Wednesday, August 10, 2011

Manas Resources (MSR) - Ready to bounce?

Manas Resources (MSR): With a share price of 18c MSR has a market cap of $32m. They have a significant number of options which expire September this year and have a strike price of 20c. With the recent share price movement they are now out of the money. The cash position at the end of the last quarterly was $11m.

They have a Gold resource of 1.13m ounces. They have the largest land holding in the Kyrgyz Republic with 4400km2. The Shambesai site has 645k ounces of Gold and a CAPEX of only $16.3m is expected with a life of mine cash cost of US$250 projected.
Later in the post I wrote:
I will be potentially be on the lookout to add these companies to my portfolio in the not too distant future (a smaller percentage than the companies I own and will buy with Australian based projects).
I've picked up a couple of parcels over the last two days, averaging in at 15.8c.

From a technical perspective the 15-16c horizontal line has provided reasonable support for the share price.

With a 18.5c share price (August 9th close price) MSR's market cap is around $33m (undiluted).

While MSR is not yet financed through to production, they do have a large cash buffer of $8.8m as of the quarterly cashflow report (Q2). They do have a large number of options exercisable at 20c, the expiry date is fast approaching. It's still up in the air whether the share price will appreciate enough to see them exercised. If they do end up 'in the money' and are exercised then we could have an additional $12m added to MSR's cash reserves which would potentially fund (along with some existing cash) their expected CAPEX costs of $16m for Shambesai.

With markets in absolute turmoil at the moment there is potential for share price downside (support or no support), however there are some exciting announcements in the pipeline which could drive the share price significantly higher in the short term.

We have 5,000m worth of drilling yet to be reported (over 10,000m completed, 5,000m reported) with recent exciting results including this bonanza grade announced July 13th:
33.7m at 10.74g/t gold including 7.8m at 28.64g/t gold returned from Shambesai shear zone outside the current resource boundary.
An announcement with further results could come at anytime.

Further to that, news of a mining license approval could shore up confidence in the project (application has been submitted) and a feasibility study is in the works (due later this year) which should provide more definitive figures for investor perusal.

The chart suggests a double bottom might be in place.


Further to MSR I also picked up SBL yesterday at 1.7c, with expectations we will see a bounce off it's lows as well. I tweeted the buying yesterday during course of trade.

I will be looking to sell both MSR and SBL into any strong rallies or news, they will not form part of my core portfolio.

I think a strong rally in the markets and precious metal stocks is likely from these oversold levels, but looking ahead to the medium term we are likely heading into a bear market for general stocks.


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