Media Speculation on MHM Metals Silica Project

The other day I wrote an article titled “Where Do I See MHM Going in 2012?” where I speculated that any significant news on the Silica Project is at least 12 – 24 months away. Anyway today there was an article in The Advocate which may shed some additional light for investors in MHM. I don’t think it necessarily means any new is close-by as getting a project of this scale off the ground will certainly take time, but it is interesting to see media speculation.

The article mentions growing investor interest in a major Tasmanian silicon smelter – possible at Port Latta and then goes on to mention MHM Metals recent announcement where they stated that they continue to “engage numerous expressions of interest” for developing a silicon smelter in Tasmania. Now these news articles are nothing new, there have been a couple in the past and MHM itself has used the line that it is talking to numerous parties for some time now.

However, what strikes me as different is the more open stance of management with Simon Wells saying that due diligence was taking place on more than one site and that the most important aspect is the cost of delivered electricity to the site. This seems to suggest that there is a little more going on than meets the eye, because in my opinion you don’t start worrying about site location and power supply requirements, etc until you have someone who is at least committed to seriously exploring the project/take off agreement.

The article also reminded me of something I previously overlooked. MHM is engaging corporate advisors. In my opinion the most likely outcome is a joint venture or spin off of the project as MHM does not have the finances or the man power to oversee two large expansion programs (silicon smelter and US salt slag projects) at the same time. So if MHM are engaging with corporate advisors then they clearly have some idea of what the project will involve and need to shore up the financial side of things to progress it further. Corporate Advisors are not cheap so you don’t just appoint them to advise you for the sake of it.

Overall it is certainly an interesting article and in reality it throws up more questions than answers. As I have previously said I think this project should be viewed as extra cream on top and with the timeframe associated with the project too hard to predict I think the focus of the market will remain on the US salt slag project.