My Take again on MHREF
Time has come to make an assessment on where we stand.
I wrote this article back in August of 2014 and feel it still is relevant on how we will move forward for 2016-17 calendar year.
Although the issue didn't come to fruition at that time, but with the meltdown of the overall commodity sector and it's driving force in the oil sector, I believe the bottom is upon us.
With our company involved in the new generation of Rare Earth Elements things are starting to come around,now we have put behind us the R%D and it's costly capital, we can now look towards the final stage of implementing the operational part.
Every now and then comes along a pinksheet or pennystock that has huge potential. Now I come from this mindset after 20 years of playing the penny-arcade and from my professional experience of having my own business as a corporate profiler and Merger and Acquisitions for the last 16 years.
Trading pennystocks is an art and science that requires an absolute discipline in understanding the nature of pennystocks. Trading in this venue is not for most and from history's standpoint most (98%) of all pennystocks, fail or flounder at the bottom to never return.
Now we have in Matamec a truly well run and in my belief a pennystock that has long-term investment potential. I have never considered a pennystock as an investment, but a mechanism to build wealth by trading and not holding to augment your earnings into investment grade securities.
I see huge upside with MHREF as we move closer to the actual operational stage.
The company so far has been extremely discipline in controlling the issue of shares or maintaining a lid on the execution or retailing other wise known as diluting the pool by running the operational stage, Administration and R&D. This is very positive and is what drags down most pennystocks and leaves investors holding worthless stock to never be able to recoup their principle investment. This company, so far is and appears to have shareholders interest in mind and that is the beginning to feel comfortable with your investment.
It doesn't surprise me that we are still lingering down in the subpennies, but eventually this will change as we move forward.
As the world moves into a renewable source for our energy needs the Kipawa project with Toyota as a partner is only going to enhance our investment that will commend credibility and as such, so will the investment for us shareholders.
As the company has noted from their analysis, the Kipawa project is a 2. $b recoverable mining project over a period of 15 years.
So when we break this down to actual revenue per year, it is 16 $m.
Now I'm not going into the operational costs since this part still has to be determined and giving actual numbers may prove to be unproductive at this time, but the company has mentioned in one of their past statements that a 25 $m capital outlay needs to be obtained. This original capital expenditure is only the beginning, but still well within making this enterprise a profitable venture for us and the company.
Currently our market cap is under 1 $m with 120m O/S and generally is within the scope of pennystock companies that truly have a business model.
As we move forward going into 2015 and closer to operational stage, which I believe to be around 2016 when we will be in full production the share price will start it's climb and I expect this to happen by the end of this year or the spring of 2015.
Currently the company maintains a burn rate of 12 $k per month , but we can count on this to drastically to go up once we go into operational stage, but with a potential of 16 $m per year of revenue or 1 $m per month, one has to agree that we are looking at an eventual considerable multiple increase in the share price.
Of course, much of this rise in the share price will be dependant upon the financial package that the company needs to secure it's capital needs to move into operational stage, but still, we should see a significant increase to at least 10 fold from the current price of .07.
One can reasonably be comfortable to the understanding that a major price hike is in the future and if the timeline on actual operational and the capital financial package is made public, we will see a move by the end of this year going into spring.
I see the first point of resistance on the share price to be around .25 and this will give us a MC of 3 $m, still well below the fair value. I am not looking at PE ratio since pennystock companies generally are never tabulated on PE, but straight accounting. I expect this movement to begin near the end of 2014 through the end of spring 2015 since the winter months well probably have very little impact.
With 16 $m in potential revenue for the first year of operation expected for 2016, but 2017, should allow for us to have a share price to be well over 1.00$. Again, of course this is dependant upon the financial package and how it is laid out with the equity end of the deal.
But let's assume that our O/S move up from 120m to 250m, even at 250 O/S one can see that under the current share price of .07 is still well under the fair value of MC 2 $m. Even at .25 the MC will be 6 $m still well under fair value if the figures of retrieval reserves is based on 16 $m per year.
If the 16 $m achievable resources is met and not mentioning the actual burn at the time during operation we could very well command a share price of .65 giving a MC of 16 $m straight up accounting without a PE ratio calculated. So one can see definitely .50 without any problem.
Now you must take into acct the gold aspect of other claims. This needs to be calculated into the overall worth and the other claims yet still to be realized with respect to feasibility and operational costs to profitability assessment.
With the Kipawa project we should bode well on it's own merit and adding the other assets (claims) we can commend a share price of well over a $1.00 in the years to come and I believe this company will eventually move out of the pennyarcade and become a true investment grade company.
I recommend this a buy at the current price of .07 and under .13. Always do your due diligence and never invest more than you can lose.
Have a good day
varok
AI
