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LIM - Lionore projects that they will produce 34,100 tonnes of nickel in 2006, 45,000 tonnes in 2007, 60,000 tonnes in 2008 and 80,000 tonnes in 2011. If they produce 80,000 tonnes in 2011 as projected and sell it for $20 per pound they would have revenues of about $3.5B. If they make $14 per pound in profits($6 cost) they will make a net profit of about $2.5B before taxes or about $1.87B after taxes or about $8.50 per share.
I thought the following statement that NMKT made when they announced the delay of the third quarter filing was interesting. "We have also had additional increased transaction activity in the third quarter and early fourth quarter. Although we are well aware that it is preferable to file within the required time constaints, we have decided it would be prudent to take advantage of the filing extention to more thoroughly review our financial report in light of the increased activity." Does anybody think this could be code for "we need more time to cook the books?" Fourth quarter activity has nothing to do with third quarter results. It almost sounded like they were saying we need more time to decide how much of fourth quarter profits we should put into the third quarter. I'm sure thats not the case. It just sounded interesting.
I can't believe that I actually almost got back in. Now we find out that New Market China has virtually no gross profit and won't have any anytime soon. Much of the ownership in NMKTCH was given away anyway in exchange for who knows what? It is now apparant that in order to get on the AMEX NMKT would need to do at least a 1/12 R/S. In order to get on a new exchange without a R/S NMKT will need to find another worthless company and give away most of the company in order to merge with it. So China accounts for over $20M in revenues and has no profit. So if NMKT is making $3-$4M in profits a year where are the profits coming from? Which division is profitable? I really feel sorry for those of you that hung in. I got out with a small profit and consider myself very fortunate. This thing had so much potential, but what a mess it is now. Some people seem pleased with the supposed profit, but NMKT has twice as many shares as a a year ago so earnings per share are dropping.
Lionore Conference Call. Lionore is holding a CC at 10:00AM to report on their Activix process. I'm surprised they have time for this since they have been so0 busy counting all their money.
Another $19M in cash? What is Lionore going to do with all this money? They allready have $280M in cash and cash flow should be more than $200M in the fourth quarter. Now they are getting another $19M thrown at them. Now they have all these decisions to make about what to do with all this money. How about a little cash dividend?
Has anybody seen the actual 10Q yet? I am anxious to see the number of fully diluted shares outstanding. I think that will be the most important number in the report. IMHO it is the constantly increasing share count that is keeping the stock down. There needs to be evidence that this has stopped before any meaningful upturn can start. Even though earnings in dollars were up compared to last year earnings per share were down.
Lionore - The lion shall roar. First quarter earnings were .06, second quarter earnings were .28, third quarter earnings were .68 and IMHO fourth quarter earnings should be around .90 if nickel stays around $14. The stock is $8.30 U.S. Lionore is forecasting huge production increases for the fourth quarter and for the next two years. Production is forecast at 34,100 pounds of nickel in 2006, 45,000 pounds in 2007, 60,000 pounds in 2008 and 80,000 pounds in 2011. LIM.TO has close to $300M in cash and cash flow is running over $200M per quarter. They are having a CC on Tuesday concerning their new Activox process. Lionore is selling for about 2.5X 2007 earnings if nickel is $14.
They made a division by division projection of revenues in January. When you take the projection for each division and add them up it came to $95M in revenues. They say New Market China has $20M in revenue, Systems Integration has $20M, Latin America has $25M, VOIP has $10M. Every division's revenues is supposedly soaring yet total revenues are only increasing by the amount that Unione has added to revenues. When you add the supposed revenue for each division it comes to more than the real revenues. NMKT promised in April to reduce the fully diluted share count which at that time was about 182M. In August they reported that fully diluted shares had soared to over 200M. Any promise that only 3M more shares remain should be taken with a huge grain of salt. You have people here with their head in the sand that don't want these real facts to be posted. They want a rose colored glasses attitude that ignores the many, many broken promises and "goals" that have happened. How about the promise of no more acquisions using preferred stock and AAPI is being offered preferred stock? How about no reverse split and the APII deal is effectively a reverse split? The list goes on and on.
