Some companies that are given the tag of having “great...

Some companies that are given the tag of having “great potential” can have their future possibilities dictated by events outside of their control. For example, the exploration company that hopes they will strike the high grade ore body before they run out of funds; the high-tech start up that hopes their product will not be redundant by the time they get to market or the company hoping that their high cost operations will make money from a hot commodity before the bubble bursts. In these cases, investors can look at independent data and reports as well as announcements from the company in and take the view that the critical factors seem to be running their way and hope that the SP will rise. Equally, other people can look at the same information and say that the shareholders are fooling themselves. Another group of people will promote any point of view that benefits their current trading strategy.

NMT has been a stellar performer over the past 12 months and is also investigating new projects that have “great potential”. Their 3 currently announced strategies of Lithium ore mining and primary processing, Lithium refining and Titanium with by-products mining and processing are at various stages of development but each has risks and upsides that will play out to determine the long term value of the company.

To me, one of the most appealing features of the NMT strategies is that so many of the critical success factors for each project are within the control of the Company Management.

That is not to say that there are no significant, out of control external factors in play. All companies are subject to the vagaries of the markets they supply into and there are plenty of people willing to talk about a “Lithium Bubble” at present. However, good operations will make money in a tough market and if you are the lowest or close to lowest cost producer (as the preliminary data indicates may be possible in the Lithium refining and Titanium projects), the greatest pain will be felt by your competitors.

For the Lithium mining strategy, the sound and interlinked decisions made to date in the areas of financing strategy, operational partner selection and market partner selection have delivered value to shareholders that is reflected in the current SP. The company recently announced that they will be processing and marketing a lower-grade product made from material that would have been considered waste under the original processing flowsheet. The value to NMT shareholders of this change will be determined by management negotiations on the processing fees paid to MIN and the discount offered to the customer that will ultimately split the benefits of the change between the 3 shareholders involved in the project.

For the Lithium refining project, the plant must be financed while maintaining satisfactory equity for NMT shareholders and it must be delivered on budget, operate as designed and have markets in place for the product. In order to achieve this, Management will need to look at a number of critical issues including how extensive the process development trials and pilot plant study will be, selection of equity and/or market partners, selection of engineering providers and the negotiation with government regarding tax concession and other incentives to build the plant. For the Titanium strategy there will be similar management issues relating to process development, financing, partner selection, marketing of main product and by-products, engineering and government negotiations. The choices made in each of these areas will be a major contribution to the success of the Company.

As a shareholder looking towards the long-term performance of the Company, I am encouraged by the development and execution of the business strategy that has led to the current SP by the Board and Management. The fact that the next steps in this strategy are clearly laid out and will be undertaken over a period of several years allows for considered decision-making by Management and ample opportunity for shareholders to review progress and assess performance.

A previous poster on this thread said that the Reed boys are a class act. There is no doubt that a 7–fold increase in share price in 12 months driven by a clearly articulated and well-delivered strategy supports this contention. However, the current SP is now the new base level for the future performance assessment of the next stages of the strategy.

These next stages in the business strategy have “great potential” and are subject to a few factors that are outside of Management control. Controllable issues have been very well managed to date. I look forward to seeing how the next steps unfold.