Mount Magnet South (MUM) - small but interesting goldie

[Huang Chung]

Here's a small goldie that could be quite a bargain. The emphasis is on the word 'small', and it's relatively low grade as well.

Mount Magnet South are redeveloping the Kirkaloka gold project, formally operated by Equigold. Mining ceased in 2005, when the gold price was US $420oz. They also acquired the CIP/CIL plant (which has been on care & maintenance), camp and airstrip. The refurbishment of the plant should be completed by the end of the year. They have just done a placement and rights issue, that will give them enough cash to the end of the feasibility design program. They will need to spend an additional $6-9m to reach production.

Currently, they have a 360,000oz resource at 1.1g/t, but drilling will increase that. Most recent drill results should lift the average grade as well. New resource calc is expected in September.

Expected production should be around 45,000oz per annum.

By my very rough estimations, their current share price puts them on a P/E of about 1 (less if the $6-9m is debt funded). Given their relatively short mine life, a P/E of around 4 is probably a reasonable expectation.

With a 12 month time horizon, I reckon MUM looks a good bet. It will never be a big gold mine, but it could be quite a profitable one none the less. I've already picked up a few shares.

http://stocknessmonster.com/news-item?S=MUM&E=ASX&N=549379

http://stocknessmonster.com/news-item?S=MUM&E=ASX&N=552930

http://stocknessmonster.com/news-item?S=MUM&E=ASX&N=553248

[yabster]

MUM huh - will be some fun with that ticker.

Looks interesting- latest results a bit better than the avg 1.1g/t (2's and 3's).
Not much cash hence the placement at 7 cents and entitlement 1 for 5 held at 5.5c - with an entitlement date 24/8 - so bit hasty for me.
Production costs of around $950- $1000 on the high side HC?

The options in the placement are long dated (2014)- so maybe a good option when they come on the market.

[trackers]

MUM huh - will be some fun with that ticker.

Looks interesting- latest results a bit better than the avg 1.1g/t (2's and 3's).
Not much cash hence the placement at 7 cents and entitlement 1 for 5 held at 5.5c - with an entitlement date 24/8 - so bit hasty for me.
Production costs of around $950- $1000 on the high side HC?

The options in the placement are long dated (2014)- so maybe a good option when they come on the market.

Ex entitlement for placement was yesterday, so that ship has sailed. Interesting company, thanks for the headsup HC its on my watchlist definitely

[yabster]

yeah I was looking at the record date.

with the placement at 7c and entitlement at 5.5 - must be some dilution to the current 9c.

on the watchlist too (esp the options )- thks HC

[Huang Chung]

Looks interesting- latest results a bit better than the avg 1.1g/t (2's and 3's).
Production costs of around $950- $1000 on the high side HC?



Don't forget the $850-$950 operating cash costs are life of mine estimates. Initial operating cash costs were expected to be around $700. Importantly, both estimates were made prior to the recent assays which are grading around two to four times the resource average of 1.1g/t. I would imagine this higher grade zone will be slated for early production.

The resource upgrade due in September should be very interesting.

[trackers]

With a resource upgrade expected next month I had a wee nibble today, looks like good value for a near-term producer with exploration upside

[Huang Chung]

Presentation released today.

http://stocknessmonster.com/news-item?S=MUM&E=ASX&N=554789

Much the same as the previous presentation, except they've added a 'relative p/e table, comparing prospective p/e ratios with the likes of Silverlake, Ramelius, Focus etc. A bit cheeky if you ask me, as they haven't run a pound of dirt through the plant yet. Moveover, whilst a prospective p/e of 1.3* is patently silly, they do (at this stage at least) have a limited mine life. In short, this aint no Silverlake!

*p/e of 1.3 is based on LOM operating costs of $850/oz
gold price of US$1,600
Exchange rate of $A/$US1.02.

Still, I'd be surprised if this stock weren't a 3 to 4 bagger sometime down the track. It's not the most exciting stock around, but it is cheap.

