Yesterday MHM released a company update. As is to be expected with these monthly announcements most of the information contained in the report is just a re-hash of past announcements. It is however, well worth reading as there are always snippets of additional information provided.
Some of the most important information is about our Australian Operations. Now the company has continuously stated that an EBIT of $8.6m should be achievable from the plant once everything is up and running and we are able to process the salt slag landfill. We can now put a clear time frame on when this should occur with 24 hour processing commencing in January 2012. It is then expected to take three months to clear the back log of partly processed landfill. So by the end of Q2 2012 we should have one full quarter (April – June) of the plant operating at capacity and processing all material (Sim and Alcoa contracts, as well as landfill).
We also received some important information relating to the export of AL80 and why it has been delayed. Basically it is a bureaucratic matter than Impex Metals (our customer) has been trying to handle. MHM has now assumed responsibility for finalising the custom documents/process so hopefully it will be resolve shortly. A poster on Hotcopper was also able to shed further light on this issue. In a nut shell Customs classify the AL80 as a “waste Product” because it is generated from a waste stream (salt slag). Whereas, Impex and MHM view it as a commodity because it has an economic value. As a result the product basically needs to be re-classified. Management also stated that other options are available to sell the AL80, although they are not as profitable.
In regard to the US operations there was not a great deal of additional information provided. It basically summarised what we had been told via the earlier site selection announcement. MHM also confirmed that they continue to talk with a number of companies to secure additional contracts. A number of these companies are also likely to sign on once the plant is finalised.
The income projections associated with the US operations will also be released in due course. It appears that they cannot be released at this time due to the confidentiality agreements with our partners and the chance that they be identified by the volume of material provided under each contract. This is somewhat annoying because if the market cannot value our projects then it is likely that the SP will remain stagnant/under pressure for a little bit longer than I would like.
An Australian and International road show is however going to take place in early 2012 and this could offset the markets inability to value our operations appropriately. A number of broking houses are also interested in publishing research on the company.
MHM also provided an update on the Silica Division and Exploration Division. As usual the Silica division is going nowhere fast and is now, in my opinion, at least 12 – 24 months off. It appears as though the complex nature of the product, requirement for a large power supply agreement (for the future plant), additional feed and supply of charcoal needed for the process means that work on this project is anything but straight forward. Luckily I attributed no value to this Division of the company during my research/analysis and it is now something to place in the “bottom draw” and consider as a bonus if and when it comes off.
Finally management have made a decision to divest the exploration projects. This is very positive in my opinion as not only was it taking up time, but draining $300,000 in wages each year for the Geologists/exploration staff. I would not expect a significant amount of money for this project (if at all) and we may just retain a free carried stake in lieu of cash. Either way removing this project from our books will give management even more time to focus on what is important: Our US expansion and salt slag/black dross recycling efforts.
No comments:
Post a Comment