As Odyssey Marine (NASDAQ:OMEX) continues to wait for the environmental approval of its Don Diego phosphate deposit, a very positive announcement was made this morning. The company announced that it has received a $3 million loan from Epsilon Acquisitions.
What is significant about this loan is that Epsilon is an investment vehicle controlled by Mexican billionaire Alonso Ancira, who is also the executive chairman of Altos Hornos de Mexico, owner of MINOSA. For those who are new to the story, MINOSA is a significant investor in OMEX, and has been a very valuable strategic partner as it pursues environmental approval with the Mexican government.
This investment is significant because it signals that Ancira and MINOSA still believe that environmental approval is coming. Ancira knows that if the Don Diego project isn't approved, this $3 million loan won't be repaid. He already has a significant investment in the company, so there is no reason for him to make this loan unless he is confident that the project will be approved. Prior to this announcement, we believed approval was coming for a variety of reasons, and this news gives us even more confidence.
Over the past few weeks, many of the bogus claims of OMEX short sellers have been laid to rest. First, they claimed that MINOSA would exercise a call option to buy the Don Diego asset after the project is approved for just $40 million. Reading the public filings made it clear that the only purpose of the call option was to ensure that OMEX shareholders would approve the deal, but regardless, they continued to make this claim.
Last week, it was reported, and confirmed this morning by the company, that the call option has expired and won't be renewed. With this news, the new claim of OMEX short sellers is that MINOSA didn't exercise the call option because it knew the Don Diego project wouldn't get approval and the company has no value.
Now, with the call option expired and Ancira putting more money into OMEX, there is no reason to believe that the Don Diego project won't get the approval they are seeking. OMEX owns half of the rights to the Don Diego asset, which has been valued around $2 billion. Despite being up more than 100% over the past few weeks, the company's market cap is still just $40 million. While this is a very binary stock that needs environmental approval, we continue to believe that approval is coming, and that upon approval, OMEX stock presents an opportunity to make a multiple of your investment in a short period of time.
Disclosure: I am/we are long OMEX.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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