** CMKX Fully Reporting Later **.......

[fastwalker]

:)FYI..FWIW..COMMENTARY..
Posted by: hoby111
In reply to: None Date:10/17/2004 6:51:50 AM
Post #of 18231

** CMKX Fully Reporting Later **

I hate that I'm thinking about this nonsense so late at night, but when an idea comes up from behind and bites you in the a$$, you have no choice but to jump up out of bed and salve it. Hence my post.

After reading george's recent theories along with others (eg, pattreko), I think I've figured out the sequence of events that will take place with CMKX, and why I think that fully reporting is at the end of the line. Here's why:

First, I think we all agree that there is a naked short problem with CMKX. If there was any doubt before, then the insane runs UCAD and GEMM have been on recently have helped obliterate any doubt. In any event, I think many have assumed that declaring a fully reporting status at this juncture would help expose the naked shorts for what they are, and that would in turn help spur the inevitable naked short squeeze we are all anticipating so eagerly. However, I think this line of thinking is completely opposite of what will actually occur. In other words, rather than becoming fully reporting to help resolve the naked short problem, I think we must first resolve the naked short problem before becoming fully reporting. Let me explain.

Once CMKX becomes fully reporting, the OS among other details will have to be declared publicly. However, my thinking is that the OS, even if known today, will continue to change until the naked short problem is settled once and for all. Why? Because I think Urban plans to sell shorts that he holds back to the MMs at a premium, and then use those funds to buy back shares to help reduce the OS. How will he sell his shorts at a premium? During the forced cover of CMKX naked shorts. And how will that cover be forced? Through a continual onslaught of dividends until the MMs have no choice but to capitulate. I really think that is what we are seeing take place now. We're in the middle of a dividend barrage that will eventually force the MMs to cover their naked shorts.

As george pointed out in his most recent theory, it is possible that the GEMM float is actually smaller than the number of shares that MMs must buy to cover the two dividends we are due to receive on 15 and 29 Nov, respectively. Regardless, even if it isn't and they manage to cover the GEMM dividends, there is no doubt that the UCAD dividend opened a wound, and the GEMM dividends will cause that wound to fester. However, if the wound looks like it might heal, then Urban will ensure that gangrene sets in by taking CIM public, adding SGGM to our ever-growing list of dividends, and/or surprising us with lord knows what other dividends he has waiting in the wings. The point is, the only reason we're receiving all of these dividends now while the company still has no revenue stream and only the potential for future profit is not because Urban cherishes his shareholders (although I believe he does), but because they will eventually force the covering of all the naked short CMKX shares.

To this point, I don't think I've written anything others haven't already contemplated. However, let's continue along this train of thought to see where it leads us:

Once the MMs' wound festers to the point that they must seek medical attention to avoid amputation of their financial limb, they will FINALLY let CMKX run and we'll all rejoice and give each other high fives. However, and this is where it gets even more delectable, while we're all celebrating our new-found riches, Urban will be putting his millions to good use by buying back shares and retiring them to the treasury. Granted, he'll have to buy back shares at a higher PPS than that which he was able to sell his naked shorts, but after pocketing his cost basis (presumably .0001), he'll still be able to buy back a handsome number of shares that he can retire once and for all. It is then and only then that he will finally allow CMKX to become a fully reporting company once again. In other words, until he determines exactly how many additional shares he can retire during the inevitable squeeze, he will not know the final OS, and therefore cannot become fully reporting.

In short, I see the sequence of events taking place in the following manner:

1) Continue to acquire positions in JVs, and then distribute all or part of the shares received in the form of dividends until the MMs finally capitulate and begin to cover their naked shorts in CMKX.

2) Once the covering begins and the PPS begins to run, Urban will sell shares back to the MMs (up to the point he still retains full control of CMKX), and then turn around and use the proceeds above his initial cost basis to buy back shares and retire them to the treasury.

3) After he has retired as many shares as he can and it appears the naked shorting problem is resolved, he will then release the OS and take the company fully reporting.

4) Once fully reporting, I think we will then begin to see a valuation placed on the company (eg, via unreported core samples), which will help stabilize the PPS and allow CMKX to finally do what it had intended to do before the insidious naked short dilemma - start digging for diamonds!

I guess that's about it. Hope these thoughts help awaken the brains of all you mainlanders just now waking up. As for me, it's time to shut my brain down for a few hours, if it's possible. See you tonight when Urban's voice takes the airwaves for the first time.

P.S. Note that I make no mention of a time line above. The reason is because I don't think even Roger and Urban know exactly when the covering and subsequent squeeze will take place. As we have seen, the MMs are stubborn and resourceful. As a result, I think Roger and UC will continue to do what they are doing now - issuing dividends - until the MMs cave in. And they will cave in. It's just a matter of time. In fact, I think that Roger and UC expected it to have happened by now (hence the idea for a shareholder appreciation party). However, as we have seen, we cannot control what the MMs will do. We can only try to influence them, and hope they eventually see things our way. But once they do, boys and girls, look out - because that's when the fun will really begin.

