mhm write up in todays herald sun , page-2

Article in today's Herald Sun: (moderators delete if it can't be posted)

WHEN the share market looks ugly - which it does at the moment - a consolation for investors is good stock selection. There is little you can do about bleak offshore market leads, but if you have chosen stocks with plenty of built-in value or potential they should reassert themselves once markets calm down.

One stock that caught my eye recently is MHM Metals, one of the real darling stocks of 2010.

As usual for a stock that had an amazing run last year, from around the 20c mark in August to its record high of $1.56 in October, MHM has since been consolidating in a trading range around the dollar mark.

The key to breaking out of that range will be some more good news, and there's plenty of potential for that - as well as the less welcome alternative of a few hiccups.

The catalyst for MHM's initial rise was a transformation from being a Tasmanian-based miner to a reprocessor of the aluminium salt slag that is produced in the recycling process.

Rather than chasing around exploring for minerals, MHM now mines slag dumps. And with a new process it has developed, it can re-process the dumped waste into valuable aluminium metal, aluminium oxide, and a mixture of salt and potassium chloride.

It recently commissioned a plant near Geelong, which will be able to process more than 60,000 tonnes a year of Alcoa's salt slag. It should generate about $8.5 million in pre-tax profit.

Assuming this process works as advertised, the really big picture for MHM is in the US, which produces more than a million tonnes of aluminium salt slag a year and has numerous large landfills full of slag.

MHM chief executive Ben Mead is now based in Tennessee, and is aiming to get enough contracts with various suppliers signed to support a $20 million/ 250,000 tonne a year processing plant.

If MHM can get the Geelong plant running smoothly and realise the start of its US expansion dreams, it could be set for a second valuation uplift.

With landfill dumping of salt slag either banned or increasingly difficult in much of Europe, Australia and Asia, MHM's global technology rights could prove the old saying about one man's trash becoming another's treasure.

A speculative buy.