can mak be a multibagger

Why MAK?

MAK is one of a handful of ASX stocks actually in the process of developing a mine for production in 12 months. Multi bagger stocks need the promise of production in the future otherwise they are just dusters. With the way many microstocks are hammered at the moment, the multibaggers are few and far between. EXT is doing well at the moment and has the promise of a uranium mine in the future.

MAK is looking to build a mine for rock phosphate with production in 12 months.

Companies need cash. Cash is is oxygen for companies. No cash no company. Opportunities for raising money through selling stocks are poor if the market is this bad, without cash you can't explore. If you can't explore you can't get the share price up. If the share price isn't up it is pretty difficult to raise cash. MAK has $13mil as of Jan.


Multibaggers need a target share price. This may be based on the resource drilled and proven or upon the amount of cash flow after expenses (EBITDA). MAK aims to earn $100 mil in 2010, from the latest presentation given yesterday. Taking a Price to earnings multiplying factor of 6 (conservative) give a market cap of 600mil or a share price of approximately $4 (on roughly 125 mil shares give or take). Shipping is to start in 2nd quarter 2010.

Which boxes still remain to be ticked before ground break?

MAK needs government approval, there are 4 approval forms that are required. The NT govt is very pro mining. Last year approval for use of hand held measuring device for estimating mineral content was achieved in days in the NT, it took 3 months in Tasmania. MAK is dealing directly with the minister for Mines which is speeding up the process.

Traditional Owners have approved each phase of the mining process and agreed to a process for agreement for mining. There are meetings set up next week and in May to gain final approval for mining at Wonarah. The CLC representing the TO's have been amenable to mining agreements in the past compared with other groups such as the Martu in WA which placed endless delays on RWD in the last 2 years.

Cash-
Approximately 70 million is required to start the mine and 30 mil to keep it going for 3 months prior to first shipment. MAK intends to raise cash through forward sales of Rock Phosphate with agreements that place a discounted price in the future for 1-2 years. 1million tonnes of Rock Phosphate is worth $350-$400 AUD. This upfront payment is approximately 3 months worth of sales for the first year.

So the upside is bright for MAK, how do you time your entry??? See the next thread for details