For new investors taking a look at SIRG, here's the skinny and the goods/bads/uglies as I see them - LMCAT, Please correct me if I'm wrong anywhere here. In fact, it would be even better if you just added a few extra facts to what I'm putting here and then STICKY this thing. We'll keep it updated as a lot of people seem to be joining us with misinformation. (there may be some in here too so edit/update this, let's set the record straight and sticky it)
The Skinny
SIRG is a company that currently owns (outright) 80% of a copper mine that has PROVEN (by geological survey) reserves of copper. It is NOT currently mining but has a target to start the mining operation later this year (2012) when it secures funding to proceed.
The GOOD:
1) Value of the ownership of rights to dig at this location (chloride copper mine) = $13M according to the recently agreed to purchase price of an additional 10% of the mine @ 1.3M.
2) Assets currently on the site of previous mining operation = 1.8M
3) Current conservative value of Sirg's 80% = $13M+$1.8M X 80% = around $12M
Note: This valuation is extremely conservative as it only takes into consideration the value of the rights to dig + assets which are always less than the value of all the copper in the ground at this location.
4) CURRENTLY (as of TODAY) there are ONLY around 200M shares outstanding @ .003 which equates to a Market Cap of $600K.
5) So it's obvious that $600K market cap is far below the MOST conservative estimates ($12M) for total value of the SIRG interests.
6) It appears a funding deal is close because it is assumed that this would be the only way possible to pay for the additional 10%
7) Other good signs that hint at funding include the hiring of an outside SVP of Operations who was not a current or past board member.
8) Throwing caution to the wind, there are HUGE copper reserves here that are proven, and additional land that SIRG owns the rights to mine that LIKELY has huge copper reserves that have not even been surveyed yet! Aggressive valuation can easily put this stock's market cap at 4-5 TIMES the conservative estimate IMHO.
The Bad
1) $5M to get the mine functional according to this board and LMCATs DD. Apparently this has been difficult to secure in the current economy.
2) Currently, there are still notes from toxic short term financing that are being converted and/or will be converted in the future. If someone out there has done all the math, please speak up so we can add the number of shares that are likely to be diluted in the future. I believe it is around $25-100M but truly I don't know for sure.
3) There will be additional dilution based on bonus shares for directors but all added together this equals roughly another 80M-100M based on the latest 8k. Also not so bad because they are incentive based and the mine must be in operation before any of this dilution occurs.
4) Additional 20M shares were included in the deal that is to be completed later in March to purchase 10% of the mine.
The Ugly
1) DTCC Chill is still in effect. (I'm not too keen on the far reaching effects of a chill but I believe it limits certain transactions of this stock)
2) No communication from CEO/board about Ugly #1.
3) What seemingly kicked off the chill? An ugly share structure change at the start of the year/end of last year to Authorize a TOTAL of 1.49 BILLION shares. This is always a scary prospect and should be taken as such. The positive spin assumption is that this increase was to facilitate a funding deal. I think we all know what the negative assumptions are (increase A/S, dilute, split, rinse & repeat).
4) No communication from CEO/board about Ugly #3. Would be nice to hear that the A/S will be reduced once mine is in operation as Josey had mentioned previously.
And basically that's all. I'd be interested to hear LMCAT or Josey add some Goods/Bads/Uglies if I've missed anything important. To many of us here, this company is an EXCELLENT bet because of the extremely low current market cap compared to it's extremely conservative valuation. We enjoy a quiet board with a few angry detractors but we are still aware of the possible risks. An excellent bet, after all, is still a bet.
