CMKM Diamonds Inc. (fka CMKX)

[mretgnol]

yEP...The one and only


By: stervc
21 Dec 2004, 11:10 AM EST
Msg. 133843 of 134374
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MLON*Parallel Valuation* please review...

Once again, I love the news that MLON keeps putting out. Although there are some things about MLON's validity that might be questionable, there are some things that we must consider that are less questionable or even at all to some. I do think I see where they are getting their logic of MLON being worth .10 to .15 cents. These are only my thoughts as to what I see as some options for consideration. I will end this post with some thoughts on how I interpreted the latest press releases (PRs) and the power behind the possibility of a cash dividend to make sure you understand if released in the upcoming PRs from MLON.

Before reading any further, understand that I am not saying whether or not I believe in MLON. I am just saying that it doesn't matter what I think. We must "mostly" realize that it doesn't matter what “you” or I think about MLON or any other stock. It's what the market thinks about MLON or the stock at hand. The average investor does not invest in a company from actually going to visit the company first hand or talking to them, but instead from the standard form of literature available to the public for viewing through PRs, filings, etc. This is how the masses decide whether to invest or not in a stock. These groups of investors usually invest not based on facts alone (if they exist), but also on potential that is brought out by the company (or others) for all to consider.

With that said, MLON has put out the most powerful PRs that any penny stock has ever put out during my entire tenure of investing since the 1990's in my opinion. Because of such, I must say that I do believe in MLON enough to take the risk for what it has to offer us investors. If it was truly a pump and dump, I think we would have already been back at .0002 cents by now.

What is happening here with MLON is something that I was suspecting to happen with CMKX. Yes, the price going up is good, but I was referring to something I made up called Parallel Valuation (PV). When you get some time and after first finishing this post, come back to read the link below to see how it was derived from my old CMKX/SGGM thoughts for a further understanding. http://www.ragingbull.lycos.com/mboard/boards.cgi?board=CLB01219&read=109280

Parallel Valuation (PV) is when we have a "dividend exchange" taking place to create this new type of valuation. This dividend is two-sided and not one-sided as like most dividends. This causes a valuation to be placed on each of the stocks exchanging dividends from the price of the other. This correlation exists because of the two companies exchanging dividends in each other and not just one company giving the dividend to the other without the other not receiving a dividend in return which is usually the norm.

Due to the exchanging of dividends each stock will trade as a subsidiary under each other causing a direct correlation in valuation even past the date of record for the dividends. So, the increase and decrease of a stock would have a direct correlation with the price of the other.

In discussing Parallel Valuation, let's focus on just one of the recent major deals that have recently transacted with MLON:
The acquiring of 3,000,000 shares of Equity Retirement Distributors Canada Ltd. (ERDTF.PK) in exchange for 500,000,000 newly issued MLON shares subject to SEC RULE 144. http://www.knobias.com/individual/public/news.htm?eid=3.1.765058a16230e655e890e7a90938c57cfd1fe83d565c2b96a1723f0d8db71629

Let's look at the agreement between ERDTF which we will use the closing price of $19.00 for ERDTF and of .0023 cents for MLON on the day of this transaction this past Friday, 17 Dec 04.

** 3,000,000 shares of ERDTF x $19.00 per share = $57,000,000 in value

** 500,000,000 shares of MLON x .0023 cent(s) = $1,150,000 in value

That means that somebody believes enough in MLON to tell them that if MLON gives them $1,150,000 in their value, they will give them $57,000,000 in its value and do so because they feel that they are doing so at a discounted rate. Nobody does a deal under the assumption that it is transacting its deal at a premium. This means that our shares of MLON are significantly undervalued until its $1,150,000 value reaches the value of $57,000,000 value of ERTDF. This is the point of equilibrium.

Now the question would be: How do we determine a fair price to purchase MLON for a fair risk until it reaches that point of equilibrium that's compatible with its dividend exchanged stock, ERDTF? There are a few ways to see this. Let's see…

As of Friday, 17 Dec 04 we’ll use since the day of consummation for the deal:

The point of equilibrium for the price of MLON is what we are trying to determine for knowing when MLON will reach such with ERDTF at $19.00 per share. The base total to use here is $57,000,000 as the point of equilibrium as derived from the example above. Let's solve for "X" to see how we must view this to see where MLON should be bought up to for reaching the point of equilibrium.

