Forum Topics M2M M2M Business Model/Strategy

Pinned straw:

Added 6 months ago

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Bear77
Added a month ago

Potential vs Reality

Friday 27th December 2024: Season's Greetings Strawpeople!


Mt Malcolm Mines - In theory (Potential):

21 November 2024: Annual General Meeting Presentation (PDF file)

Excerpts:

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Source (Above 5 slides): https://wcsecure.weblink.com.au/pdf/M2M/02883842.pdf (M2M AGM Presentation, November 2024)


Mt Malcolm Mines - Reality:

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Source: https://mtmalcolm.com.au/ (M2M Website, current, although map is well out of date.) Dacian was acquired by Genesis - GMD - in 2023, and so was all of St Barbara's Leonora assets, so Sons of Gwalia and Mt Morgans are both assets owned by Genesis Minerals now. Red 5 acquired Silver Lake Resources and is now known as Vault Minerals - VAU - so Darlot and KOTH are both owned by Vault now.

Below is a more up-to-date map - from Genesis Minerals' website - that is of a smaller area - which does include Mt Malcolm mines tenements which are just to the east of Leonora (all within 30km of Leonora) but this map (below) does not even show M2M's Golden Crown gold project at all because Mt Malcolm Mines (M2M) haven't progressed it sufficiently to warrant inclusion:

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Source: https://genesisminerals.com.au/our-assets/leonora-operations/


So M2M are always keen to talk up the "huge potential" of Golden Crown, understandably, however the reality of the experience of anyone unlucky enough to be holding any M2M shares has not been so wonderful:

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It does often appear that M2M spend more on flash investor presentations than they do on drilling; they are always keen to highlight their highest gold hits from historical drilling, especially when their more recent results have been much more underwhelming.

I have mentioned here before that they tend to run on the smell of an oily rag, and a lot of that has to do with the fact that they have very few funding options left available to them, other than borrowing money from their own Managing Director, Trevor Dixon, who is also their largest shareholder, with over 51 million shares and another 12 million options. Mr Dixon own 22.78% of M2M, but that still isn't much considering M2M's entire market cap is just over $5 Million and falling; however it's clearly in Trevor's personal interests to keep the company bobbing along rather than drowning by being placed in the hands of Administrators.

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Source: 30 October 2024: M2M's September 2024 Quarterly Activities and Cashflow Report

https://wcsecure.weblink.com.au/pdf/M2M/02874513.pdf

Disclosure: No, I don't hold any M2M shares, but yes, I have been guilty of trading them occasionally when they were awaiting drilling results, and that was on the basis of my belief that they could be counted on to talk up any drilling results with the maximum possible positive spin, which tended to often lead to a nice little spike up in the SP, which is always the time to get out. You can see that in a shorter term chart, like a 12 month share price chart (below):

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So, if you're into that sort of thing, they can occasionally be traded, but know they could fall into Administration at any time or be suspended from trading for another reason, such as failure to satisfy the ASX that they have the ability to continue as a going concern (i.e. are able to source adequate funding to keep doing something productive, like drill more holes). They do not have any proper income, other than a little cash from selling the gold produced from their bulk sampling - which isn't much gold, because they are still explorers and wanna-be-developers, so it just a matter of whether or not they can continue to find ways to fund their continuing cash-burn.

The fact that they are so broke, and have bugger-all options for funding, is not just a risk in terms of solvency, it's also a risk in terms of capping their upside. They are only ever going to be worth more if they can prove they have more gold within their tenements that can be mined profitably, and to prove that, they need to drill more and fund studies, starting with a scoping study, then a PFS, and that would still leave them some years away from being able to actually "produce" any gold - i.e. become a proper gold producing company.

Sure, they could become a takeover target, especially for a company such as Genesis Minerals (GMD), who are trying to mop up most of the decent gold deposits in the Leonora-to-Laverton area, however Genesis won't be interested in M2M yet, as M2M haven't found enough gold yet, and M2M's Golden Crown doesn't even make it onto Genesis' own map of the area, as I have shown above, so I believe that the chances of M2M being acquired at this stage are between slim and none.

So, very, very, very, high risk this one!

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Could pay off big time, but I would say there's a much larger chance that they won't.


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Not all gold companies make good investments. Most of them lose money, because most of them are still in the cash-burn phase as they are either explorers or project developers.

Only the producers actually have the chance of making profits, outside of asset sales or inconsequential gold sales such as M2M's sales of gold from their bulk sampling.

Asset sales only provide a one-off benefit, not ongoing income, unless there's an ongoing or future royalty attached to the sold asset(s).

With over 2,000 companies listed on the ASX, a company like M2M isn't going to make many people's top 100 list, let alone be one of their 10, 20 or 30 best investment ideas. That doesn't mean they won't be profitable one day, or that investors can't make money by trading their shares. That is always possible, but so is winning a lottery, and buying lottery tickets is NOT a good investment strategy.

M2M just aren't investment grade. They can be traded, but calling them an investment is a real stretch.

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