brian blooms latest review, page-8

re: brian blooms latest review~mrs smith Well, the issue has closed under subscribed! Only 44% of shares sold and the remainder will not be placed on the market! A big worrying doubt I have is that the directors did not take up their entitlements. One of the agenda items at the agm on 11/7 was that directors were allowed to subscribe for a certain amount of shares in the new issue. Between them they were entitled to 1.5M shares. only Bob McNeil took shares and he only subscribed for 40% of his entitlement. Obviously these guys have one of three problems;
1. No confidence in the direction of the company and the silver price;
2. Cannot bring themselves to dig into their own pockets to enable the company to get funding; or
3. Personal reasons why they could not get the money to take up their entitlements.

Now if its either of 1 and 2 above, this company has no future. I hope for the companies sake that their reasons are because of point 3.

Hopefully with the issue out of the way the shares may begin to head north like they were before the issue was announced. I know that there is still the unknown factor of where will they get the additional $2m they need to go into production. if the shares rise, the Sep 05 oppies come into play. Here's hoping on a rampaging silver price over the next 8 weeks.

Now to respond to Mrs smith;

The only people that should even contemplating investing in MMN is a person that has a bullish outlook on the price of silver. If you have any niggling doubts about where the silver price will be, my advice is to find another investment! I am a super bull on the silver price for many reasons. I have held MMN for more than 5 years and have only recently sold out of Bolnisi to take up the latest MMN entitlement. I was more bullish on the silver price than Bob mcNeil at the Perth presentation in June.

Now in regards to Brian Blooms analysis I offer the following remarks;

1. He used AUD$ costs for production but stated them in US$'s. AUD $5.80 is equal to US$4.40 per ounce so if we were to reduce the costs to US$4.40 and leave the selling price the same we come up with a totally different scenario.

2. He quoted 282M shares for MMN when in fact shares on issue as of today is 458M (approx).

3. He stated that from years 2 to 9 that MMN will produce 4M ounces per year. MMN have stated that their plant capacity is 3.5M ounces.

Now I have done some calculations and come up with the following after assuming;

1. 1.5M oz produced in year 1
2. 3.5M oz produced in years 2 to 9.
3. Silver price for year 1 will be AUD$11 (US$8)
4. Silver price for years 2 to 9 will be AUD$14 (US$10)
5. US/AUD exchange rate 70 cents - I am mega bearish on the AUD.
6. Shares on issue is 458M.
7. MMN only has 16M oz reserves so I assume that the remaining 17M oz will be converted to reserves with the higher silver price.

My NPV for MMN after taking all of the above into consideration is 19 cents. Yes we can dilute further by taking the options into consideration but realistically the exercising of the options around 19 cents will do more good than harm. Now if MMN bolted to 40 cents in the next 8 weeks, the options would be extremely dilutionary but a big bonus for their holders.

Cheers,

Phillw