ALMI Atlas MiningAnother interesting company for those of
you here at All Stocks willing to take a
slightly elevated risk in investment.
I have some mixed feelings about this
company but feel this might be a fairly
safe investment for you. I am somewhat
encouraged by ALMI's CEO, a gentleman
named Bill Jacobson. He is responsive
to inquiries and does come across in
a sincere manner. My personal take is
he has the interests of investors at
heart and is working at protecting
both ALMI and its investors. I find
nothing about him indicating greed
nor intent to "get rich" at the
expense of investors. However, my
conversations with him are limited,
but he does pass my personal tests
for being honest and sincere.
ALMI truly has only one product which
exhibits potential for good profit and
a future price break out.
Jacobson's company does have other assets
in the form of contract mining, this is,
mine operations for others, along with
some timber land which does provide ALMI
with a minimal amount of cash to fund
current operations.
Some money is coming in from mine
management services. A fair amount
of cash is generated by board feet
sales of timber. Both fund their
day-to-day operations and do prevent
most need for additional funding.
However, periodic stock sales are
being used to supplement cash income,
but not in great quanities nor at
great frequency, so dilution is
relatively low.
This single product of which I write
is a specific type of clay, halloysite
clay, which is used for production of
porcelain, more commonly, "china"
products such as in fine dinnerware.
ALMI has only one competitor down in
New Zealand where the only other known
halloysite mine exists. There are no
other discoveries of commercial level
deposits of halloysite found.
I have not yet looked hard at this
New Zealand mine to discover their
production costs and sales figures.
However, they are the only supplier
of halloysite clay until ALMI comes
online with production. Market prices
are hard to assess for accuracy because
they have a true monopoly on this clay.
When ALMI begins production, I am sure
sparks will fly due to new competition.
Holding a BS in Earth Science, I have
some appreciation for what ALMI is
planning to do. Their clay deposits
do appear to be fairly pure but it
is noted there is ferrous oxide (rust)
staining of some deposits indicating
at least a degree of impurities,
maybe higher than liked. Nonetheless
chemical baths and processing will
be able to remove "iron rust" from
this clay leaving a virgin white
snow color great for china products.
Halloysite clay also has other uses
with it containing "micro tubular"
structure. This "tubular" inclusion
makes a good vehicle for time release
of selected substances. Primary use
is as a paint additive for rust
prevention, such as ship hulls.
Please visit the ALMI website for
a lot of information on technical
details on their clay product:
www.atlasmining.com/
On production, a bit of confusion
but this might be my not quite
understanding statements. This
clay is located at surface level
and down to two-hundred plus feet.
ALMI indicates "mine shafts" for
this projects but I view this as
a straight "scoop and dump" type
activity. Not sure why "shafts"
are important to this project
other than initial assessment
of depth and concentration.
Currently ALMI have no facilities
for processing this clay but are
engaging in test runs to find a
best method for processing. This
is a positive signal. ALMI is
actively engaged in finding a
supplier for processing machines
or an independent processor to
handle their mining output.
Some snippets of information for you.
Be sure to read all SEC filings for
ALMI to attain better knowlegde.
(From their recent 10Q:)
Cash On Hand
Year 2002 5,246
Year 2003 109,508
Total Current Liabilities
Year 2002 1,180,170
Year 2003 974,549
Operating Income (loss)
Year 2002 (482,818)
Year 2003 (958,996)
Per Share Earnings (loss)
Year 2002 (0.04)
Year 2003 (0.06)
Revenues for the nine month period
ending September 30, 2003 were
234,900 and 269,316 for the same
period ending September 30, 2002,
or a decrease of 12.7%.
For the three month period ending
September 30, 2003 revenues were
$81,906 compared to $134,512 for
the same period ending September
30, 2002 or a decrease of 39%.
The main difference was caused by
the additional logging revenue of
$54,250 recognized in 2002 while
in the 2003 we did not receive any
revenue from logging.
Gross profit (loss) for the nine
month period ending September 30,
2003 was ($27,517) compared to
$33,210 for the same period ending
September 30, 2002 a difference of
$60,727 or 182%. For the three month
period ending September 30, 2003 gross
profit (loss) was ($39,500) compared
to $48,551 for the same period
ending September 30, 2002 a difference
of 88,051 or 181%.
