QMN 0.00% 16.8¢ queensland mining corporation limited

take a step back

  1. 180 Posts.
    On another down day, I think it is important for all holders to take a step back and ignore the current market depth disparity and ongoing sideways movement.

    On a personal note I am around $15K down and around 8.5 cents away from cost basis at the current SP. Sure at various stages I have thought about crystalising my losses over the past few months as I have watched the SP retrace from low 40's to low 20's, but a few things have always stopped me:
    1. I truly believe that at some stage in the near future the market will take notice of QMN and support the SP at higher levels that is currently the case. How can it not? Sure they have plenty of irons in the fire and are always at the risk of spreading themselves too thin, but at least they won't die wondering what could have been.
    2. As much as die hard CDU'ers (I hold CDU as well) don't like to admit it, as they think Rocklands is the only game in town, both QMN and GBZ move up and down with CDU and the delayed JORC has certainly contributed to the lack of action in the past few months.
    3. The down days are generally on insignificant volumes so I don't really see a mass evacuation. Rather I see it as the market sitting back and watching to see what will happen next (and with CDU).

    Whilst the off screen buying has certainly shown support around the 24 - 26 cent rang in recent times, I do have to admit that the market depth disparity does on occassion make me a little nervous, as in theory all it takes is a down day on the DOW or commodity price weakness and it could potentially be a rapid drop.

    Also, the admission by management that equity raising will be needed in the near future does make QMN a company with a significant amount of shares on issue. Certainly cap raisings don't strengthen the SP in the short term and excess dillution is always a concern.

    That aside, I see White Range, Flamingo, Morris Creek and QMN's other projects as a bloody good reason to look to the future for investment value. We have all seen it head north rapidly in the past and there is absolutely no reason why it can't do the same in the first quarter of 2010.

    Clearly the drill results from Rocklands suggests it is of world-class quality and the natural inclination is for everyone to look to Morris Creek as the project that QMN will hedge its bets on. Personally I see it a little differently.

    I do agree that good assay results from Morris Creek will get the market excited again, but I think it is the overall package that will see the underlying value in QMN. Flamingo has the potential to be just as good as Morris Creek and of course the measured White Range acquisition is something that will inevitably be factored into the share price.

    If you look at some of the other junior miners / explorers - and to a lesser extent CDU, their share price is based purely on drill results and the excitement they bring. But unless you have a either a measured resource, a JV, an imminent take over offer or you are prepared to pull the copper / gold out of the ground, the numbers don't mean squat. CDU has suffered in recent times for that very reason.

    Some of the detractors of QMN point to the some of the recycled tenemants they hold - how could any tenemant given up by another company ever be worth anything? My question is why not, surely not every discovery in the past 100 years has been on unexplored land? Each company has a different strategy and ideas on which areas they will explore. Inevitably areas are relinquished as companies focus their attention on a select few. Who is to say that one or multiple leases that QMN hold don't contain a JORC compliant resource that will ensure the company has significant ongoing cash flow for many years to come? Noone can say unequivocably that is or isn't the case - only time will dictate whether that is the case.

    People forget that QMN has the processing facilities and ability to convert from explorer to producer in a very short amount of time and at very little cost. In my eyes this is a big plus. Whilst we are currently not getting the benefit of sahre price spikes following drill result announcements I am comfortable in the knowledge that I hold shares in a company that at least has shown they have and end game.

    Without knowing the inner workings of the company I think their approach is explore - process - explore further to extend life of their resources. The approach of many other companies is explore - explore - explore - with no real strategy for ever coverting the discoveries into $'s.

    To cut a long-winded post short, patience is the key.

    I personally think it would be silly to sell before CDU's JORC is released and to see what effect that has on QMN's share price. As meerkat said the company would be silly not to push the QMN / CDU (perceived or actual) relationship in the short term. I totally agree. However, I also believe that QMN has shown their hand and they are definitely headed down the path of being a consistent producer.
    Mind you with the assets and land, I believe QMN will always be an attractive proposition to other companies wishing to expand their geographical footprint and a viable option for the processing when mining commences - wherever and whenever that may be.

    This is only an opinion. Naturally as a holder I am going to extol the virtues of QMN. Please do your own research and draw your own conclusions.

    Good luck all.

    P.S. Apologies for the long-winded diatribe.
 
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