[fastwalker]

a RESPONSE from the author on the validity of #2.....

Okay, let me try to take one more crack at explaining Step 2 of my sequence for everyone, since my choice of words still seems to be causing some confusion.

First, when we (investors) buy shares, there is no difference to us between naked short shares (NSS) and legitimate shares. By virtue of our brokers placing our orders and the MMs fulfilling the orders, for all intents and purposes, our shares are legit. In fact, there are even laws (at least in the US) that support our claim to owning legit shares. That is why the shares appear in our brokerage accounts and why we have received our first round of dividends. As far as we are concerned, our shares are real. The same is true for Urban. The only folks who know otherwise are the MMs, since only they know whether the shares they issued to us actually exist.

Now, when I suggest that Urban will sell naked short shares back to the MMs, and then turn around and use the proceeds to buy legit shares to reduce the OS, please understand that from Urban's (and our) perspective, the two events appear identical. In fact, for the reasons I explained in the previous paragraph, they are. Therefore, my choice of words is misleading in that Urban is not picking and choosing which shares to buy and sell. To him (and us), the orders are the same. However, by virtue of knowing the number of shares that are actually issued along with what the brokerages collectively claim to have, mathematically Urban can determine how many NSS exist. In this way, he can sell shares to the MMs, and then, when convinced that the MMs have begun to cover their shorts, buy shares back and retire them. Let me explain via example:

Just to keep the math clean, let's assume Urban knows that there is an OS of 500 billion shares but has determined that there 1 trillion total shares actually floating around in the marketplace (via transfer agent records, dividend payouts, etc). Let's further assume that Urban (insiders) has possession of 600B shares and retail investors 400B shares (again, hypothetically speaking to keep the math simple). Based on these numbers, all shareholders collectively own 500B legit shares and 500 NSS. Now, referring back to my explanation above, we as investors all own legit shares from our perspective, so it is the MMs who have the responsibility to reconcile the 500B-share discrepancy that exists. This is where the dividend onslaught comes into play. Through these dividends, the MMs will eventually be forced to cover their CMKX shorts. When they do, Step 2 of my suggested sequence of events will take place. For example:


Start of cover period: 500B legit shares and 500B NSS (of which Urban has half, or 500B shares)


1) Over a 10-day run of the PPS, the MMs successfully cover 100B short shares (ie, they buy back 200B shares from existing investors, but only turn around and resell 100B of those shares to new investors, which they manage to do by refusing to sell new shares, as well as causing dramatic peaks and deep declines timed in such a way that they can get existing investors to sell more shares than new investors are willing to buy (quite a trick, I know, and precisely why the MMs are in a world of hurt right now). Then, with their net gain of 100B shares, they "retire" them since the shares do not exist in the first place (ie, they reduce the NSS from 500B to 400B).

2) Now, let's assume that during this first 10-day run, Urban himself sold 50B shares, thus reducing his total holdings to 450B shares. Let's further assume that during the run, Urban was able to sell those 50B shares at an average price of .0011. If his cost basis is .0001, then he would net $50M (50B*.0010) from this transaction.


After first 10-day run: 500B legit shares and 400B NSS (of which Urban has 450B shares and $50M in cash)


3) Now, after a day of rest, let's assume the covering continues for another ten days, and the MMs successfully cover another 100B shares just as they did above. During this 10-day run, however, Urban not only sells 100B more shares to the MMs, but he also buys 50B shares back, resulting in a net decrease in Urban's holdings to 400B shares (450-100+50). Now, you may be wondering why Urban would both be buying and selling. The reason is because he has to play both sides of the ball in order to keep liquidity in the marketplace, thereby giving the MMs the opportunity to experience a net gain in shares so that they can cover their shorts. In any event, let's assume that Urban was able to sell the 100B at an average of .0031, thus netting him a sum of $300M (100B*.0030). However, because us longs are holding tight, the PPS is spiraling upward out of control, and Urban is forced to pay an average of .0040 for his purchase of 50B shares over this 10-day run, which costs him $200M and leaves him with a net cash balance of $100M ($300M-$200M). Nevertheless, having successfully reacquired 50B shares, he retires them to the treasury. The net result of all these transactions is thus:


After second 10-day run: 450B legit shares and 300B NSS (of which Urban has 400B shares and $100M in cash)


4) The process above repeats itself until the MMs are able to fully cover their original 500B NSS position in full. All the while, Urban continues selling shares and buying them back (again, to maintain liquidity in the market) while the MMs are covering their shorts. And, as long as Urban keeps at least 50% + 1 share of the OS in his possession at all times, he can continue to sell, buy back, and retire shares as long as he has the cash to do so. Therefore, the longer and more painful it is for the MMs to cover (ie, the longer us longs hold out before selling any of our shares), the more shares Urban himself will be able to buy back and retire to the treasury.

