RE: That was fast!cupricity,
That was fast, I had doubts that it would be done in that short a time. I assume the holders of the new issue qualify as voters in the upcoming Directors election, as the record date was February 1. If, as most suspect, one of the purposes for the issue was to thwart the ISM plans, the timing was exquisite, and UMJ management and advisors seemed to know what they were doing. Things have been quiet up to now, except for ISM's whining Press Release and apparently their advice that this was being taken to the Courts. If every company poured money and options into legal fees, consulting fees, promotion, etc. that ISM does, we'd have a lot more lawyers, promoters, and others hangers on - and a hell of a lot less commodity production. I expect things will heat up from now to March 3, as both sides have the indicated legal action to deal with - plus I expect they will soon announce their slates for the election, and do some campaigning on who has the best vision for the company.
On the financial side, I've had a quick look at the financials, as I wanted to get a feeling on the new placement and the dilution issue. Dilution always gets people up in arms, but I don't think every share issue should be judged as being unnecessary dilution. For instance a share issue that is based on raising funds for the purpose of growing the company, is certainly more acceptable than one that's required because the company is floundering, and needs cash to cover its past operational misfortunes. My take on the situation is UMJ's need for cash is not due to previous mismanagement or waste.
I don't know all the past history of UMJ, but a quick look at the financials indicates, in my opinion, that the past achievements are not that bad. At Oct 31, 2010 - I might summarize the situation as this. The company was given equity capital of about $24.5 million, it put $18 million into exploration properties, and $6.5 million to expenses. The company is at the point, that it is beginning to show cash flow that seems to indicate a reasonable return on the $18 million property. The company is weak in working capital, and it would take some catch up time to use operating cash flow to put it in a more solid working capital position. The cash from the current placement puts the company in a more solid position immediately, and allows a portion of the placement and future cash flows to be used for exploration growth - earlier than would otherwise be the case. If the company is as successful in expending its cash resources as it appears to have been in the past - maybe the "dilution" will be positive - it might be that existing shareholders will just have a smaller percentage of a bigger company. It may advance the date the company is able to make the big step in financing/merger/sale to realize on the mineral deposits over a short period - rather than 40+ years. That is the key to significant share price growth.
Just to put things in perspective, lets compare my opinion of the achievements of UMJ to that of the company that presumes it is qualified to judge the management of UMJ.
UMJ
The company was given equity capital of about $24.5 million, it put $18 million into exploration properties, and $6.5 million to expenses. The company is at the point, that it is beginning to show cash flow that seems to indicate a reasonable return on the $18 million properties.
ISM
The company was given equity capital of about $75 million, it put $26.5 million into exploration properties, and $30 million to expenses, and has about $18.5 left that is being used to cover continuing losses, and expend in mainly non-mining strategies . The company at this point is experiencing negative cash flows from an operation with only minor investment income, there has been no indication, as yet, that the $26.5 million in properties will yield economically viable operations.
In my opinion, UMJ is in a position to grow slowly but steadily with the present capital base - or grow substantially if capitalized to produce its resources at a faster rate. My opinion of ISM is that it is in danger of continuing its decline into oblivion - unless it can hit a home run. In my opinion it has always been a team of pitchers - when it comes to getting a hit, they strike out.
The events of this month will be important in deciding the future of UMJ - I hope they go the right way.