The big argument against investing in CHM is risk-reward.
They have nothing but this claim to sustain the SP.
Just to support the current SP they need $100m out of this after meeting all costs. That is about 25% of the value of Jack hills plus all the development that MMX have put on it.
Assuming a 25% chance of any significant victory the average value of the award needs to be about $400m just to justify the current SP.
These are the assumptions I used when deciding not to buy CHM as a hedge.
Probabilities in my mind from info available:
No payout - 50%
small payout - 25% - up to $2m
mid-size payout - 15% - up to $20m
big payout - 10% - maybe a 25% stake in Jack hills or $50m.
The risk weighted value based on my assumptions (which may be wildly wrong) is only about 8-10 million, or about 1c per CHM share.
I think anyone thinking of holding onto or buying CHM shares should work out their own numbers - but you have to assume numbers 10 times more favourable than mine to even justify the current SP - and for something with such high risk you would a return averaging 100% profit - so you have to have an outcome 20 times as favourable as my predictions to justify a new investment - given you money will be tied up for about a year or more of legal wrangling. Do it both for the fully diluted case (1.6 billion shares) and undiluted case (about a billion shares) - bearing in mind that if the value of winnings is more than about $200m full dilution is likely to occur - limiting the upside case.
Those willing to trade this good luck to you - just be prepared to lose all if they go into a TH before announcing dropping the case.
IMO it is very hard to justify the current CHM SP given the very high risk of a 100% loss of capital (insolvency if the lose and have costs awarded against them), and the limited upside multiplier due to the massive number of shares this is shared between.
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Last
1.6¢ |
Change
-0.001(3.03%) |
Mkt cap ! $14.18M |
Open | High | Low | Value | Volume |
1.6¢ | 1.7¢ | 1.6¢ | $10.84K | 677.2K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
15 | 1997996 | 1.6¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
1.7¢ | 245189 | 2 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
15 | 1997996 | 0.016 |
10 | 1806477 | 0.015 |
4 | 728475 | 0.014 |
3 | 242223 | 0.013 |
2 | 83412 | 0.012 |
Price($) | Vol. | No. |
---|---|---|
0.017 | 87500 | 1 |
0.018 | 508453 | 2 |
0.019 | 807601 | 5 |
0.020 | 1523093 | 7 |
0.021 | 412857 | 3 |
Last trade - 16.10pm 23/08/2024 (20 minute delay) ? |
CHM (ASX) Chart |
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