I have had a few people mention this stock to me since it has re-listed, so i thought i'd share my views after taking a look.
For the risk involved in this project, i can't see the upside to make an investment. For what is essentially a standing start industrial business in an extremely risky country i'd be expecting to make 5-10x return to risk the capital. The capital structure is horrendous and fully diluted is around 4 billion shares on issue. From 1c to 5c to reach that minimum 5x return, it would be valued somewhere around $200 million. Could this be achieved from their current project, maybe? However, i'll go into more detail on this after addressing a few other points that make me skeptical about the management/broker forecasts.
The management has not delivered on anything to date and by the looks of what happened with the previous funding deal, have cost the shareholders a lot of money by not undertaking proper due diligence. Frankly, announcing to the market that you have secured the funding in a 'binding' arrangement and then it falling over is a major red flag. Then this new capital raising there has also been an investor pull out, but he still took stock at the discounted first raising? Not sure if this was management or the broker, however extremely poor none the less and a big red flag.
The broker has also issued themselves with 80m options for free (who voted this through after their previous track record on the funding?) which is another major red flag as an investor.
These points above make me discount any of the 'forecasts' around the project economics and revenue potential of the business. As a potential investor, hearing their free cash flow figures knowing they have millions of free options and that management has yet to deliver on anything promised, it would be far more prudent to wait and see if they can deliver as all signs point the other direction.
I'm of the opinion they are drastically undercapitalised and will require more funding (more dilution to existing holders) to deliver on the project. When/if they do actually start turning a profit i would reassess the project then. Although, at that stage, i doubt it would fit my investment profile and the capital structure would likely have blown out further which those making an investment now will need to consider in their project valuations.
I feel sorry for those investors who bought in on the previous funding deal (which sounded far too good to be true and obviously it was). I'm surprised management still have a job and the broker can even raise capital for this business after what happened.
If I was a shareholder i'd be counting myself lucky that it is even back trading! I've seen companies that by way of comparison would have been in a far better position than GMC, never return to trade before getting delisted. At least you can recoup some losses as opposed to a 100% write off! If people are still willing to buy the shares above the last placement price (about 0.8/0.9) then that's, even more, money in your pocket! But maybe i'll be wrong?
I guess hoping that management can now somehow deliver and pull a rabbit out of the hat is understandable when looking at big losses, but thinking about it objectively might save you far more heartache? Like a bad ex-girlfriend, cut the loss, learn your lesson and run!
Not for me this one and the above points prohibited me from looking into the project details in much detail. I prefer reading fact, not fiction!
Hopefully, this information helps. GLTAH, you need it!
Expand
