Ann: Clariification of CEO Change & Company Updat, page-57

re: Ann: Clariification of CEO Change & Compa... I think everyone here should be listening carefully to Browser and Firsova, which is a massive volte-face from me. I too was blindly optimistic about MHM's prospects and through some dubious updates from the FR days, dodgy broker valuations and my own/HC's kool-aid thought MHM would soar. It's ridiculous how many thumbs the critical posts get and how few the better posts from Browser and Firsova get.

In hindsight there is no way the prior valuations were ever justified - those valuations were based on profitability that never transpired and statements about an operation that wasn't finished/working. We went from $8 million profit, to $8 million EBITDA, to a process that had never worked but that we had already been paid for (hence the part processed junk we're sitting on) to now, where profitability is yet to be divulged and which will be far less than previously thought. That the process runs with positive EBITDA is encouraging but this is on the back of increased tolling fees from Alcoa, this means that the cost of processing waste is higher than previously anticipated which may mean that reprocessing landfill isn't worthwhile, removing a whole load of value from the current operation and making it a harder sell as an option elsewhere.

My relatively uneducated take on things currently, which is opinion only. Is that the company is inching towards sustainability in the Australian market, but still hasn't proven up the technology enough to export it. Firsova's warnings about constant delays and troubles is important here and the market is fed up of failure to deliver. Another poster has repeatedly suggested a position of underpromise and overdeliver would be preferable to the current succession of delays and disappointments. The one silver lining may be that we're running at breakeven or better (hopefully the annual report will clarify this). If the filter and upgrades do make the process more profitable it will give more time to prove things up, sell the AL80 and generate a business case for a US plant. But even if we get that far the money for a US plant has to come from somewhere.

If we can arrest the cash burn I don't see why the company would bother with a CR at these levels, micro-cap valuation has to factor in the cost of someone trying to do something similar from scratch, we also have a toehold in the US market. Ideally the company needs to start generating a modest profit before year end to show they have the luxury of time to get things right and optimise profitability whilst planning for a more profitable bespoke solution elsewhere, rather than the crumbling retrofitted model they're patching together now. A CR to cover cashburn will likely spell the end of the company, a CR that value adds or expands the company would be a worthwhile or even welcome development.

I struggle for a good analogy, but if this were biotech, we might be trying to get through phase II trials to prove the thing works before seeking capital to roll out to a bigger much more profitable market, the difference being that we can potentially be self-sufficient in the development stage and not be limited by a seven year patent once the roll-out happens. The wild card would be US banning landfill, but that seems unlikely whilst their economy is in the doldrums.

Fingers crossed...