Lionore is roaring. Lionore(LIM.TO) earned .06 in qtr 1, .28 in qtr 2, .68 in qtr 3 and IMHO will earn close to $1 in qtr 4. The stock is $8.90 US. They are projecting huge gains in production for the fourth quarter and for next year. Lionore is a nickel producer. They have close to $300M in cash on hand. You can buy Lionore throygh Ameritrade by using LMGGF.
The most important thing to look for in the third quarter report will be the fully diluted share count. There was a big surprise increase in the fully diluted share count in the second quarter. Another big increase IMHO would be the death blow to NMKT. Keep in mind that even though earnings are even with last year the per share earnings have been chopped in half. Keep in mind that NMKT set "goals" of about $95M in revenues in early 2006 based on what each division thought they would do. Most of the increase in revenues in 2006 has come from the acquisition of Unione. Without that acquisition revenues are nearly flat compared to 2005. NMKT has now had huge misses on its revenue projections or "goals" for 2005 and 2006. It calls into question the $120M projection for 2007. I know I will be called a basher for pointing out these facts. I am still trying to decide whether to get back in and am trying to be realistic when assessing the situation.
This whole idea that if you buy out a small company that your stock will now automatically trade at the same price as the little company you bought is absurd. What if NMKT bought a company with 100,000 shares outstanding that was selling for $100 per share? Would that mean that NMKT would suddenly start trading for $100 per share? Doesn't anybody realize how stupid this is? You can't automatically make your market cap double by buying some little company that loses money. The market will decide the market cap of the new company based on what it thinks NMKT is worth.
I can't believe how gullible people are. Do people actually believe that the market is going to double the market cap of NMKT just because Phil Verges wants it to? NMKT has a market cap of $50M and APII has a market cap of $10M. The new company will have about 55M shares outstanding. In order for the new stock to sell for $2.25 the market would need to assign a market cap of $125M to the new company. Since NMKT will represent 90% of the new company the market will determine the market cap of the new company based on what it thinks NMKT is worth. The market thinks NMKT is worth $50M. Why would it suddenly think it is worth $125M because they bought a $10M company that loses money? IMHO the market will decide the new company deserves a market cap of about $60-$70M. With 55M shares outstanding the stock would sell for about $1.10-$1.30. That would make the share price too low to keep a NASDAQ listing. JMHO
Why I sold. I sold because there is just too much confusion and uncertainty surrounding what is going on with NMKT. We were told no more preferreds and now preferreds are being used to buy APII. We were told lower fully diluted and fully diluted went way up in the last report. Why own a stock with so much uncertainty and information you can't rely on? I bought RNO and LIM.TO. These are two stocks about to report gigantic profits that are selling for 2 times next years earnings if nickel prices stay at current levels. RNO should earn .25 in the current quarter and the stock is $2.45. LIM.TO should earn .75 in the current quarter and the stock is $6.90. I want to own something that you can hang your hat on. It is easy to predict earnings because you know what nickel prices were last quarter. I sleep a lot easier now that I don't have to worry about what the latest broken promise will be coming out of NMKT.
Please see my post on the APII board on Yahoo for an updated version of how this will work.
New Market to lose money now? It looks like there is a good possibility that NMKT may lose money now. Unless they get rid of Action the losses that Action has will be a part of NMKT's consolidated results. They will also be paying as much as $1.5M in dividends on the preferred shares. The combination of Action's losses and the preferred dividends could cost NMKT $2-3M in losses. Just read the announcement to read all about the convertible preferreds. The dividend rate is .30 per share per year and they are callable into common shares at $6. It tells you all about it in the announcement.
They are issuing more convertible preferred shares in order to make an acquisition even though they said they wouldn't do that any more. They are issuing $30M worth of convertible preferred shares to pay for this acquisition and it will cost them $1.5M in interest payments(dividends) to do it. What are they getting? A company with little revenue that is losing money. They are only doing this to get a NASDAQ listing, but once again they are breaking a promise to shareholders. There were supposed to be no more convertible preferred shares issued to pay for acquisitions.