Phew. Does that explain Step 2 any more clearly?

P.S. I realize other posters have added comments or questions since I started putting this post together, but I have not had a chance to read and address them yet. Also, I had not read CDLIC's post prior to starting this thread, so forgive me for repeating what he has apparently already said.

[fastwalker]

;D One more response regarding the above post...

I think UC already has the outstanding pretty much where he wants it. He is limited as to how low he can go by certificates issued and deals with partners. He may have purchased additional shares beyond what he needs for the outstanding to take part in the squeeze, but as soon as CMKX becomes fully reporting I believe he will have to report all of his own sales. The public may not take it well if he is constantly selling huge blocks of shares after becoming fully reporting, so there is risk there. I also don't understand why he would sell shares at these levels just to buy more later at a higher price. I think he has already figured out what his ownership percentage in the company will ultimately be.

I think the main reasons for the delay in becoming fully reporting was there probably were issues that needed to be resolved (things the public would be better off not knowing) before fully reporting status and these probably have been resolved. The last major roadblock was he did not want to tip the NSers as to what we were doing. I think now that the NSers have been trapped by "the bear trap" of dividends, the last hurdle may have been removed. RG and UC may want to see that the NSers begin covering before they give up their non-reporting status. When the PPS begins to rise UC may sell some extra (naked short) shares for operating/investing capital and then go fully reporting.

What's also interesting is that RG appears to have a plan to keep dividends out into the future. This is almost like an insurance policy against naked shorting once he gets the cover to start. This way the NSers have no reason to think that once they get over the current dividend hurdle they will be free to start NSing again, like in the past with CIM. They also must look forward and see more dividend dates coming up, and this is incentive for the NSers to give up. He also has the option to increase the existing dividends, which I believe he will do.

Ultimately, UC wants to go fully reporting because it will create tremendous value in the company and hopefully make his shareholders wealthy. With all the cash flowing into CMKX recently he probably has a load of PRs to release after the PPS starts to rise. Then he will concentrate on operations and increasing the value of the company so the PPS just continues to increase. Eventually CMKX will wind up on another exchange through merger or due to filings by RG. However this plays out, I'm sure there will be many surprising events all along the way that nobody could have predicted.

Just my opinion. With the current prices of UCAD and GEMM, success appears to be imminent.

John

source for the above post: cmkxdiamond.proboards32.com/index.cgi?board=general&thread=1098009206&action=display&start=15

[fastwalker]

Posted by: hoby111
In reply to: None Date:10/17/2004 2:33:41 PM
Post #of 18240

Further explanation of Fully Reporting

I had originally posted this theory on the CMKX 32 Board, and some questions surfaced, so here are responses, should they help you understand my thoughts more clearly:

cmkxdiamond.proboards32.com/index.cgi?action=display&board=general&thread=1098009206&...

First, regarding Step 2 of my post, when we (investors) buy shares, there is no difference to us between naked short shares (NSS) and legitimate shares. By virtue of our brokers placing our orders and the MMs fulfilling the orders, for all intents and purposes, our shares are legit. In fact, there are even laws (at least in the US) that support our claim to owning legit shares. That is why the shares appear in our brokerage accounts and why we have received our first round of dividends. As far as we are concerned, our shares are real. The same is true for Urban. The only folks who know otherwise are the MMs, since only they know whether the shares they issued to us actually exist.

Now, when I suggest that Urban will sell naked short shares back to the MMs, and then turn around and use the proceeds to buy legit shares to reduce the OS, please understand that from Urban's (and our) perspective, the two events appear identical. In fact, for the reasons I explained in the previous paragraph, they are. Therefore, my choice of words is misleading in that Urban is not picking and choosing which shares to buy and sell. To him (and us), the orders are the same. However, by virtue of knowing the number of shares that are actually issued along with what the brokerages collectively claim to have, mathematically Urban can determine how many NSS exist. In this way, he can sell shares to the MMs, and then, when convinced that the MMs have begun to cover their shorts, buy shares back and retire them. Let me explain via example:

Just to keep the math clean, let's assume Urban knows that there is an OS of 500 billion shares but has determined that there 1 trillion total shares actually floating around in the marketplace (via transfer agent records, dividend payouts, etc). Let's further assume that Urban (insiders) has possession of 500B shares and retail investors 500B shares (again, hypothetically speaking to keep the math simple). Based on these numbers, all shareholders collectively own 500B legit shares and 500 NSS. Now, referring back to my explanation above, we as investors all own legit shares from our perspective, so it is the MMs who have the responsibility to reconcile the 500B-share discrepancy that exists. This is where the dividend onslaught comes into play. Through these dividends, the MMs will eventually be forced to cover their CMKX shorts. When they do, Step 2 of my suggested sequence of events will take place. For example:


