I have been thinking quite a lot why the sudden change in news output from MUS. I have been a holder for nearly a year and for the previous 10 months we got frequent updates on what has been happening and progress. Since the CR news has fallen to a minimum. Why?
My first theory was that with the success of the CR and imminent revenue coming from the ruby mining that CJ just didn't care about what happens to the SP. He and CVW are not selling anytime soon so they don't need to worry about what happens to the SP in the short term. While a neat theory, there was something not quite right about it. The SP has been languishing much more than benign neglect would suggest.
Reading through the proxy form it occurred to me the real reason - management of MUS want the SP to go down. It quite rare for management of an ASX company to want the SP of their company to go down, but the situation of MUS is very unusual. Let's go through the important facts and assumptions.
Assumption 1. CJ & CVW know the true value of the new lease and it is very, very high.
Assumption 2. CJ & CVW want to own as much of MUS as they can. Due to the CRs they have been diluted down to 5%.
Assumption 3. CJ & CVW don't have much cash. CJ has said so publically.
Assumption 4. The lease could not be left until later since the locals are mining it like crazy. It had to be acquired now.
Fact 1. Regius had to offer the lease to MUS first.
Fact 2. The conflict of interest required an independent valuation of the lease.
Fact 3. The absence of a JORC means that the value of the lease was always going to come in low despite this not being the real value of the lease.
Fact 4. The independent value report puts a cap on the price Regius can sell the lease to MUS.
We now have the perfect conditions to encourage managment to let the SP languish. CJ & CVW want as much of MUS as they can get, but any increase in the SP will ultimately drive down the number of shares that they will get. For example, if the SP had increased to 20c they would have had to scale back the number of shares they sold the lease from 30 million to 10 million just to keep the acquisition under the independent valuation price cap. The real kicker is they don't even need to do anything dishonest, they just have to start acting like a normal ASX company in regards news. The idiot fraction of the shareholders will then do the rest of their job for them and drive down the SP.
So what does all this mean? Once we get past the EGM expect a blizzard of extremely positive news that will drive the SP way past 20c. I would not be surprised to see the SP over 30c by July. I know what I will be doing on Monday
