If the financial due diligence turns up with a favourable result and the JV is sealed, then the SP would have to take into consideration that any financial due diligence would have to had taken into account potential future earnings of any oil that may be drilled from the Monitor tenements. That said, a thumbs up for the due diligence would mean that there is potential for $$$ to be made in the drilling of oil on those tenements, and that $$$ is likely to be made, on the balance of probabilities.
The upward movement in SP, if the JV was to be signed, would depend on the potential $$$ to be made from the tenements, and hopefully the announcement accompanying the signing of the JV would give some clue as to the estimated potential future earnings of MHL. Then it is a matter of taking 15% of that estimate (MHL's portion), discounting for risk, to come to an appropriate re-rated SP.
Cheers, achan
MHL Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
