The MST SagaA year ago shareholders of this company were about...

The MST Saga

A year ago shareholders of this company were about to sign off on the share purchase plan raising $2,613,400 at .02288/share to "save" the company whilst it found additional sources of finance. The sp was around .03 with some ups and downs of around 10% or so. Subsequently a deal was announced to raise $35m from Assure Fast Holdings Limited BVI (AFHL). The company was "saved", but at what cost? Issue of shares at $0.0175/share plus options for $0.06. Outcries abounded from some about giving the company away, but in general the reaction was thankfulness and the sp more than doubled for a few hours before dropping back to around .03 within a week. Some made quite a few bucks at this time, particularly those new holders who had bought on the issue at .022 & sold quickly on the big rise.

Then the saga began.......... and we know what happened there. The board was led by the nose for months and taken for a wild ride with continually delayed funding promises. Surprisingly, the sp held up for a while around .03 for a month. Then the gyrations began as it became increasingly obvious no money was going to be forthcoming - but the board still persevered. Many criticisms were made together with accusations of conspiracies and schemes being contrived to destroy the company for the benefit of international (US?) arms manufacturers or the US military.

MST became the laughing stock of the ASX - except of course for the poor holders who had been faithful true believers for many years and who for the most part were too sick to even smile at the laughable carry on. For weeks, demise of the company was predicted nearly every day. Finally it was admitted that no money would be coming.

But undaunted they carried on and found dribs and drabs of money here and there to keep going. Eventually the dribs turned into the odd mug and the drabs into a small bucket or two when a new deal was struck with a new financier (GEM), enough to keep the place afloat for a year or two but at a significant cost in dilution to current holders and considerable destruction of the sp.

Then came more issues to private investors. The latest deals in this period were in effect "suicide bonds" ie share issues made under conditions pretty well guaranteed to lower the market price to pretty well the minimum possible price (given that the company is still considered to have some worthwhile intellectual property). Whilst not privy to the decisions of the board we can only surmise that these were indeed issues of last resort to keep the company running and prevent it falling into administration because the deal with the financier GEM (as it turned out) was not working out well. The sp dropped to a low of $.006/.007 and the market cap of the company to around $8mil after expenditure of almost $100mil over the years. The long suffering holders, for the most part, hung on as there was little point in selling out at such low prices, but some gave up and caved in at the low point thus feeding the sharks waiting to snap up the shares in their waiting entrapment.

Miraculously, some good technical news coincided with the end of the period for retrospective calculation of the sp for the latest round of issues and then the sp lifted a bit.

Then a new deal! A new source of finance with a new company under better terms was found. After some hesitation and profit taking the sp has now started to lift and seems to be in a position to hold up, though with some uncertainty. The sp is now more than 50% above it's low point and perhaps some confidence is starting to return that the worst is now over.

Where to now? There's a way to go yet but if (as hoped for) there may be some good technical and sales news not too far away maybe we can see more interest in real buying soon. What's MST potentially worth? In the long run, if the full potential of the technology as envisaged is achieved in both arms and ammunition sales, it could eventually end up a billion dollar+ company, at least that is an assumption that the true believers would make.

It is not unlikely that with further finance required plus paying out or issuing shares to noteholders another couple of billion shares could be issued before it really becomes a paying proposition.

Let's say that the company can end up with a cap val of $1bil and we end up with 3bil shares issued - value per share would be around $0.30

If the company can end up with a cap val of $500mil, it would be $0.15/share, if $100mil $0.03/share ... etc.

You can make your own guess as to what a company like this might be worth given it's unique and apparently desirable technology. These figures are of course all rubbery guesswork - but isn't that what playing this game with this kind of share is all about?

So, now that the company really does seem to be on track to surviving, is it a worth while investment at the current share price? Is there a reasonably positive path for growth of the share price and even the prospect of some return for the old shareholders who have lost so much?

Does it seem like the worst really is over? Hopefully the board will no longer be finding it necessary to pull the rug out from under current shareholders. For those long term holders who may still have some confidence in the company, is now the time to average down? For prospective new shareholders, is it time to jump in and see how the ride is going to go?

Latest indications on the sp movements would indicate that perhaps it is (imo).