RE: topped up11 Sep 2013 01:26
Courtesy fatherjockstrap on GCM, noticed a bit on the new mill etc , MML looks good reading this
In view of not only increasing political worries over Iran and North Korea as well as the rapid expansion of the money supply resulting from Quantitative Easing in the US, UK and Japan, which are set to increase future inflationary pressures, it appeared sensible to increase the portfolio's exposure to gold. The existing holding in Medusa was accordingly substantially increased; this is a company based in the Philippines, where it benefits from a very low cost of production. Indeed the company's cost of production, at a total cost of less than US $400 per oz., is so low that it is represented in the lowest quartile (by cost) of all producers of gold, thus providing a huge margin of safety against a possible falling gold price.
The company benefits from other major advantages over its peer group. These include excellent operating conditions under a democratically elected US style of government, royalties having been newly reset at only 5%, no corporation tax for 8 years and a resource which will last for at least another 10, if not 30 years.
Production in the last year was severely curtailed by a monsoon (a once in thirty year event), which washed away the road to the mineshaft. In addition, a series of breakdowns at the ore crushing mill caused further losses of production. As soon as the new more efficient and larger mill is commissioned in July, however, the productive capacity of the company is set to expand from its current level of 100,000 to no less than 400,000 oz. per year within the next 4 years, having been financed entirely out of the company's own cash resources. Once that target has been achieved, there is the exciting prospect of a massive future dividend stream, further enhanced by the sales proceeds from the divestment of its copper resource, which the company has no intention to mine.
http://investing.thisismoney.co.uk/news/article/id/4613647/
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