Start of cover period: 500B legit shares and 500B NSS (of which Urban has half, or 500B shares)


1) Over a 10-day run of the PPS, the MMs successfully cover 100B short shares (ie, they buy back 200B shares from existing investors, but only turn around and resell 100B of those shares to new investors, which they manage to do by refusing to sell new shares, as well as causing dramatic peaks and deep declines timed in such a way that they can get existing investors to sell more shares than new investors are willing to buy (quite a trick, I know, and precisely why the MMs are in a world of hurt right now). Then, with their net gain of 100B shares, they "retire" them since the shares do not exist in the first place (ie, they reduce the NSS from 500B to 400B).

2) Now, let's assume that during this first 10-day run, Urban himself sold 50B shares, thus reducing his total holdings to 450B shares. Let's further assume that during the run, Urban was able to sell those 50B shares at an average price of .0011. If his cost basis is .0001, then he would net $50M (50B*.0010) from this transaction.


After first 10-day run: 500B legit shares and 400B NSS (of which Urban has 450B shares and $50M in cash)


3) Now, after a day of rest, let's assume the covering continues for another ten days, and the MMs successfully cover another 100B shares just as they did above. During this 10-day run, however, Urban not only sells 100B more shares to the MMs, but he also buys 50B shares back, resulting in a net decrease in Urban's holdings to 400B shares (450-100+50). Now, you may be wondering why Urban would both be buying and selling. The reason is because he has to play both sides of the ball in order to keep liquidity in the marketplace, thereby giving the MMs the opportunity to experience a net gain in shares so that they can cover their shorts. In any event, let's assume that Urban was able to sell the 100B at an average of .0031, thus netting him a sum of $300M (100B*.0030). However, because us longs are holding tight, the PPS is spiraling upward out of control, and Urban is forced to pay an average of .0040 for his purchase of 50B shares over this 10-day run, which costs him $200M and leaves him with a net cash balance of $100M ($300M-$200M). Nevertheless, having successfully reacquired 50B shares, he retires them to the treasury. The net result of all these transactions is thus:


After second 10-day run: 450B legit shares and 300B NSS (of which Urban has 400B shares and $100M in cash)


4) The process above repeats itself until the MMs are able to fully cover their original 500B NSS position in full. All the while, Urban continues selling shares and buying them back (again, to maintain liquidity in the market) while the MMs are covering their shorts. And, as long as Urban keeps at least 50% + 1 share of the OS in his possession at all times, he can continue to sell, buy back, and retire shares as long as he has the cash to do so. Therefore, the longer and more painful it is for the MMs to cover (ie, the longer us longs hold out before selling any of our shares), the more shares Urban himself will be able to buy back and retire to the treasury.

Phew. Does that explain Step 2 any more clearly?

----------------

Let me add a brief addendum to (hopefully) further clarify why I think Urban must both buy and sell shares during the covering, as well as why I think he will have to pay a higher price than he will get for selling his shares:

1) He will both buy and sell to help increase liquidity during the cover.

2) He will have to pay more than he will be able to sell for because MMs are going to be reluctant to sell any shares while they are covering. They need to experience a net gain, so just as they are only selling now, they will (mostly) only be buying during the cover. As such, as they drive the PPS up, we'll see the spread (difference between bid and ask) increase, as well as a heavily lopsided trading pattern, exactly opposite of what we have now (ie, rather than having 98% of the trades going through at the ask like now, we will see most of the trades going through at the bid instead). The increased spread will not only discourage new investors, but the MMs reluctance/refusal to sell new shares will cause any new shares acquired to be purchased at a premium.

[IQ]

Fastwalker, like the name states you are ahead of the game. "The point is, the only reason we're receiving all of these dividends now while the company still has no revenue stream and only the potential for future profit is not because Urban cherishes his shareholders (although I believe he does), but because they will eventually force the covering of all the naked short CMKX shares."

This means that we should see the stock price of CMKX stay low .0002 - .0003 this is the only way the MM's can cover and afford to do so. Soon after they do that I will expect CMKX to start showing the true value of this stock which is at least one less decimal place and more likely two deicmal places. Thus 0.03 cents or higher then to follow are PR's that demonstrate we have found a mineral that is profitalbe or minerals and that full scale production is about to go ahead.


CMKX go go go. ;D ;D ;D

[fastwalker]

I agree, right now, I'm at Hex's other home and posting some similar thoughst with regards to what is taking place...IMO, we are still a little way off from the moon..