marborough- mbg green alert to 15c

  1. 258 Posts.
    There was renewed interest in Marlborough. I know that I have been calling mbg for a couple of months and since then it has consolidated and look like heading higher. It was held down by its recent 1 for 3 share issue but that will be bedded down tomorrow. The issue will be fully taken up reflecting the confidence in the company. Issue was made at 4.3c pershare and on Fro share closed about 5.5c showing confidence with the issue.

    The cash raised is to increase the production of tin by about 70% to around 2000 tonnes per annum, a very respectable level. It will also be used to increase the resource at Ardlethan Mine and surrounding areas. All these sound very positive in light of the increasing tin price. When I initially wrote tin price was at under $4000 US, and now it is at $5400 US and increasing. I know it is not as sexy as gold or nickle but the market will soon reevaluate with increasing price. China is also very hungry for tin, so price can only continue to increase.

    Mbg is very well run. I was a bit uncertain with previous md who seems to be less agresive but now with change of head I think a lot will change and many opportunities will be look at. It has hedge its US$ exposure to a great extent and now enjoying it so protected against the A$ rise for a proportion of its revenue. As an example, mbg will be divesting its interest in its gold tenement and shares will be given to shareholders in a float of the new company. The md recognises that the value of the tenement (Lucky Draw) is not being recognised in mbg and through a separate float shareholders can realise the value which otherwise is not being reflected. The shares to be given are shares in Republic Gold which is yet to be listed, entitlement date yet to be determined.

    It just had a record production quarter with 285 tonnes of tin. With the cash received it will improve further the production. Mbg has a significant investor, a Malaysian tin miner which again reflects the confidence level. With its connection, I can see mbg getting into other outstanding project either in Aust or overseas so think this represents significant upside. Over the last few months it has done its retrace and looks like heading upwards. With production increasing, tin price improving and issue out of the way, it can only be positive for mbg. There is very good support at 5c with a signifant number of shares wanted.

    I have in the past call in excess of 10c for mbg and that was when the tin price was much lower. With the improved situation now, 10c even is an undervaluation. With such huge progress since my last review, the green alert should now be up to 15c.

    A green target of 15c is reasonable based on:

    - issue now nearly completed and will be successful
    - record production for last quarter with improved tin grades
    - entitlement to Republic gold shares
    - will be cashed up
    - Improving global requirement for tin and improving price at record level
    - Had very good track record, every quarter seems to be record built on record of production
    - a major overseas investor with tin connections
    - significant upside on other tin projects
    - one of the few successful tin producer
    - cashflows from tin sale and very clever hedging strategies in place, should reflect an increase in mbg share price
    - Not recognised by the market yet but will be soon, especially now that the issue will be out of the way in the next couple of days. I can see the buyers lining up so hopefully we can see it trending to our green alert, hopefully initially to 10c, and then next level to our target.

    Research yourself and see if you agree.


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