Just when you think the market has gotten used to mining companies jumping into the medical marijuana space, you witness another moment of investors going bat crazy. Prescient Mining (CSE:PMC, Stock Forum) seems to be the object of affection today as it announced that the company had signed a letter of agreement granting it exclusive right to acquire a firm in the final stages of gaining approval on a much-coveted MMPR license.
According to the summary on tsx.com, the company didn't actually become Prescient Mining until September 2010 when it changed its name from Milk Capital. It traded on the TSX until it switched to the CSE on May 28, 2014.
What does Prescient have on its plate? Well as far as research on SEDAR can garner, the company has its eye on the Hook Lake property in Northern Saskatchewan under which, due to an agreement signed in 2012 with current owner Geomode Mineral Exploration, the company has the option to acquire 100% interest in. How much interest does it have in the property now? I'm going to guess 0%, because there are no accessible materials that say any different at the moment.
However, there is a NI 43-101 technical report the company filed April 18, 2014 in regards to the property, where Prescient revealed plans for a two phase drilling campaign which was budgeted at approximately $1.5 million. What have they done so far? Approximately $60,000 worth of work. They are committed to spend another $75,780 on or before July 27, 2014 with another $750,000 worth of work and a $1.0 million cash payment to Geomode due on or before July 27, 2015.
This immediate payment schedule might be difficult for the company because according to its latest financial filing, the company as it only has $575,133 in cash and cash equivalents and was operating at a net loss of $161,808.
Which brings us to today's announcement. According to the news release, Prescient has agreed to make a $500,000 loan to the MMPR hopeful through the non-brokered private placement of 16 million shares at 10 cents a share. Something in the math tells me they're bringing in a possible $1.6 million for a $500,000 loan. Are they attempting to fund Hook Lake as well? There is no mention of the property in this press release.
In fact, if you did no further research, you might get the impression that the company was heading whole hog into the MMJ sector. Even the statement by company president says nothing of its mining activities and I quote, “This potential transaction represents a significant milestone for the Company and will place the Company in a very strategic position in the medical marijuana sector.”
Of course there is the obligatory, “At this time, no transactions are in place, or is there any assurance that a new project will be concluded in the future. There can be no assurance that the transaction will be completed as proposed or at all” proviso to cap off the release.
So just what is it that this company is doing and why does the market still react like a crazed Pavlovian dog every time someone mentions medical marijuana? I'm stunned and confused.
Prescient was in the news recently when the company announced its listing on the CSE at the end of May.
Shares rose 316.67% on the news to $0.125 per share.
Currently there are 16.0m outstanding shares with a market cap of $2.0 million.
CORRECTION: In the original writing it was stated that the company had been delisted by the TSX twice. Further research revealed that the company had requested both of the delistings in the process of a name change and exchange switch. The company can be found at the Mosam Ventures website.