Welcome To The Monument Mining Ltd HUB On AGORACOM
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Message: MMY: Near term Gold producer
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This is the last analyst report from MMY:
http://www.infomine.com/index/companies/FundamentalResearch/FileDownload.asp?DocumentId=200
Investment Highlights
Monument had to revise its construction and production plan to take the Selinsing gold project into production, as its lenders were unable to supply the $10 million credit facility agreed upon in July 2008.
The revised construction plan, which is pretty much the same as the original plan, allows the company to delay their cash outlays, and commence production in the second half of 2009. The original plan was to commence production in the first half of 2009.
The company expects gold production from the gravity plant to commence in October 2009.
The company announced results of the Phase II drilling program on the Buffalo Reef project. Although grades from wider intervals were lower than the previous results released in March 2008, the results were encouraging as they compliment the previous gold intercepts.
At the end of Q2-2009 (end of December 2008), the company had $12.67 million in cash and cash equivalents. The company also expects to generate free cash flows from production at the gravity plant. We believe these will be sufficient to complete the company’s capital projects at the Selinsing property by the end of 2009.
We have maintained our BUY rating and fair value estimate of $0.50(US $)
Stock Options and Warrants:
We have revised our DCF model based on the company’s new development plan discussed earlier. At this time, MMY has not given production guidance on the gravity circuit which is slated to commence operation in August 2009. Thus, we have estimated production of 5,064 oz. of gold from the gravity circuit for the oxide material in 2009. Our model shows that free cash flow from the estimated production at the gravity plant, plus current cash on hand, will be sufficient to complete both capital projects by the end of 2009. Other notable changes to
our model include: - Revised near term gold price forecast to US$900/oz in 2009, US$850/oz in 2010, US$725/oz in 2011, compared to US$910/oz in 2009, US$755/oz in 2010, US$600/oz in 2011 in our previous report. - Revised C$/US$ exchange rate to 1.18 from 1.10 in our previous report.
Sensitivity: The following table shows the sensitivity of our DCF model to the changes in discount rate and our long term gold price forecast. Sensitivity Gold Price (in US$/oz) $1,000 Discount Rate 8.00% $1.03 10.00% $0.93 12.5% $0.83 - with Gold price $1000 -> short term target $0.83 15.00% $0.75 In addition, since the company has made significant progress in the development of the Selinsing property, which is now close to production, we have not valued the company based on our real option model in this report. We continue to believe the company has significant exploration upside along the continuous epithermal trend that encompasses Selinsing and Buffalo Reef. Thus, we believe our valuation is conservative as we have accounted for only 50% of inferred and historical resource estimates. Based on our valuation models and review of the company’ s progress since our previous report, we reiterate our BUY rating and fair value estimate of $0.50 per share. Well I will be satisfied also with 0.5 $USD but that was my last short term target, for me Gold will be $1000 for sure so short term target and fair value is $0.83 Conclusion: Because fair value is $0.83 MMY has great near term potential, that means that sp will rise in the near term more than 100%, that is great and this is a screaming buy, we are waiting for news here about the start of production, with that news and no debt and obligation sp of this company should significally rise in the short period of time.
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