Entering text into the input field will update the search result below

At 25% Of Merged Company Value, Torchlight Looks To Be Worth Only $0.35/share

Feb. 18, 2021 9:30 AM ETMeta Materials Inc. (MMAT)44 Comments
White Diamond Research profile picture
White Diamond Research


  • Torchlight Energy is engaging in a reverse merger, we believe because it has accepted that its assets are practically worthless.
  • The company it's combining with, Metamaterial, has no interest in TRCH's business or assets. It appears to only want the Nasdaq listing.
  • TRCH will sell its assets or spin them off before the business combination happens; the combined company will get none of TRCH's assets.
  • TRCH shareholders will get 25% of the combined company, which at MMATF's market cap, puts TRCH's current value at 35c per share, assuming its assets are worthless.
  • At TRCH's current share price, it is trading at a whopping 1050% premium to its arbitrage value.

Metamaterial Only Wants To Merge With Torchlight For The Nasdaq Listing

On 4/29/19, we published a report that stated we believe that Torchlight Energy (TRCH) assets are worthless and that "we do not believe Torchlight will be able to successfully complete the sale of the company or its asset(s)."

The company hasn't made any significant progress since our report with selling or developing any of its oil and gas assets. It did sell its interest in its Winkler Project in November for $450K, but that's not a significant sum.

Torchlight Energy and Metamaterial (MMATF) announced the signing of a definite agreement on 12/14/20 for a business combination. TRCH shareholders will receive a 25% equity interest in the combined company, while MMAT shareholders will receive a 75% interest.

Metamaterial designs, develops, and manufactures advanced materials specializing in nanocomposites, nanofabrication, and machine learning to control light and electromagnetic waves. It's a totally unrelated company to TRCH's oil and gas exploration business. This confirms to us that our analysis on TRCH is correct. Its assets are practically worthless, and the stock is worth a fraction of its current market cap that has runup on the merger agreement.

The purpose of the merger is only so Metamaterial can be listed on the Nasdaq. Therefore, the current value to TRCH shareholders is only 25% of that of Metamaterial's current market cap plus the value of TRCH's oil and gas assets.

As of the close of 2/16/21, Metamaterial was worth $3.01 CAD x 83.6M shares outstanding = $251.6M CAD. That equals $251.6/1.27 = $198M USD.

Assuming that TRCH's assets are worthless, based on Metamaterial's market cap, that values TRCH at $198 x 25% = $49.50M, which equals a share price of $49.5M/143M = $0.35.

At the time of the merger announcement, on the close of 12/14/20, Metamaterial was

This article was written by

White Diamond Research profile picture
We provide deep research and valuable information on small cap stocks to hedge funds and high net worth individuals. We specialize in the technology and healthcare sectors. We have an over 80% success rate, see our reports at whitediamondresearch.com. See the 3rd party verified return on each of our bearish reports over the last 24 months at: https://breakoutpoint.com/as-summary/white-diamond-gvmtg/To inquire about becoming a premium subscriber, send a PM here or email us at research@whitediamondresearch.com.Follow us on twitter @whiteresearch.

Analyst’s Disclosure: I am/we are short TRCH. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (44)

How does a company like Torch issue a report claiming billions of barrels discovered ....and now becomes virtually worthless . Anyone going long on this scam will lose their cash!
Are you guys still short?
...going long on GME is still NOT as ridiculous as it may FUN-duh-mentally sounds
Regardless of the fundamentals, the shorts are worried.... they don't have the financial strength to sit through a GME style squeeze.

Why is the author that specializes in tech and healthcare posting an article about oil and gas?


I disagree! The reverse is also true: If TRCH is valued at $500M then that makes MMAT VALUED AT $2B: which is perfectly fine conaidering they have sales projection of $300M/year by 2025! Investors are not fools!

Elephant Analytics profile picture

Here's something that nobody who likes TRCH's stock can answer... Even if you really like Metamaterial's future prospects, why would you own TRCH's stock instead of MMAT at their current prices?

Right now MMAT is valued at around $270 million USD. That will get you 75% of the combined company.