I just sold my last 6,000 shares. I had kept a few shares just in case. This situation gets more bizarre all the time. NMKT has purchased a nearly bankrupt floundering company in order to pick up the NASDAQ listing. What are they paying for this listing? They are trying to convert the existing common shares of Action over to convertible preferred shares that they will have to pay $1.5M per year in dividends on. This will increase NMKT's annual expenses immediately by $1.5M. These shares later could be converted to 5.2M shares of common. Action has no money to guarantee NMKT $100M worth of market value. In order to keep the minimum price requirement for the NASDAQ NMKT shareholders will probably receive about 1 share for every ten shares they own now(my estimate). This is all getting way too complicated for me. It may get them their NASDAQ listing, but it will cost them $1.5M per year and eventually probably a 20-25% dilution of their shares.
My02Cents? Do you think the ownership NMKT has in VHGI could lead to a stock dividend for NMKT shareholders?
NMKT is going nowhere until either they report earnings of more than $1.0M or until they announce a significant dividend in NMKT China. Look into RNO(Rio Narcea Gold). They are mostly a nickel producer. Nickel has doubled in the last three months. RNO earned .04 per share in the second quarter. They should earn .30 per share in the third quarter. The stock is $2.46.
I sold some more at .325 this morning. Early in the year I was expecting $85M in revenues, $4-$5M in profits, 150M in fully diluted shares, .03 in EPS, an AMEX listing and three stock dividends. I now expect $75M in revenues, $2M in profits, 200M+ in fully diluted shares, .01 per share in EPS, no AMEX and ????? stock dividends. The only thing that can save this is a very nice New Market China dividend. I sold my EZM I bought in June at $1.90 for $2.98. If you want to make a bundle(IMHO) check out RNO. They made .03 in the second quarter and I expect .25 in the third quarter. THe stock is $2.29.
With 200M shares outstanding NMKT would have a market cap of $600M in order to achieve a $3 price on its own. We all know thats not realistic. I usually hate reverse splits, but in NMKT's case it is the only way to keep this stock from always being a penny stock. It should have been done a year ago and we wouldn't have been in this mess now. Revenue and profit growth have slowed. Despite adding an acquisition that has revenues of $3.5M per quarter there was no growth in second quarter revenues compared to the first quarter. Phil has warned that there will be extra expenses due to the sub listings. We are going up against some strong profit numbers from the third and fourth quarters last year. There is a strong possibilty that profits in the second half will be less than the $2.5M of last year. Profits for the year could be less than .01 per share compared to more than .02 last year. Lets face it. We're in deep doo doo. The only way out is dividends in the subs that are significant enough that we can make up our losses in the parent company through our ownership in the subs. If we get token ownership in the subs we will be left with nothing.
The fully diluted count is not going up because the stock recently dropped to .30. There were a lot of shares converted during the second quarter when the stock was much higher. Not many shares have been converted in the last 45 days since the stock went back down. Even though many new shares show up in the o/s the number of shares still to be converted remains about the same. All those shares got converted in the second quarter yet another 51M shares still remain to be converted. Something just isn't adding up. You begin a quarter with 50M shares remaining to be converted. You convert 20M shares during that quarter and at the end of the quarter you still have 50M shares remaining to be converted. You don't know that new preferred shares weren't issued during the quarter because none of us really has a clue as to whats going on with the share count because Phil doesn't tell us. It is all a big mystery. We can try to speculate as to where all these new shares keep coming from, but we really don't know. The problem is that it doesn't really matter. The point is that the share count keeps growing and growing and the company is being grossly diluted. Where the shares keep coming from isn't the point. The point is they keep coming and coming. We were told told that fully diluted count would be reduced and it has been significantly increased. If NMKT makes $2.8M in 2006 the EPS will only be about half of what it was in 2005. Any hope of future EPS growth is vanishing before our eyes because there are way too many shares out there.
