,
Looks like MK doesn't spell stoping correctly, stoping is a mining method which creates an opening of large underground rooms, or stopes, by the excavation of ore. Stoping is practiced in underground mineral mining when the surrounding rock is strong enough to permit the drilling, blasting, and removal of ore without caving.
This is very good news for MON, and I think that they have turned the corner and we will see an improvement in the shareprice shortly.
MK bought another 100,000 MON shares recently.

 

[grace]

Isn't there one last fund raising to go of $10 million to finance Mt Magnet settlement due 30/06/08.

Have this in my notes (sold out a little while back and have not been keeping up to date). Please advise, thanks Grace.

 

[Boyou]

Gracious ,Rimtalay

The clarification is good knowledge for me.In regard to turning the corner..perhaps the road has a few more turns to make...I keep a weather eye on POG! As does MK.