Will this stock rise from $2 to $100/share?

Silver Stock Report

by Jason Hommel, Jan 7, 2006


How my moly stock may rise from $2/share to $100/share.


After my Jan 4th email: "Silver Stock Picks for 2006,"
http://www.silverstockreport.com/email/Silver_Stock_Picks_for_2006.html
my moly stock rose from $1.18 to $1.46
A gain of 24%!

After my Jan 5th email: "A Moly Stock Comparison,"
http://www.silverstockreport.com/email/A_Moly_Stock_Comparison.html
my moly stock rose from $1.46 to $1.88
A gain of 29%!

A total gain of 59% in two days!  

Your enthusiasm for this stock has encouraged me to evaluate it once again!

Please give me about 5 minutes, and see how my moly stock MIGHT rise to over $100/share in about 3 years.

Here's the fundamentals:
30 million shares fully diluted.
Share Price: $1.88 U.S.
$56 million Market Cap

My moly stock owns many different molybdenum properties, the best of which is in Nevada, that has 1.3 billion pounds of moly, which is valued at $23.5/lb.  The total dollar value of the moly in the ground, in proven and probable reserves (43-101 compliant), is $30 Billion!

Mining costs are $3.50/lb., as outlined in the feasibility study.

It will take about $20 million dollars, and about 2 years, to get through the permitting process.

At $1.88/share, all the warrants are "in the money," and if exercised, will bring in $10 million, half needed for the next two years.

The company is seeking a listing on the Toronto exchange, with an IPO priced at the market, that may raise another $10 million.

If the IPO is priced at $2/share, this will be another 5 million shares issued, and perhaps another 5 million warrants, bringing the total shares fully diluted to 40 million.

After permitting, in about 2 years, I'd expect that the stock would be a $10 stock, easy, with a market cap of $400 million.  

Then, I'd expect the company to easily raise $500 million (more than enough) to build a mine, which is estimated at $415 million to build.  

At $10/share, raising $500 million, would require issuing 50 million more shares (with no warrants), bringing the total shares to 90 million.

At 90 million shares, at $10/share, the mine would begin.  

After about a year, the company would be on track to earn the following:

My moly stock plans to produce 35 million pounds of moly per year for the first 5 years, and they have a 53 year mine plan.

35 million pounds x $3.50/pound profit (at $7/pound moly) = $122 million dollars annual profit.
35 million pounds x $6.50/pound profit (at $10/pound moly) = $227 million dollars annual profit.
35 million pounds x $11.50/pound profit (at $15/pound moly) = $402 million dollars annual profit.
35 million pounds x $16.50/pound profit (at $20/pound moly) = $577 million dollars annual profit.
35 million pounds x $26.50/pound profit (at $30/pound moly) = $927 million dollars annual profit.
35 million pounds x $31.50/pound profit (at $35/pound moly) = $1102 million dollars annual profit.

If the moly price is in the middle, at $20/lb., profits could be $577 million dollars.
At a P/E ratio of 10, the company would have a $5.8 billion market cap.
With 90 million shares, each share would be worth $64/share.

If the moly price is high, at $35/lb., profits could be $1102 million dollars.
At a P/E ratio of 10, the company would have a $11 billion market cap.
With 90 million shares, each share would be worth $122/share.

That is the "blue sky" potential, if everything goes right.

Here are the biggest risks, in my opinion.

1.  If the moly price (currently $23.5/lb.) drops below production cost of $3.50, or even down to $5/lb., the project will have to wait.

2.  If the project in Nevada does not get permitted, the company will have to fall back on any one of the other many moly properties in their portfolio.

But I'm confident moly prices will remain high.  See: The Molybdenum Discussion Board
http://www.siliconinvestor.com/subject.aspx?subjectid=55222

And I'm confident that the project will be permitted, since the State of Nevada is the best political jurisdiction for mining on the earth.

A realistic pricing scenario, with a timeline, is as follows:

Today, my moly stock is a $1-2 stock.
In a month or two, with the Toronto listing, my moly stock might be a $2-4 stock.
In 6 months, after the Toronto listing, my moly stock might be a $3-6 stock.
In 2 years, after permitting, my moly stock might be a $10-20 stock.
In 3 years, after successful mining, my moly stock might be a $50-100 stock.

There are several important points to be aware of regarding stock price volatility, and times to get cheap stock:

Nine months ago, there was a financing at $.75/share.  This stock will be free trading in about 3 months, and will put downward pressure on the share price as people "lock in" profits.

Currently, the company is completing a financing at $1.10/share.  This stock will be free trading in about 4 months, and will put downward pressure on the stock.

Currently, there are 15 million warrants and options.  As these continue to be exercised (as they are all in the money above $2/share) they will bring in $10 million to the company, and their sale will put downward pressure on the share price.  That could be up to $30 million in stock (at $2/share) to be sold into the open market by early financiers who may be locking in profits of several hundred percent.

Furthermore, with an expected time of 2 years to get through permitting, many investors will get bored, and sell the stock, pushing prices down.  A good time to buy the stock might be about a year from now, in the middle of the permitting process.  Other good times to buy might be towards the end of the permitting process, or just after permitting, when risk is substantially reduced, and when moly prices have had a longer time to stabilize.

For further research:

The Molybdenum Discussion Board
http://www.siliconinvestor.com/subject.aspx?subjectid=55222

Final disclaimer:  I own over 450,000 shares of my moly stock and 205,000 warrants at $.80 that expire in Nov. 2006, and the company has not paid me to write about or promote the company.  If my moly stock rises to $100/share, my portion will be worth over $65 million dollars.

Sincerely,

Jason Hommel
silverstockreport.com
bibleprophesy.org

Excerpt from my article: Bible Verses on how to Manage Money
http://www.bibleprophesy.org/goldismoney/biblemoney.html

Do not be deceived.  This is not advice, it is a positive command to not be deceived.  Being deceived leads to disaster.  You must avoid investing in frauds such as Enron, or the dollar, or bonds.  Worshiping a false idol (dollar or bonds!) can cause your wealth to be destroyed.  Wealth itself can be either a deception, or a reward.

Galatians 6:7  You cannot fool God, so don't make a fool of yourself! You will harvest what you plant.

Deuteronomy 11:16-17   Be careful, or you will be enticed to turn away and worship other gods and bow down to them. Then the LORD's anger will burn against you, and he will shut the heavens so that it will not rain and the ground will yield no produce, and you will soon perish from the good land the LORD is giving you.

Matthew 13:22-23  The one who received the seed that fell among the thorns is the man who hears the word, but the worries of this life and the deceitfulness of wealth choke it, making it unfruitful. But the one who received the seed that fell on good soil is the man who hears the word and understands it. He produces a crop, yielding a hundred, sixty or thirty times what was sown.