Those who have read my earlier posts on OBM know that I got out for the most part at an SP between 23 and 30 cents. The reason for this was that there was no re-rating after the production of the first gold bar and the gold bar itself was also rather small. Unfortunately my father hold still a larger position.
After that, the communication bothered me. I don't like it at all when the management doesn't provide transparent and timely information. Also an experience from the last few years: The quality of management is measured, among other things, by the communication with the shareholders. If this does not convince me, I get out. This prevented me from re-entering at lower prices. I briefly thought about it at an SP of just under 5 cents, but then gave it up. I am glad I did.
I still hold a small position, which is why I am no longer so active here, because it is practically irrelevant whether I lose the rest or not. I was able to sell at a profit. So I am relaxed.
Well, I've been in similar situations a few times in the last 15 or 16 years and you have to look at things very soberly and draw your conclusions.
The way I see it, OBM is not making any money or very little money. At least they seem to be break-even. So the whole machine is serving as a flow heater. What they earn they need to cover the costs. Okay for the employees and the management - for the shareholders there are no advantages except that the company doesn't go bankrupt - at least not so quickly. So from my point of view we still have a little time.
They are looking for a new CEO. Someone who can turn the wheel. That's a good plan. The problem is that you don't find people like that so easily and probably the good people already have a good job - moving to a company that is probably in a lot of trouble is not very attractive. But it might be possible to find someone with a lot of motivation and passion without a big track record who sees these problems and the solution to them as a challenge.
Interesting from my point of view: We have a market capitalisation of 52.2m (...almost "explorer level"). 28.2m cash and around 4m in gold. Simplified, this means that one buys OBM for about 20m or the other way round: about 60% of the SP is cash and gold. The production plant and the tenements are thus valued at around 20m.
Now, cash is a volatile thing, is burnt for drilling and exploration and if the gold price falls, the situation does not improve.
The plant on the other hand certainly has some value. Replacement value I would estimate at 80-120m (new?). As it stands now, certainly less - if you can't run it profitably, it's in the wrong place anyway. Still, it's probably worth the 20m. Probably more.
Where is the upside here? I think they need to drill and find more resources that contain enough gold to produce profitably. After all, the plant is running - you just have to feed it. So the turnaround is not impossible but you have to "find something". Which is easier said than done.
Lithium - I don't really know. It doesn't convince me. Even if you could find something, you can't throw it into the existing plant and process it. Producing lithium profitably is even harder than gold. May bring in some fantasy in the short term - but don't think it's a game changer. That's why management is not focusing on lithium exploration, but sticking to gold - last chance, so to speak.
Conclusion: For someone who is not pre-loaded or for someone who is very courageous, it could be worthwhile to dip a toe in the deep end right now. Possibly even 2 toes. For someone who does not want to take any or only very calculated risks, it is probably worth waiting and seeing what happens in the next few months. Better to pay 5 or 6 cents and miss the first run than to get in too early.
Personally, I think - based on past experience - that the downside risk is limited to an SP around 2.5 cents plus/minus 10/20%. That is my worst-case scenario.If the market capitulates, we could see such an SP - but I don't think it has come to that. It could happen if there is another hick-up in production or if the gold price falls by 10% and the last optimists leave the boat.
Good luck to all shareholders here. These are not recommendations but just my thoughts on OBM. As always: DYOR
OBM Price at posting:
3.8¢ Sentiment: Hold Disclosure: Held
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