Right now TRCH is valued at $500 million. That will get you 25% of the combined company plus $13 million in proceeds from the Winkler and Hazel asset sales plus any proceeds from the Orogrande sale.

Simple math indicates that Orogrande would have to fetch approximately $400 million for it to make sense to buy TRCH instead of MMAT. There is zero chance that Orogrande is worth anything remotely near that amount given that it is essentially unproven acreage with minimal production.
23 Feb. 2021

@Elephant Analytics For the same reason $MMAT wants a NASDAQ listing: They don't trade on any US exchanges. The exact reverse argument could be made on why you should buy $TRCH pre-merger. Not to say there isn't speculation involved with Metamaterial's valuation after the merger - that's definitely so. However, if non-CNSE traders want an early piece of the pie on Metamateria; Torchlight energies is their entry.

Elephant Analytics profile picture
I suppose that could be a reason for an investor to buy TRCH if they were only investing a small amount of money.

However, if one really believed in the Metamaterial story and were investing a more significant amount of money, it would be silly not to try to get access to buy OTC or CSE equities.

At $50k of initial investment, the arbitrage could be worth over $100k (assuming that TRCH's current share price is reflective of the value of the combined company).

Another great hit and miss article how are you allowed to be here seriously.

Buying into TRCH right now would be like buying GME at $400. Both pumping schemes divorced from fundamentals. Might as well literally take cash and light it on fire and watch the pretty colors.

Elephant Analytics profile picture

Yeah, looks like it is being talked about a decent amount on Reddit and Twitter. One poster actually assumed that Torchlight could receive prime Midland Basin prices for its Orogrande Basin assets and thus make it worth billions.

Pretty crazy. It is one thing to try to own the stock for a trade. However, anyone expecting a substantial dividend from its asset sales obviously has minimal knowledge of the oil and gas industry.

"It is one thing to try to own the stock for a trade."

Agreed. But I don't really buy into the whole market timing fallacy of the "trader". Heck, I don't even buy into "seeking alpha". Looking at all the underwater energy permalongs shows something.

@Elephant Analytics

I'm pretty damned skeptical of the nanoparticle hype company also. I've got some material science training and the hypes from now remind me a lot of the hypes from as far back as the 1990s. Just silly, silly.

@Elephant Analytics

Anyone who is worried about the latest article posted on seeking Alpha in regards to $TRCH Should go read his article about CleanSpark and then look up its current stock price $CLSK. I’d take what “White diamond research” says lightly and with a grain of salt. I feel bad if you are short on this stock.

Wez profile picture


Your comment is like mocking people blowing the whistle on Enron in the year 2000. The looked very dumb, until they didn't...

If you care so much about valuations why don't you go short Tesla?


Who got greedy and burnt? (and still not covered?)

Thanks for helping this get to $4.50+

It is a stock promotion, not a real company, agreed. Personally, I would not short, given the danger of pumping, based on self-dealing stock sales by the major holders.

Bull & Bear Trading profile picture

I came upon this article and trade with no bias and no position.

Considering both the bull and bear thesis on this trade, it is clear that TRCH is dramatically overvalued. Will existing TRCH shareholders receive only .35 cents per share? Actually yes, this is entirely possible. However, existing TRCH shareholders may receive a higher amount in the .50 cent range IF the price of the MMATF can be propped up long enough after the merger.

Candidly, this overvaluation is not likely to persist as the price of both companies are clearly overvalued currently. The market is increasingly aware of this extreme overvaluation now and it looks like TRCH will return to $1.50 per share.

The real question for traders/investors is whether TRCH can hold the $1.50 level in the next few days. Doubtful. This overvalued situation is now in full view of the street and .50 cents per share for TRCH seems like a fair valuation.

The only folks propping this empty shell of a company up are the uninformed retailers who for some strange reason have bought into some convoluted narrative that they don't quite understand. Best for all to protect any recent gains and exit TRCH.

Thanks for an excellent article to expose this overvaluation. Excellent research and outstanding communication skills. Highly competent work like this is what makes our markets function properly. A+.

And just what is your technical basis for overvaluation? None stated just like the article.