(From their June, 2003, Prospectus:)
WE HAVE EXPERIENCED ANNUAL OPERATING
LOSSES SINCE SEPTEMBER 1997 AND OUR
AUDITORS HAVE INDICATED UNCERTAINTY
CONCERNING OUR ABILITY TO CONTINUE
OPERATIONS AS A GOING CONCERN
We are selling the units through the
efforts of Mr. Jacobson, without
the use of a registered broker-dealer.
Consequently, there may be less due
diligence performed in conjunction
with this offering than would be
performed in an underwritten offering.
(From their recent 8K Filing:)
One concern we have had this past year
is the lack luster performance of our
stock. We went through tremendous efforts
and expense to get the company into a
fully-reporting status with the Security
and Exchange Commission, and have
strived to keep up our filings.
We have a resource of at least 300,000 tons
of unique halloysite clay with a minimum value
of $450.00 per ton. This equates to over $4.00
per share value to our shareholders. If the
rest of the investing public understood as
well as you our shareholder, the significance
of this we would not be struggling with a
market price of ALMI in the ten-cent range.
(read my comments on price rigidity)
***
This recent 10Q discloses ALMI is periodically
diluting this stock with common stock sales.
However, dilution appears to be controlled
by not issuing large amounts of common stock
nor by issuing common stock too often. It is
clear ALMI is using common stocks sales to
keep this company afloat.
These are my thoughts on current stock prices.
We have tried to accumulate at .11 per, again
at .115 and finally at .12 per share. We have
accumulated no stock at this time. We will
keep trying. We are less willing to pay a
price over .12 per share. We could accumulate
at .125 per share and perhaps will finally
give-in and do this.
Concern over a five-tenths of one cent price
difference does seem rather silly. However,
this concern really isn't. We are testing
the rigidity of stock price.
Fluidity in stock price is extremely important
for the financial well being of a company.
When rigidity is present, overall, less funds
are generated from stock sales. Fluidity
allows prices to move up and down, as you
know. These price motions allow investors to
"feel" they struck a bargin, allows feelings
of having won a small victory. This encourages
further investment. Many investors need to
"see" some volality in prices. My personal
take, when I see a stock which absolutely
flat-lines on prices for long periods, I
usually pass on the stock thinking,
"This stock is going nowhere."
Fluidity in prices, in the long run,
generates a lot more cash income than
does rigidity in prices. A flux in
prices nets more investors.
ALMI exhibits extreme rigidity in
prices because Jacobson is acting
as the "broker" for ALMI. Another
problem is high investment by a
limited number of investors who
are also maintaining rigidity in
prices. Net effect is a lessening
of cash income from stock sales.
This rigidity is causing financial
harm to ALMI rather than benefit
based on a false belief protecting
stock prices is prudent and wise.
Rigidity in price is an effort at
maintaining a minimum and only allows
for upward motions. This actually
turns away investors and keeps a
stock price artificially high. To
seasoned investors, this is a clear
warning sign to not invest; a major
downward "balloon burst" is in the
makings and will happen, in time.
Bottom line on rigidity is a severe
lessening of volume. This is not good.
**
Recently, I talked with Bill Jacobson about
a few concerns we, our family, have.
My first question to him is about the change
in ownership of the land upon which the
Dragon Mine is located and how this will
effect Atlas Mining.
His response:
"Change in ownership in property. The Dragon
Mine changed hands a month ago, but had no
effect on the lease purchase agreement we
hold. Our agreement calls for the payment
of 100,000 shares of stock annually to the
owner, a 3% royalty on production and a
$500,000 buyout should we elect to purchase
it. As long as we continue to pay the annual
fee of 100,000 shares, we continue to control
the property."
My next question for Bill is expected start up
time and costs of moving into clay production.
His response:
"Start up at the Dragon is expected to be
sometime this spring. Weather right now is
now very conducive to starting up the
operation, so we will hold off until probably
March. It should not take too much time to
get the property into production. We have
some halloysite exposed on the surface
that we can excavate, but the majority of the
product is underground about 100 to 150 feet.
We will be able to access this deposit in
about 60 days. Meanwhile we will be
constructing plant facilities. As in any
project of this nature, not all will
go according to plan. We feel our experience
in the mining field will help us overcome any
obstacles. Start up costs will run about
$250,000 for mine development, and close to
$1 million for plant facility. Not all will
have to be cash up front as we have some
financing options available to us."