Its nice that we now know that NMKT is going to own 60% of the stock in IICPQ. Thats a good thing. Its also nice to know that somebody that was involved in financing New Market China will also get 20% of New Market shares. Wouldn't it be nice to know what percentage of the shares will be going to NMKT shareholders as a stock dividend. NMKT says they can't announce that because it is all still being negotiated. Maybe it's true that they can't give the exact details of the deal, but if they really wanted to they could tell us about what percentage of the shares NMKT shareholders will end up getting. They can tell the New Market China "financier" that he is getting 20% of the shares so why can't they tell us what percentage we're getting. Until NMKT shareholders are satisfied that they we're getting a fair shake this stock will continue to be very weak. With the parent company being grossly diluted our only hope is a decent ownership in the subsidiaries. Perhaps a profit in the subs can make up for the losses we are taking in the parent company.
I can't believe that no one is talking about the explosion in fully diluted shares. This could be the most important thing that has happened to NMKT all year. We were told that an effort was being made to reduce the fully diluted share count from 182M shares and what we got was an increase to 202M shares. Where did these mystery 20M shares come from? Are there more surprises like this coming? There was hope that the issuing of new shares had come to an end, but both o/s and fully diluted have increased significantly since the "promise" of a reduction. Doesn't anybody want this addressed at the CC? If the sharecounts are going to keep increasing then NMKT is history. Its going to take significant earnings gains just to keep EPS at the same level if share count keeps increasing. Forget about results, dividends, and AMEX. If the share count is going to keep going higher and higher it all means nothing. Where does it all stop? 300M shares, 400M shares, 500M shares, 1B shares? As always, we get told one thing and something completely different happens.
The disappointment comes from the fact that acquired Unione in March($14M in revenue). This quarter was to include Unione revenues for the entire quarter. Failure to increase revenue even though Unione was included means to me that revenues were way down in the second quarter. Unione should have taken them to at least $20M just to stay even. Financials don't mean anything now until November 15. Everything is riding on how many shares we get in the New Market China deal. Thats what most people bought NMKT for and it means everything. A nice dividend means happy shareholders that will BUY BUY BUY! A token dividend means disappointed shareholders that will SELL SELL SELL!
Revenues were a big disappointment. Even though Unione with revenues of $14M were included in this report revenues were flat compared to the first quarter. Revenues would have been down from last quarter if Unione had not been included. It looks like NMKT's explosive growth has stopped. The recent new contracts are encouraging, but they're going to need a lot more. Profits were also flat compared to the first quarter. It looks like the only hope for NMKT shareholders is that the New Market China dividend will be better for NMKT shareholders than it appears right now.
"I understand that the benefit of the transaction may not be crystal clear to shareholders at the moment." You can say that again.
When all is said and done the only thing that matters is what percentage of shares in New Market China and the other subsidiaries will NMKT shareholders get? Who else owns the shares and how we got there won't matter. Many of us got into NMKT because of the promise of dividends in the subsidiaries. If we only get a token number of shares then the main reason for buying NMKT will have been a disappointment. If we get a significant number of shares then our patience will have been rewarded. We just don't know yet until the dividends are announced. Once these dividends have been paid then the promise of getting dividends in subsidiaries won't be a big reason for buying NMKT anymore. There could be more dividends in the future(healthcare or a new sub), but if we receive a token number of shares it won't matter. It all comes down to hopefully soon we will be finding out if the dividend promises were the "greatest idea ever" or just a big joke handing us some little token ownership in these subs.
Great post. I agree. As usual, they've done a horrible job of telling shareholders whats going on here. We just really don't have a clue. They've given us bits and pieces. Just enough to confuse us. IMO we would be better off with no information than partial information. It just creates more confusion and causes more mistrust. If you have something to tell us then tell us the whole story. Now you just have us upset and wondering if you gave away the family jewels.
