research & resulting questions

Hi everyone,

I have been researching MHM for the past couple of weeks and have finally finished reading each of their announcements for the last couple of years. As a result I do have some comments and questions which I wish to discuss with other followers of MHM. To make it easier to read I will break down each of my comments and questions into specific business units/operations.

Australian Salt Slag Processing:

Comments

- The agreement with Alcoa provides 33-39,000 tonnes of material over the 3 year contract period. (Say 13,000 tonnes per annum)
- The Agreement with Sims provides for 6,000 tonnes of salt slag and 6,000 tonnes of Aluminium Dross. (12,000 tonnes combined).
- There is then 160,000 tonnes in landfill (Alcoa).

Questions:

1. If the plant can process 60,000 tonnes per annum and Alcoa and Sims provide 25,000 tonnes (13,000 + 12,000) then the remaining 35,000 tonnes of capacity will be made up by processing landfill. That would allow the plant to run at full capacity of 60,000 tpa for 4.5 years (160,000 t of landfill divide 35,000 tpa of spare capacity). What happens after this? unless there is a significant increase in the secondary aluminium processing then the plant may only be able to operate at 50%?
2. The agreement with Sims was originally for 12 months and Alcoa for 3 years, if there is the potential for these contracts not to be renewed (however unlikely it is) then shouldnt the company be valued (or at least their aust operations) using DCF rather than P/E ratio.

Australian Salt Slag - Plant Upgrade

Comments: I can see the potential of MHM's technology and expansion programs, what has been disappointing however is their failure to meet a number of key targets. They originally expected the plant to be completed by Q2 2010/beginning of Q3 2010. This was then extended to Sep 2010, then Oct 2010. MHM then found out they needed to do a cultural study to build the evaporation ponds (the final piece of the puzzle). Construction was to commence on 11 March 2011 and take 4 weeks. Other delays have been evident with the constant reference to take off agreements with their Silica project (nothings happened for 2 yrs).

Questions:

1. I dont really have a question regarding this, however the constant revision of deadlines is a concern of mine. Any comments?

Silica Project:

Comments: In the Quarterly Activities Report (date: 22 April 2009) MHM stated that they were speaking with multiple partners about a takeoff agreement. In later announcements MHM said they would not undertake further drilling to confirm the extent of the resource until they had an agreement in place. As of their latest Quarterly Activities and Cashflow report MHM said that drill rigs have been mobilised with drilling expected to commence in May 2011. They continue to negotiate offtake agreements.

Questions:

1. Is it not a concern that the company has not been able to say anything more than "we continue to negotiate offtake agreements" for the past 2 years?
2. It appears as though the companies it was negotiating with said you need to confirm the resource first and as a result MHM has finally committed to a drilling program. Is this how others see the situation as well?

Miyabi Gold Project:

Comments: MHM signed the Letter of Intent on 14 May 2010. Reviewing this announcement it seems like a very weird move. At the time MHM was going full steam ahead with the plant upgrade and all their other activities were Australian based. They then decide to consider this JV with the potential for 520,000 oz of gold at 1.3g/t, which doesnt exactly scream awesome prospects. As aresult they wasted a year of energy and $41,000.

*They also have not updated their website as they still mention this project.

Questions:

1. No questions really but hopefully MHM stick to their core business, don't chase other "dreams". I also hope they spin off their resource businesses once they get this Silica takeoff agreement sorts.

Moving Forward:

The company is now actively progressing with its international expansion plans. As a result we have a number of new deadlines to MHM to meet, these include:

1. Conclude feasibility study with SSC by 30 June 2011.
2. US explanson to commence Mid 2011 with commencement of plant design and preconstruction engineering.
3. Selection of first salt slag plant - imminent
4. Commencement of US production by Mid 2012


Questions:

1. Are there any other deadlines I have missed or important milestones.
2. Does anyone know how much the reclaimed minerals (salt, Aluminium Oxide) could sell for (cost/tonne)?

Thanks for reading