I asked him about their current board harvest
of timber to establish some idea of their cash
flow and if they have enough to "winter over"
without problems.
His response:
"Timber harvesting is about done for the year.
Our loggers were able to keep the roads open
this winter to continue our efforts a little
longer than usual. So far we have harvested
about 600,000 board feet. The timber
harvested was used to pay an advance to a
lumber mill that financed the purchase of a
piece of property for us. This advance will
be paid before the loggers finish up their
program this winter."
Finally, I queried Bill Jacobson about his
ability to raise capital venture funds for
start up and production of clay mining. I
also specifically asked if he plans to dilute
ALMI stock or if he feels there will develop
a need to dilute.
His response:
"Looking at partial financing from credit
facility guaranteed by Canadian government.
Also have commitment from equipment financer
in US. This will take care of the majority
of initial capital costs. No guarantees that
we won't sell some more stock to make this
happen, but not looking at any sales at this
time."
There is an issue discussed independent of
my other inquiries being an oddity. During
my research I turned up some very disturbing
news. Concerned and wanting to verify the
factual validity of news reports, I contacted
Bill Jacobson to reaffirm what I suspected.
Couple years back, abc down in Australia
released a news report about mining in
general. In the that report, an abc
reporter mistakingly identifies ALMI
as the owner of Minoro Mining.
www.abc.net.au/4corners/stories/s455067.htm
Another "official" type report is found
listing Minoro Mining as a culprit in one
of the top ten enviromental disasters in
the Philippines.
pdf.wri.org/mining_background_literature_review.pdf
Almost all investors would not turn up
information like this. However, those
of you here at All Stocks board know
how much emphasis I place on extensive
research. With your doing so, performing
good research as I insist, you may
discover those same reports as I did.
I am completely satisfied this abc news
report does mistakingly identify ALMI
as the owner of Minoro Mining. Please
dismiss this association of ALMI with
this Phillipine disaster; there is
simply no connection on this; it
is a reporting error.
On my concerns about abc down in Australia
reporting Atlas Mining as the owner of
infamous Minoro Mining, I advised Jacobson
of this error in reporting and suggested
he contact abc Australia to have that
report amended or corrected.
His response:
"Thank-you for the comments about Minoro
Mines. You are correct, we are not owners
of it."
Overall, my opinion is ALMI is having
some minor financial difficulties which
are somewhat seasonal in nature because
of their timber activities. I do not
"think" ALMI will go belly-up anytime
soon. I also think ALMI will not show
any upward price motions for a very
long time. Most likely a safer than
usual investment for a penny stock
but you might not earn profits until
the end of this year.
This time, I have no projections for
you on expected share prices in the
future. I consider ALMI to be in
the class of "start up" company
although they have been around
since the Great Depression. It
is difficult to assess the market
potential for this clay other than
to say their competitor appears to
be doing well.
Maybe .50 to .75 per share? Your guess is
good as mine, no pun intended although
a good one.
Good news releases later this year,
perhaps around April to June, will
enhance stock prices.
This surface deposit of sedimentary
halloysite clay, does have very good
potential for profit and only one
proven competitor. Actual profits
will depend on Bill Jacobson and
how well he manages this project.
Production and processing costs will
be the true determining factor on
profitability rather than actual
mining extraction.
My suggested purchase price is in
the range of .115 to .12 but I have
no doubt you will have to pay .125
per share because of rigidity. Do
not pay higher than .13 per share.
I would encourage you to keep your
bids low, perhaps .115 per to apply
pressure for some liquidity in price.
We will be accumulating up to 50,000
shares but have had no success over a
good number of days at acquiring shares
due to rigidity and over-inflated prices.
You may not be able to accumulate any
shares at all unless you pay too high
of a price. I encourage you to not do
this. Keep some pressure on fluidity.
Should you not be able to accumulate
at a reasonable price, no problem.
ALMI will not enjoy as much cash
flow and you can move on to other
investment potentials.
Be sure you understand there will be
no upward price movements for many
months, not until initial reports
of actual clay mining.
As always, research carefully, read
all SEC filings, leave no stone unturned.
Never buy, sell nor hold based on my
personal opinion. I could be wrong.
You could lose money.
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