I know I'm preaching to the converted, but thought I'd put my...

I know I'm preaching to the converted, but thought I'd put my thoughts down anyway.

This valuation only considers the Salt Slag processing. It values MHM on a PE basis as it is a perpetual revenue stream, not like a mining company that has a limited life.

I have also ignored capex for plants as they appear to be approx 33% of annual earnings which won't have a huge impact on valuation.

It's important to note that all expansion etc. can be funded with existing revenue so no further shareholder dilution should be required.

Earnings on processing 33ktpa is $8.6m per annum = $260/t average

Fully Diluted Shares: 115m

Earnings as of October 2010: $8.6m
Market Cap w/ PE10: $86m = $0.75 / share
Market Cap w/ PE15: $86m = $1.125 / share
Market Cap w/ PE20: $86m = $1.50 / share (more realistic IMO to allow for potential growth upside)

Assume a deal to process 200ktpa for Alcoa is done, that will produce similar earnings of $260/t = $52m pa

Earnings w/200ktpa = $8.6m+52m = $60.6m
Market Cap w/ PE10: $606m = $5.26 / share
Market Cap w/ PE15: $909m = $7.89 / share
Market Cap w/ PE20: $1212 = $10.53 / share

If a deal is done with Alcoa US that will be a huge tick of approval for MHM and their technology and will open up the rest of the world markets.

FWIW: If Alcoa captured the whole US market of 1mtpa that would be equivalent to:
1mtpa * 260/t = $260m / annnum = $2.6b @ PE 10 = $22.60

On the above basis, if the company does announce a 200ktpa deal with Alcoa US, it is a bargain buy even under $2. (Assuming the earnings assumptions above are similar to the current deals with Alcoa and Sims)

PS: Oh and there's further upside if there's a deal done to process existing Alcoa US stockpiles..... wouldn't that be a nice cherry on top :)

PPS: I'm fairly confident the figures above are correct, but please correct me if you think otherwise.