Annual Reports: OBJ & MHM

I thought I would just do one post to cover both OBJ and MHM Metals who both released their annual reports this week. As is normally the case annual reports they only provide us with information on what we already know, however, it is important to read them in detail as you can pick up some hints or insight into the company’s operations and managements thinking.

Firstly, with OBJ, it is clear that all their programs are progressing well with their international partners. We also appear to be gaining increasing recognition in both academic and corporate circles which can only be a positive thing for the future.

One interesting thing to come out of the report was the company’s expansion of its own laboratory and the granting of ethics approval to perform their own tests (in their own lab) on skin. This should allow OBJ to speed up a variety of testing procedures and have more control over the process.

Secondly, OBJ stated that they are actively seeking short, medium and long term outcomes and that they have moved further from their research and development base to product-focused development programs and partnering activities. This helps firm my belief in the company’s technology and the potential for a re-rating of the share price within the next six months.

Moving on to MHM Metals and the report was slightly more mundane with no new additional information provided. The key point that I really picked up from the report was that “black dross” does offer an additional revenue stream for the company and that they are going to look at constructing a plant that can recycle this material alongside salt slag and any reclaimed landfill.

Secondly MHM continued to state that they are in discussions to receive government support for their project. What level of support is unknown at this stage but clearly tax concessions, land grants or a financial incentive will be hugely beneficial for the company.

Finally MHM reaffirmed their position to look at non-dilutionary methods of finance and remain committed to 100% ownership of the plant. This has helped allay some concerns that I had previously stated on my blog. Given the potential for a larger plant I was concerned that the company may need to approach the market for additional funding which would obviously dilute my initial holding and could provide additional downward pressure on the share price. It was also my view that a capital raising now would potentially be the worst possible time given the negative sentiment that surrounds the company and wide market.