Mercator Minerals Ltd MLKKF

RE: Mercator's delay in phase 1 and 2

[jims101]

It appears to me that ML's planned expansion has slipped a quarter since their make up of their last presentation. See page #5 which talks about commencement in Mid 2008 vs. the most recent release which speaks of Ocotober 2008.

https://www.mercatorminerals.com/docs/ML_InvestorPresentation.pdf

this may have something to do with the recent weakness though one would think it is more general resource market related. They expect EBITA of around $362 million in the first year of full prodution (based on $3 copper and 25 Moly) which ought to be in full swing about this time next year. That would be about $4.25 per share, hence a $17 per share price based on a four multiple. One can apply their own multiple to EBITA, but four seems about right to me based on other in full production base metal miners' stats. That full $4.25 is a full two years away from being realized and another two months after that from being fully reported...we're talking about late 2010 for that $4.25 number to actually appear on earnings statements. Of course the market should see progress towards those numbers well in advance; maybe 15 months from now when quarterties are reported that show the initial first full quarter benefits of phase 2 production on the income statement.

the bad news is that management will get it in their heads that they ought to spend that future increasing cash flow, actually before it is in the bank, on a less prospective property and make some bid that will suck up all that free cash flow into expansive capital expenditures...We've been around that issue before. The better news is that others will see expansion phase 1 complete and the associated increases of cash flow coming from phase 2 and make a move on ML itself in about a year or slightly less, reflective of the $4.25 future annual cash flow before it is actually realized.

My projection is that you'll see something near $17 as a share price if there is a take over offer within the next twelve months and nothing more if there isn't.

ML's current property is such a gem that buying anything esle but its own shares for the sake of glorious "expansion" and management's benefit is dilutive.

Management will get my vote to turn down overtures from prospective buyers at any price short of $35, IF they commit to aggressively buying back Mercator shares with free cash flow, which in my estimation will have the effect of far more quickly elevating the share price somthing near $35 and beyond than going after a new capital intensive project.

I make these comments again so as to enlighten those new comers to a prefer means of boosting shareholder value and of course in the hopes that some of the old pros who have suffered through multiple 40% and 50% falls in this company's share prices will see the light. I have no quams with sharing these thoughts with the company and have forwarded this post to them accordingly. Minority views deserve to be heard!!!

jims101