Ralph, good (as always) to hear from you. I've been reading Stockhouse also. The guy who sold out at a loss sounded pretty sad.
I wondered if the post you were discussing was a set up; eg somebody planted it just so you or I would refute it.
Theoretically, there is plenty of feedstock, plus plenty of ore to be custom tolled. Theoretically the retrofit to other metals will work. Theoretically, Werner and Maskwa will be developed.
Theoretically, there will be plenty of money to make these plans reality. I think it is fair to say that CMR is locked out of issuing more share capital. I mean, they could issue 30 million shares at 30c, drive the existing shares to .3 to .40 and raise 9 million, but in addition to screwing the little guys (who cares), they would seriously dilute the position of the big 3. So that leaves bonds and bank debt. I don't think they are big enough to interest the bond houses, and I think it might be hard to move bonds related to a metals play.
The Stockhouse commentator stated that there was not a long enough feedstock train to satisfy a bank. I think from his comment that he is neither a banker, nor has dealt much with them. Banks want (in order)
1) upfront fees
2) to lend you way less than the appraised value of a property (60% better than 70%). If your asset is worth less than the loan and things get tough, just mail them the keys rather than a check.
3) A reasonable guarantee that cash flow will support loan repayments 2-3 times over
Lets guestimate that the banks value the refinery at 10 mil, they should be willing to lend 6 mil that CMR says they need for rework. Interest would be only 600k CDN a year, so 2 mil projected cash flow easily satisfies bank.
Interestingly the stock hovers at .70-.75. I think there are 3 options.
1) they pull off the refinery, have cash flow of 12 mil a year by 1/2001, and the stock goes to $2+
2) they fail miserably, the stock goes to 0 and we all get on with our lives, poorer but wiser. (and for those of you down in the dumps over buying this stock [mgt gets upset when I use superlatives in describing their securities] look at your beautiful wives, children, relatively clean air and water and [variably] healthy bodies and give thanks every day that your only major problem is that you own this stock in this market- I do)
3) they get funding, they retrofit the plant. Everything happens over budget and late. Initial runs plagued with problems. Problems eventually get resolved, but with higher operating costs than expected. Stock remains in current range.
On the plus side, and I mean this sincerely, mgt. is tough, bright and (I am told) hard-working).
If they pull it off they are heroes (and rich). If they don't, they're bums.
Circumstances will not allow 9 more years of talk and no production. It doesn't cost 0 to own a $10 mil plant, you at a minimum have maintenance, taxes, insurance, heat, lights.
They promised production in Q4 of 00 and retrofit starting in July. It's 6/4/00. If retrofit starts anytime soon, you should see the stock move up. If things are delayed, and production (if any) gets shifted into Q2 01, I think the stock will plummet. |