[Huang Chung]

Good to see MUM regain her footing with a 16% rise today.

[trackers]

Yep! Finally some green in my portfolio

[Huang Chung]

Good to see MUM regain her footing with a 16% rise today.

After another pullback, MUM goes for another run today....up 10% on good volume and no news. POG didn't help today, either.

Given the moves, MUM might be a good trading stock.

[trackers]

Great picking HC, I did quite well out of this one but am now gone

[Huang Chung]

Fair enough Trackers.

I can't see myself folding anytime soon.

[soulman]

A big shortfall. Funny world this. A shortfall of 7.7 mil shares at 5.5 when the market price is 12. Give or take and taking in margin of error, why wouldn't anyone subscribed for it. Wished I could get some for 5.5.

[Huang Chung]

I managed to get 100,000 shares at the subscription price soulman.

[soulman]

Nice one HC. Sold at 13.5. Profit taking might hit in the short term when the allotment take place. Up in circa of $6.5 profits at the minute, are we taking the LT view or hit and run?

[Huang Chung]

Hi Soulman

I'm focusing on the medium term, although I think you did well exiting at 13.5c for a short term trade.

[Huang Chung]

Finished the day at 11c. You'd have to be thinking about dipping your toe into the water again, wouldn't you Soulman?

[soulman]

Not yet HC. I am sitting back and will watch the sell side when Appendix B come on board tomorrow or next week.

[drillfix]

Hey SM, I thought you were only trading stocks that pay the div's :P

[soulman]

I did Drill. Did well out of IFL especially. I bought and sold IFL multiple times with the last one at near the high at $6.33, just the day before it went ex-div. Never bought back in until $5.50 and then sold at BE. Geez, they flopped as low as $5.19 just a few days ago. Other small gain to mention include FWD, PPT, CDD, DWS, ASX and TLS. All bought and sold for a small cheese. I try to do it during the Feb and Aug reporting season. Longer term holdings, I still have PPT and QBE. BSA, WLL and TAH are the one's causing me headaches. WLL has taught me not to buy illiquid stocks.

I have been back into gold recently with success in MSR, MUM and CVR. Also, you can't beat Huang Chung picks. The man himself has 3 mil CVR shares. You can't beat that confidence.

[drillfix]

Hey no worries Soulman, and quite understandable re-comments about small cheese. In these market conditions small cheese is a blessing and I have played the small cheese game more successfully than I have trying to hit home runs every time. In fact, its trying to hit home runs in these markets have turned out costing me money so I choose acceptance of "what is" with regards to market condition rather than be deceptive to myself about the state of a trade.

Would not mind jumping in a couple of HC's stocks as I would a few peoples but they do require a set belief system and patience which the 2nd part I have a problem with whilst again market conditions and being nervous continually holding.

Good luck to both you and the man HC :)

[soulman]

Looking at the market gyrating up and down. Just in the band of trading range Hoops mentioned. Some might be confusing and one's must have a purpose. MUM is valued more with their processing plant ready to go.

[drillfix]

Looking at the issue price and the current price of MUM, one can only stare at the 100% premium and wonder why in the world did placement that low?

Obviously the price was lower before but that seems ridiculous from an outsiders point of view.

TA wise, the 60 minute chart seems to be lubing up to get ready but he daily does not look very good at present. (imo)

[Huang Chung]

Resource Stocks magazine article:

http://www.google.com.au/url?q=http://www.mountmagnet.com.au/IRM/Company/ShowPage.aspx/PDFs/1432-82492500/ResourceStocksMagFtMMSProfileOctober2011&sa=U&ei=IQ2WTvX-Eq2kiAeD08SHBg&ved=0CA4QFjAA&usg=AFQjCNE9xMvw6XMMJmY0tYFd0rD8JN_Geg

[drillfix]

Hi HC,

Welcome back mate. Are you now back home in Bris or off the expensive internet boat? :P

[Huang Chung]

Back home in Brisbane. Had a few nights in London after the cruise finished.