MCO - Morning Star Gold

Here is a beaut little gold mine picked up by Tech/A in another thread which I can't find. The chart speaks for itself...

Moses,

Are you really Moses?

I Picked up some of this compony recently at about 22 cents although its speculative.

It is quite speculative but the historical grades from the website look good and the rock sampling is very good.

One must remember however any body can go toa ny old mine and chisel some good grades out.

I believe they now own a drill and if not currently drilling will be doing so shortly. If my analysis from the reports is correct one of the directors owns a significant % of the company so he must be confident.

"Its the honour of kings to seach out a matter."

Best Regards
Enoch

3 drill rigs (owned outright by the co. !!!!!!!! ) working as we speak. plenty of results coming in the months ahead.

Between SBM and MCO I don't know which stock has performed better.

Looking forward to the drill results.

the co. now owns 4 drill rigs. quite remarkable that a co. that has the best website on the ASX for a small cap - so that anyone can research in-depth: owns 4 drill rigs so as to drill the blimey out of their gold tenements targeting 5 million ounces: & lo & behold, noone knows of them! (going by the lack of commentary on any stock chatroom). just think : 4 drill rigs working 365 days a year for the one co.! have you looked at the website?

Moses tends to give very good leads. I hardly buy anything that goes up this much already, but I think even at the current SP it is still a bargain. Apologies again if I got anything wrong, and criticisms are welcome! :

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MCO is led by a father and son team (chairman father, MD son). MCO’s major project is the Morning Star Mine, which produced almost 1 million ounces at 27 grams per ton, operating between 1861 & 1963 (around 10,000 ounces a year). The grade is so good that the tailing (waste product) contains 2g/t – 6g/t and can be economically recycled today. Mining activities was severely disrupted due to forest fire and lack of man power during World War II, and the mine was subsequently closed due to low gold price. A large portion of the mine, called the gap zone, was never developed for the above reasons, and is currently being drilled. A 2005 geological depth/strike model proposed targets of greater than 4Moz below the 200m level. The rehabilitation of the main shaft in addition to sampling extensions to the known mineralized systems will create underground diamond drilling platforms to test the gap zone. The target of the ‘gap zone’ is around 1.5-2Moz of high grade gold.

Valuation

MCO has also done significant metallurgy work, and they will most likely go with gravity separation after leaching. There is only a single metal and no need for complicated froth flotation etc. The recovery using this method will be 88-98%, depending on the duration of leaching. Using this method, MCO only need to crush the ore to a very coarse 250 microns. Gravity method is the oldest and most cost effective recovery method, and will save MCO lots of CAPEX and OPEX.

Assuming that MCO continues production at historical rates of 10,000 ounces (slightly over 10,000 tons) per year, at current gold price and an extremely pessimistic OPEX of $190 AUD per ton of ore, they can easily generate around 6 million dollars of profit. The fully diluted market cap today is 59M (at least 10M cash will come from oppie conversions in 2008). That gives an absolute worst case PER of 10 when MCO starts production, and production can last for a few centuries at this absurd production rate. There are plenty of exploration opportunities in surrounding areas. To take advantage of that MCO has purchased 4 diamond drills to carry out surface and underground drilling.

Since the conversion of oppies will happen in 2008, I do not expect any significant placement to take place anytime soon.

Snap Shot

106M shares
54M options (@25c strike, Dec 2008) (conversion = $13.3M)
Sp = $0.37
Market cap (fully diluted) = $59 Million
Cash = $2.2M
Directors own 30.5%, very modest director fees of 92k for 4 people.

Interesting readings
http://www.ferret.com.au/articles/z1/view.asp?id=97788

MCO now own outright 5 diamond drill rigs. 2 are in operation as we speak working 12 hour shifts 7 days a week. one underground biting into the "gap zone" & the second on surface. another rig is about to be commissioned to start drilling on surface. co. target is 4 - 5 million high grade ounces of gold. there is a non-jorc resource of 430000 ounces on the hill above the mine. initial assay results hopefully out just prior to xmas. visible gold in all the drill core sent to lab. prospects are very real.

the cap. raising is out @ 30c issue price (with free options). trading on friday at 27c. assay results pending.

surface results could be good as a new reef was discovered in 1995 at 50 metres depth & has been intersected at 75m depth in recent drilling. also intersected Whitelaws reef on 4 / 5 level from the south - which produced in the past at 40g/t.

u/g drilling is targeting the 7 sub level area around Whitelaws reef (which dips to the north). multiple reefs hit.

check out the morning star website.

The 0.25c options are a bit of a slap in the face for long term holders i would think.

How far are they from production..how many share issues to come?

Some negativity (well lots) in the market toward using historical records and quartz vein deposits and reality will be that per ounce it may be valued on the low side.

However ---- drill results will excite traders so maybe a good stock to trade in and out of IF volumes start increasing...pretty sick atm.

They are targeting 1.5-2Moz and m/c per ounce for Citigold is $15/oz and for Bendigo mining it is $19/oz. So really if MCO do find 1.5Moz there is not much upside from todays m/c if the market holds on to fears of not trusting deposits that cannot be jorc defined by nature.

