I think you're right on every count except the 'hold as a solid investment' part. This stock (speaking in strictly portfolio terms) is a gamble. bellbell63 says, "You are betting on one thing and one thing only -..." and he's right. If you buy HMGLF you are betting that all the parts fit together. This company has NOTHING that is marketable. When they do, the stock will appreciate based on an algorithm developed by some genius quant who has factored all the risks, all the upside, and all the actuarial tables relevant to miners and pumpers and cell-makers and guys named Elon. Then every retirement fund and hedge manager will own a little (or big) piece of HMGLF. I'm not buying a single long-term share until then...(but I kinda like to gamble a little sometimes).
There's a lot of good info being posted here and I appreciate the insight into a startup mining operation and the new Li separation process. I love the technical stuff but never have time to read & analyze everything available (or pertinent).
Given the profound unknowns (how much Li, purity of Li, time to market, cost to market, etc) it's plain to see that PE's officers won't be paying cash for their new Model S anytime soon. I think it also means that this is not a stock to hold nor a stock to short. It looks like a 'volume' & 'velocity' stock that can make a good deal of money if you watch the trends and support/resistance lines closely ('cause they will change a good bit as the months drag on).
The professional traders will push this stock around until PE has earnings, partners, credit facilities, or something else to give it the aire of a more legitimate company. The neat trick will be playing their game (trading in and out) without getting caught.
Does Elon Musk favor vertical integration? Are SpaceX & Tesla and (that HyperLoop thingy) integrated from source of supply to manufacture? It doesn't make economic sense to buy every SKU in the supply chain, but without Li Tesla is selling the world's longest extension cords. If PE successfully markets new refining tech while sitting on substantially productive leased acreage, I can see TSLA or another Musk entity buying them out.
I call it the 'pot odds theory' that poker players use. If there is a substantial sum in the pot and it only costs a fraction of the pot to 'call the bet' then you get great 'pot odds' to call.
But you can still get beat. Doesn't matter how much you lose, it's still a loss. Bankruptcy doesn't mean it isn't a good company or that they're not worth a lot of money. Sometimes it's just a business decision make by people outside the boardroom. Don't be looking at 'pot odds' on this one...
No disagreement necessary ;P
PE, if they are anything like their biotech brethren, will use any method or data point to generate further venture/speculative capital. Sure, they'd like to have a profitable company providing a necessary resource to a world-changing technology (TSLA). They would love the prestige of bringing their own new-tech to maturation while mining a rare-earth resource. But none of that is required to get more money from people who seem have plenty and no good places to put it...
Sorry for the poor communication. I would be a lot less glib if I was just a little less cynical...
I am saying that the dilution could be exponential, not just fractional.
If discovery reveals an order of magnitude more lithium available than first thought they could ask for hundreds of millions of dollars (both Canadian & US) to dig holes and establish filtering/refining plants.
As for percentages, if they dilute 100% your 35 cent shares are worth 17.5 cents. But they might dilute 1000%, making your shares nominally worthless unless the good news that accompanies the dilution compels investors to pile into the stock.
ronfab1, this is my first exploratory mine play as well. But I do have 7-8 years experience watching biotech startups plumb the depths of the capital markets to extend their trials/enrollment/opex/ramp. My impression is that the dilution will be 100% of what the C-Suite can hold in both fists after making their sales pitch regarding the 'value' of the 'proven' reserves that can be 'realized.' In the case of HMGLF I would guess the TSLA agreement will be used as further proof that any capital investment is worthwhile even if new-tech testing doesn't provide any recognized measure of long-term viability.
I could be wrong...but I doubt it. ;)
There seems to be support here and in Canada. Not much volume but not much action. Maybe a mining stock with potential is just being traded about at a low PPS?
Dr. Andy Robinson's place on the board and name on the NI 43-101 is crucial to see HMGLF as more than a long term gamble.
"The instrument requires that a "qualified person" be attributed to the information. This Qualified Person, in the spirit of the National Instrument, is required to be a reputable professional who is knowledgeable of the mineral property concerned, and who has sufficient experience and qualifications to make the statements which are made within the report. Often the Qualified Person need not be the author of the report, but in attributing the report as being compliant with the National Instrument, they are vouching for it. This is a matter of professional integrity and carries legal risk, as misleading statements can result in legal sanctions in Canadian and other jurisdictions."
The reference goes on to state that a 'qualified person' must have 5 years experience "relevant to the deposit type or style of mineralization"
So...credentials aren't the problem..