Mercator Minerals Ltd MLKKF

New Bulls have arrived

[jims101]

No reason for the share price to be this low? Go back to the late months of Spring and Summer and you'll read the same comments when visions of share price in the teens were the vogue. At that time the main concern was whether the company would make a dilutive cash intensive acquisition, which it tried once and thank goodness failed to accomplish. The key thing we long at that time failed to realize or fully grasp was that MOLY and Copper prices were about to dive...and I mean really dive, in MOLY's case - about 75% in a week. This for a metal that posters said was indispensable, certain to hold up and RISE. China demand, oil transmission line needs, MOLY was if not King, then Queen for the Future.....Oh dear, sorry missed that one...A little credit crisis got in the way.

Then, as the stock price plunged relentlessly through every support and  through a dollar the longs realized that management hadn't hedged any copper, and should have, if they had been smart, espeically in view of Phase 2 expansion plans that needed to still be financed.  AND then  worst of all those of us who hadn't looked close enough, being enraptured with the bullish future for MOLY, Copper and Mercators wonderful deposit and low cost structure found out that inbeded in the company's  debt covenants was a provision that there would be recourse if cash levels for the company dropped below a certain level. OH, now we understood why the price of the shares could be so low...AND now we learn that Sprott is going to close its MOLY Fund....Who do you suppose is selling to meet redemptions...? 

So yes, its a great buy, probably for the long run (assuming it survives in its current independant  form) but copper better stay around $1.50 at least and Moly around $10 so that the company can maintain sufficent cash levels to meet debt covenant requirements and finance its phase two expansion. Otherwise  - TOAST...