So do have caution but also know that high grades can excite an uniformed market when low market caps companies so it may do better than the big boys...to a degree.

Do keep an eye on CTO and Bendigo as if they get re-rated MCO will be seen on a more positive note by the market.

I am keeping eye on this one but volume turns me away from taking a dive ....yet.

spagetti.......you seem to miss the fact that they are drilling the 7 sub-level jorc compliant.

also, i assume you know about Grade Factoring? now grade factoring has always played a major role in the past. check it out.

the average production grades in the past were 2 fold to 5 fold higher than the average assay grades (on different levels of the mine). this is a totally different story to the bendigo story by a long shot.

assay grades versus mill production from the years 1934 - 39 for the burns, whitelaw & campbells stopes were as follows : the average sample assay range was from 6.09g/t - 12.4g/t Au.
yet the average mill recovered grade for 1934 - 39 was 22.1g/t - 67.7g/t Au. this disparity or Grade Correction Factor is 350% t0 540%.

also, sp moved to to 29c today. the story is gathering momentum.

saltyjones

No real dispute from me, just vein drill results are usually great and I think it will move the s/p but long term investors do shy away from this type of deposit. Not my opinion, more my observation and the s/p today went up on a feather. The price people are prepared to pay now is .27 so that is the value.

Just my feeling is this type of deposit never reaches it's full potential, whether rightly or wrongly. How can they do jorc definition on such a deposit? See bendigo got drill results for like 4000 g/t and never budged in s/p. This sort of result will seduce day traders by the million but longer term investors know it is due to the nugget effect you get in such systems.

So I see a bumpy ride if volume ever increases. The day traders will love any results with grades factor as they are blind to any other context so just wanted people to be aware of the fact this deposit may not be as great as it seems on drill results. If they show some continuity the story maybe very different but you do not know this yet, nobody does so it is a wait and see. So be cautious and informed.

Could be the stock of the year but so could many others, It is unknown at this stage.

I will buy some for the ride but unless you understand where you are going on the journey you may not know when to get off the train.

Have to somewhat agree with above...gold in Victoria in general has some problems, u just have
to look at all the Victorian producers, theres like 2 i think?

Lots of historical gold in Vic but almost no modern industry...still with POG now above 1000 AUD
and 910 USD the nugget argument become less and less valid.

if you go thru all the past announcements from 1995 thru to today some very obvious points stand out.

the above remarks about nuggety gold misses the point (in understanding the MCO story) cause when you read all the past announcements you learn that Grade Factoring is very important.

production records are 2 fold to 5 fold HIGHER than assay results. not the other way around as has been inferred.

with assay results pending look for the underground drilling results. smack bang into the 7 sub-level area. if you read up on past announcements about this area maybe the reader will attain a greater insight into the co's prospects.

Have recently topped up on mco at bargain (hopefully) prices. I keep going thru their website and reading any information I can find on this company. I keep coming to the same conclusion that with a few more oustanding drill results like they are getting, the share price could easily go up 5 fold. But then so could bdg.
cto, exm to name a few. Just wish if they are confident of tonnes and grade they could fast track production. Has been a disappointing few weeks for junior gold companies with share prices following the sheep mentality on the markets.

According to the ASX web site today MCO had no trades at all? How often does this happen, not just to MCO but other companies on the Stock market aswell.

travwj said:

today MCO had no trades at all? How often does this happen, not just to MCO but other companies on the Stock market aswell.

Click to expand...

Its commonish for the small caps and more common for small caps with
small amounts of shares on issue and even more common if a company has
few share holders, not many shares and with a small Market cap.

great website put up by the MCO boys..........did you notice that they are looking at an underground gravity plant.........also, did you notice that a decline portal site has been selected & the the portal development starts Q2...........did you notice that the operations manager, dennis clark, was recently involved with allegiance resources shaft & decline development i.e. in dennis we have the experience on hand for decline development........did you notice that morrie goodz 1998 resource report is now referred to as "close to 500,000 ounces"........did you notice the mine map, that appeared a couple of days back, that shows the burns reef, campbells reef, whitelaws reef & the exciting & rich 7 sub-level........another exciting development is that 7 sub-level drilling. how, what could be fabulously rich gold grades, are located where the dyke interlaces with the surrounding sedimentary rock. this drilling is extending the dyke boundary further north by an extra 80 metre so far. and the question remains : ''how deep does the reef keep extending along strike into the surrounding sedimentary rock ? "..............i suspect that the mid-year resource statement is going to be huge & catch everyone by surprise. the very few sellers of stock really have no idea, i presume, of all the progress going on. i contend that the mine is further on in development than the market has any idea of. and one of the reasons is because they dont bother to study the co. even with such a bountiful resource like the informative MCO website. high grade all the way with MCO.

wow! 1000g/t Au. Big increase in the mineralised area of the mine to 10%. This is BIG news. I would say everyone missed yesterdays report. Just have a read. Wow!

Hi There

Just wondering what everyones thoughts are on where this stock is going?

Seems to have been sitting in a narrow range for a while now.