Medusa Mining (MML) is a small gold producing company (MC of approx. $173m) that flies under the radar. It has much going for it, and an analytical look at the ‘figures’ vis-à-vis its competitors in Australia would have the bookies pricing it at ‘odds on’. But, the market doesn’t. Indeed it might be regarding it as a value trap.

I’ve attached an excel summary of MML v other Australian goldies. Caveat: I use UK based Stockopedia as my reference source and I have, on rare occasion, found a few faults in data presentation. A couple of tantalising stats:

At 82c, it has far better metrics than the Aussie goldies in these areas: 

P/BV @ 0.61, most of the others are at multiples of 1, 2 & 3x)

EV/EBIT @ 1.83x (compare that to SLR, GOR & PRU @ 13x+ & EVN at a whopping 26x)

SP/Op cash flow is 2.32 whereas the others are massively higher 3in the 9x to 12x band.

P/Sales @ 0.864 – the next closest to OGC @ 1.98 through GOR at 5.499

ROE is 11.5% is mid-range.

Yes, its AISC is a tad higher, but it is completely unhedged and has ability to take advantage of the higher Au prices on offer as a consequence of heightened world tensions.

BUT, and there’s always a BUT an in the case of MML it is a BIG BUT.

Let’s talk sovereign risk. MML operates out of Mindanao in the Philippines, an area of outright insurrection by Islamist extremists who the army cannot contain. It is a powder keg waiting to explode as it did some years ago.

Throw in a national government who aren’t enthused by foreign miners where (I’m told) corruption isn’t a dirty word and collection of the ‘Yankee dollar’ is pursued. Plus, a population who have shown some opposition to miners in the light of damage to water tables via suspect tailings dam failures/breeches etc and the risks multiply. Then look at Philippines and history; It probably has experienced more natural disasters than any other with its typhoons and earthquakes…the just two weeks ago.

Conclusion: There are no quick fixes to operating in the Mindanao island, in a politically questionable country with traditionally bad weather patterns. MML is priced accordingly with little in the way of tailwinds. That said, the recent purchase of  a large tract of land in the Drummond Basin in Central Queensland for prospecting purposes is a smart move and they have retained all the geo staff with a drill program underway now.