Why Medusa Mining’s Share Price Rose Today


What Happened to Medusa Mining’s Share Price?

Shares in Philippines based gold miner Medusa Mining [ASX:MML] soared around 11% today, after rising nearly 9% on Friday. Since bottoming in November, the stock price is up more than 100%. Although that isn’t as good as it sounds. The stock is still down more than 50% over the past year, as gold stocks have been out of favour.

Why Did This Happen to MML Shares?

While there was no specific announcement from the company, gold stocks were severely beaten down at the start of the year. The Aussie dollar gold price has rallied strongly and gold miners are now clawing back some of their prior deep losses. A bullish technical breakout occurred in Friday’s trading session. Strong follow up buying continued today. Hence the rapid share price gains.

What Now for Medusa Mining?

Medusa Mining suffered from a badly managed expansion plan over the past fee years. Last year, the Managing Director left, and the founding CEO and major shareholder returned to get the company back on track.

So far, things are looking good with the new plant performing better than it ever has. The good news is there’s still room for significant improvement. Meanwhile, the market seems to have forgotten about Medusa. It trades on a price-to-earnings multiple of less than three times.

This is incredibly cheap and suggests the market thinks gold is going lower or investors are just not interested in gold stocks and they therefore represent a bargain.

I recently recorded a presentation to argue that gold is in the early stages of a new bull market and that tremendous opportunities await early stage investors. The performance of MML recently bears this out. The presentation is a few weeks old now, but still massively relevant. If you want to take a look, click here . It’s free!


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Greg Canavan
Greg Canavan is the Managing Editor of The Daily Reckoning and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails. For more on Greg go here.

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