Mercator Minerals Ltd MLKKF

RE: RE: Something has to be up!!

[LongonZinc]

Not sure how you figure they are a bargain at 26-cents or basically half of the value of a share.  The price is 26 cents, to exercise the warrants you will have to pay another $1.00.  This brings your cost to 1.26 per share.  The only way these become better than the shares at this price is if the stock goes significantly above $2 in the very near term.  The warrants expire in 7 months.  If the sp quickly goes to $2 you will make no more money on the warrants than common shares.  If the stock slowly climbs to a dollar over the next 7 months you will lose 100% of your money on the warrants but will nearly double on the shares.

 

IMO the next report by ML will be make it or break it.  I have spent a fair amount of time going back through the numbers and costs and updating my model.  If they can meet their average Q2-4 production guidance numbers in Q2 and meet the estimated cash costs for production, then watch out.  Look at the Q4 mining and operating costs, compare to the stated coss in the 2012 Q1 report.  If they can keep those costs below $39 million and produce the contained metals, then they will finally have generated some significant cash flow (based on the guidance this could be in the $15 to $17 million dollar range before Admin and exploration costs).  They need to be doing everything they can conserve cash on hand.  Would be nice to see them cut those admin costs by 30-50%.

This is important because their cash reserves are low and they are required to maintain a certain minimum cash balance as part of the debt agreement.  If they can not generate cash and continue to burn reserves they will need to obtain capital.  This would most likely come through a private placement IMO.