Key Variables for Resolution
X = Equilibrium price of MLON
Shares of MLON Exchanged = 500,000,000
The Equilibrium Value of ERDTF = $57,000,000

Solve for X,

500,000,000 x X = $57,000,000
X = $57,000,000 ÷ 500,000,000
X = .114 cents

This means that 500,000,000 shares of MLON at .114 cents is where the equivalent value of (500,000,000 x .114 = $57,000,000) needs to be to capture equilibrium with the value of ERDTF at the time the deal was completed (or made known to the public). If the point of equilibrium is .114 cents from these thoughts, this means that any shares of MLON bought under .114 cents is considered undervalued.

I think this is how the company is seeing the value in itself. This means that the value of MLON is .114 cents from the ERDTF deal alone. From the Western minerals/PRMN deal, I calculated it to be .01 to .02 cents with using the same logic for solution as above. This gives MLON even more value giving MLON the official justification to show why they think they are worth .10 to .15 cents. Keep in mind this does not include the 10,000,000 shares of RRBK at $14.75 per share that they own or the $45,000,000 in assets or any other previous or future deals that they have on the table for continued enhancement of MLON valuation. RRBK link from Money…made: http://ragingbull.lycos.com/mboard/boards.cgi?board=MLON&read=19843
I think this is why they see that they will start entertaining offers at .10 cents per share.

So, why is Mario doing all of this hyping as many have termed it? Well let's see. The market is one big pool of a Network Marketing concept meaning that it reacts because of "word of mouth," getting the word out for people to buy shares in your stock. If you released huge news and nobody even knew of your existence, your stock would not move. Stocks do not trade in the market to not get investor attention, but instead because of trying to gain investor attention.

The way the attention is being built to a climax with MLON to bring and enhance investor confidence is very well orchestrated. All they have to do is deliver the “key” substance as it appears that MLON is building key announcements to be made at the price obtainment of .01 cent.

Since the Float is low with ERDTF, it wouldn't take much buying power to make it run even higher enhancing the value of MLON along the way. Money could be strategically placed into ERDTF to enhance the Parallel Valuation in MLON to get it jumpstarted towards rectifying the covering process, if any naked short problem exists. This would give us two floats, the legitimate and illegitimate floats. If enough of the "illegitimate float" have been absorbed (or eliminated), then MLON could run a lot higher and faster to enhance the Parallel Valuation more than what ERDTF would do because of the larger consideration for percentage gains. There is actually more to this which is actually too much to explain for now. Heck, this post is already gonna be long enough long enough. LOL

As you can see, MLON would be significantly undervalued and an immediate proportioned valuation should be placed into MLON as compared to the price of ERDTF because of Parallel Valuation. Let's make better sense of this for a better understanding.

1 share of ERDTF would cost you $19.00 per share. To get a better understanding of the power of Parallel Valuation, we must determine how much an equivalent price of MLON shares would be for that 1 share of ERDTF.

ERDTF shares exchanged = 3,000,000
MLON shares exchanged = 500,000,000

500,000,000 ÷ 3,000,000 = 167

This means that the 167 number is the MLON share price multiple to use to determine this other point of equilibrium to see how it relates to Parallel Valuation. This means that 167 shares of MLON theoretically equates to 1 share of ERDTF. To further explain the importance.

1 share of ERDTF @ $19.00 = 167 shares of MLON @ .0023 cent(s)

1(ERDTF) x $19.00 = 167(MLON) x .0023

$19.00 = .3841

Price paid for 1 share of ERDTF = $19.00
Price paid for 167 shares of MLON = .38 cents at .0023

This is like you giving me .38 cents and me giving you back $19.00 in return. This means that MLON should be bought up to where the price of MLON x 167 equates to $19.00 for the 1 share of ERDTF. That would be the .114 cents that we talked about earlier. As you see that .114 cents x 167 would roughly give you the $19.00 per share equivalency of ERDTF. This is another way of determining the point of equilibrium. MLON would be considered under valued until such .114 cents point of equilibrium has been obtained.