I think that the distribution to NMKT shareholders will be announced at the same time that the closing of the deal is announced. They are going to get a new CUSIP # and a new ticker symbol(NMCH?). I expect that when the new ticker symbol starts trading we will know how many shares of the NEW company NMKT shareholders will be getting. There will be no more IICP as of then. The NEW company will be called New Market China and will trade as New Market China.. The big question is how many shares of the NEW company will IICP shareholders get and how many will NMC shareholders get(2M) and how many will NMKT shareholders get and will some shares be sold to new investors? The purpose of the trips to China was to attract new investors to invest in New Market China. NMKT's preferred shares are going to be convertible into New Market China common shares. Lets say that they end up issuing 50M shares of New Market China. Then the preferred shares issued to NMKT will be convertible into at least 51M shares of common. That way NMKT keeps its 51% ownership and control over the company. My biggest concern is how big of a percentage of the NEW company will the owners of the 23M shares of IICP end up getting? They deserve nothing. They are being paid $250,000 (probably cash) for the preferred shares by NMKT. That is all they should get. We are just buying their stock listing and thats all. Anything more than that means we are throwing money away. Right now you and I own 100% of New Market China because it is owned by NMKT and we own NMKT. Why do we want to give a big chunk of it away in exchange for nothing? How would we feel if NMKT announced that they were giving away 23M shares of NMKT shares to someone because they were a nice guy. Thats basically what we're doing if we give away 23M shares of New Market China to IICP shareholders because they're nice guys. I just hope that there's a lot more to this than meets the eye. When the dust settles I hope these IICP shareholders don't end up owning a big percentage of OUR New Market China. I'm trying to believe that Phil isn't stupid enough to hand most of OUR company over to a bunch of strangers just because they let us buy their stock listing for $250,000.
To me it matters a lot. The issue is not control. We all know that NMKT will control the new company. The issue is how many shares will we get and how much will they be worth? If current IICP shareholders are going to own 23M shares of the new company who are they and why are they getting all these shares? Its the common shares that will trade on the market and will have a value that depends on the total number of shares outstanding. To have an extra 23M shares out there in the float will dilute our percentage of ownership. Why should these yoyo's get 23M of our shares? It just doesn't make sense. The reverse split idea makes sense, but Phil said there will be no reverse split. We are paying IICP $250,000 for the convertible preferred shares. That is their compensation for taking over their listing. Why do we need to give them those 23M shares? We just need more explanation on this. It matters very much. Do you really want to give away 23M shares of your new company to somebody for nothing? Do you want the value of your new shares seriously diluted because of all these extra shares. NMC will have a certain market cap. When you divide that market cap by the total number of shares outstanding do you want that number inflated by an extra 23M shares owned by somebody that didn't earn them? They were just given to them for no reason. We need an explanation.
Is it possible that Phil got those 23M shares of IICP in exchange for his NMKT convertible preferred shares? He said he intended to swap the NMKT preferreds for shares in the subsidiaries. Somebody owns those 23M shares and stands to make a bobanza once IICP takes over NMC. It seems like if this is the case that the transaction should have been reported by now.
This is unbelievably confusing. The way this looks NMC shareholders would get 8% of the total shares(2M) and IICP shareholders would get about 92% of the shares(23M). This makes no sense at all. There is something going on here they just haven't explained. NMKT will get convertible preferred shares, but how many shares are they convertible into? How many shares will be issued to NMKT shareholders. I just can't figure out why IICP shareholders are going to get 23M shares of the new company. What is that for? They are being paid $250,000 for the preferred shares. That is the price NMKT is paying them for the stock listing. I see NMKT must provide 2005 audited results for NMC. I don't see how this could be any more confusing. What in the world is going to happen to these 23M IICP shares?
Its goodnews/badnews. Good news because it shows that the conversions have slowed way down. Bad news because it shows that the plan to get people to take shares in subsidiaries didn't work. Almost everybody except Phil allready converted. Its more good news than bad though because the constant conversions needed to stop.
