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2/23/09

Malaga (MLG.to): The difference between liking a mining company and buying its stock

Every so often I mention Malaga Inc (MLG.to) on the blog. The comment is usually along the lines of "I like it, dedicated tungsten miner, cheap stock, investing in new power infrastructure, profits could surprise the market in FY09, better than the avg pennycrapper, DYODD, I've played the stock before" etc etc, but I haven't bought it recently (and said as much, too). Why so? Well firstly because I'm a whuss, but more to the point here is that I've wanted assurance from management that they're true to their word. And in the last few months, it has to be said, they haven't impressed on that score.

The case in point is the new 43-101 compliant resource study for its Pasto Bueno tungsten property. For those that follow the stock and have the memory, there was this snippet from the 3q08 earnings report about the subject:

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Vector Engineering has begun its analysis in order to issue a new report on actual resources of the PastoBueno property based on NI 43-101. This report should be completed by the end of this year.
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The end of the year came and the end of the year went. Not a word from MLG.to. Then suddenly this PR popped up on January 23rd 2009 which said (extracted):

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Malaga firmly intends to publish this new report, which will focus on the tungsten resources and reserves at Pasto Bueno, on its website and on SEDAR before the 20th of February 2009, as required by the Canadian authorities.
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Well guess what? Yup, February 20th just came and passed. Not a word from MLG.to about this ghost-like 43-101 compliant report.

The bottom line: The mine may pass muster on the numbers and the plans sound great and the investment in the new hydroelectricity plant looks good on paper to cut costs significantly. As for the metal, tungsten isn't at its highs right now but on the other hand it hasn't slumped like so many other metals......

......and I can certainly live with using U$30/kg on my MLG.to production model during 2009 if it holds there. All that is peachy-keen, but why should I buy the stock when management cannot keep its own word? There are thousands of good stories and stocks out there to choose from, so why bother with this one if on the "gotta trust the managers" score, MLG.to has come up short again.

There's more to investment in junior miners than an XLS spreadsheet. DYODD, dude.