Is anybody ready to make an estimate for second quarter results? I'm going to guess revenues of $20M with a net profit of $1M. I expect them to raise revenue guidance to $75M. This will be the first full quarter with Unione included. Unione is probably doing about $4M per quarter in revenues right now. I think we need earnings of at least $1M to get things going again.
I guess we can't really judge whether this is a good deal until we see what happens to the 23M shares now outstanding in IICPQ. If we end up with 60M shares outstanding and IICPQ shareholders get 23M of those shares it would be a gigantic disaster because we would have given away 40% of New Market China for nothing. We can only wait until we see what happens to those 23M shares. If most of those shares go away then NMKT shareholders will end up owning most of New Market China. When I talk about the cost of buying this shell company I am not talking about the cash cost. I am talking about the cost in terms of what percentage ownership are we giving away in order to get this stock listing? If IICPQ shareholders get 23M shares valued at .11 then we paid $2.5M to buy this stock listing. We didn't pay them $2.5M in cash, but we gave them $2.5M worth of OUR New Market China stock. We just really have no idea whats going on here yet. We need more details before we can make a judgement.
How much did we pay for this shell company? That is the real question here and we don't know the answer. The company trades at .11 even though it doesn't seem to have any real value. It has a market cap of about $2.5M. I certainly hope we didn't pay that much for it. What we paid is that they get to keep their 20M shares that they have now. The big question is how much of a percentage ownership will NMKT end up with and how many shares will be issued to NMKT shareholders. If NMKT China has a market value of say $20M then the IICPQ shareholders should get no more than 10% of the new stock. Even that would be a lot for a company with no real value or business. Giving them 10% of NMKT China would be very generous just to be able to use their listing. Hopefully, more details will come out in the letter later in the week. The $2.5M market cap doesn't make any sense unless they have something that we don't know about. Why would a company with nothing be worth $2.5M. Hopefully, NMKT shareholders will get a lot more than the 20M shares that IICPQ shareholders are getting since there isn't going to be a reverse split. It looks like the new company needs to have about 200M shares outstanding or we get screwed. If NMKT keeps about 60%, IICPQ keeps about 10% and NMKT shareholders get 30% of the shares NMKT shareholders would get about 60M shares or one share for every three shares of NMKT that they own. NMKT China with 200M shares outstanding would probably sell for a market cap of $20M to $30M or about .10 to .15 per share. That would make your dividend worth about .04 per share for each share of NMKT that you own.
Intercell is just a shell company that was purcheased only to give New Market China its own stock. It is cheaper and quicker to buy a shell company than to go through the long, expensive application process. NMKT would need to get an audit of NMKT China and pay the application fee. By buying this shell company they allready have a listed stock and they can begin trading immediately. We don't know yet how much they paid for this shell, but I doubt that they paid .12 per share. The owners of Intercell will receive some shares in New Market China as payment. Intercell has no business. Thats not the point. NMKT is only after their stock listing. IMHO NMKT will get a new ticker symbol and will change the name of the company. We will probably be looking at NMCH. This will speed up the ability to pay the stock dividend to NMKT shareholders. This was very good news for NMKT shareholders. We finally have a realistic chance to get a dividend announcement in the very near future.
I just bought 5,000 more shares at .33. It looks like some progress has finally been made toward the first dividend. It looks like we will all be owning some Intercell. Does anybody know what the symbol is for Intercell?
You misunderstood what I said. I didn't say that Phil deliberately lies about things. Phil gets overly enthusiatic about things and sets unrealistic goals. He tells shareholders that certain things will happen by a certain time. When these things don't happen he sweeps it under the carpet. He makes no effort to explain why it didn't happen and he doesn't explain what is being done to fix it. He just repeats the promises with a new time frame. When you tell someone that you will do something and you don't do it you have an obligation to explain to them why. Phil has no sense of obligation to explain himself when he doesn't do what he said he would do. He just jerks shareholders around. His way of handling failed goals is to make more promises that he can't keep. Once you do that a certain number of times you simply lose all credibility.