Bull & Bear Trading profile picture

@mlefran Excellent question. Full disclosure is that I became a licensed broker in 1986 and learned a lot about how not to trust analysts while working for NYSE-member Oppenheimer & Co. I learned to trust numbers above words, for starters.

A stock chart, or candle chart, is a reflection of what people are actually doing with their money based upon numbers. Volume is also based upon numbers. Take a look at the daily candles. If you are comfortable reading charts, then you know that this is just day 2 of a multi-day correction in a dramatically overbought stock. TRCH was .45 cents on 12/17/21. It traded up to 4.83 just two days ago on 2/16/21. I think reasonable people would agree that better than 10X increase in value is overbought.

Even now at $3.45 the stock is insanely overbought. I am a retail trader for quite a while now, so when I use the term "retailer," I am including myself. Only retailers are buying into this idea of the merger being a positive. Why? I have no idea. I am certain either the Canadian outfit, and/or the characters at TRCH determined that pumping the stock was in their best interests. You can see the stock being bought ahead of the announcement if you read the chart. Typical pump and dump action. The companies trading on the Canadian exchanges have been notorious for decades. Good to see that nothing has changed. The Canadian boys could have opted for other means to gain a listing on the Nasdaq, but this chosen route enables the principals to avoid much scrutiny. This alone is very telling, imho.

Back to the chart. Volume has fallen off of a cliff for the last 2 sessions, so the momentum and pump is over. You can clearly see the dump is working as is typical. You can also visit social media to see the desperate cheerleading by bulls who either didn't know when to leave the party, or are the chasers who are now newly minted bag holders. The study of group psychology in markets is fascinating in that the same darn pattern repeats over and over, and people never ... I mean never, ever learn. So volume is gone and only the chasers and baggies are left to prop up the stock.

If you know your chart patterns then you know that yesterday was a classic breakout failure pattern. One of the most reliable bear signals to sell a stock that is known to mankind... or even primates. Seriously, this chart pattern is so easy to identify that even a caveman can do it. No joking. Yesterday was an obvious sell signal, and the market has sold. Now you have your typical continuation pattern lower that will last some number of days. There will be a trading bounce perhaps at $2.50, or thereabouts... but the direction is clear for the near term, and that direction is lower.

Charts often reflect the fundamental situation. Let's see, TRCH is in such desperate straits that they were willing to take a merger deal for only 25% of a Canadian stock that basically has as much value as a patch of blue sky. "But, but, but... the PR statement!" and the other ingenious hype that is on the Internet, I can hear bulls saying adamantly. Yeah, well from an industry insider of 35 years let's be candid, bulls in TRCH are proof positive that P.T. Barnum was correct.

I get it. You hate bearish articles. You hate overly honest comments like this one. You want to debate the shiny buttons, and point to the bells and whistles that you were told to focus on by the people who are doing the manipulating in this stock. Please understand that these hucksters are grasping at straws and desperate to save their marriages, and remain living indoors... they will say and do anything to desperately pull off this white collar swindle. TRCH has drained these people of all their capital for years and they couldn't find anyone simple enough to buy their company (and stock)... until they devised this current scheme. Check the chart and you can see in November when this scheme began for TRCH. The pumpers began buying stock with the idea of finding retailers to dump on in a few months. The plan worked like a charm.

Now they are dumping their stock either onto the open market, or they exercised warrants, or they are rolling up their stock into the merger and will cash out as often as possible. Isn't that what you would do, if you had no morals? The book Liar's Poker is a good read. The boys involved in this microcap heist are a smaller version but still same concept.

You want to assign value to the assets at TRCH, I know. The value of any asset is only worth what a buyer is willing to pay for it. Clearly TRCH found no buyers willing to pay anything significant for their assets. Otherwise, this .50 cent stock would not be getting rolled up into a Canadian flying carpet company for just 25% of the merged value.

C'mon guys, this one isn't that hard to read. Even if you don't like the charts and what the daily numbers on volume and price action are screaming out, even if your don't like the several bearish articles from different authors... and these articles are in the league of "rip your face off kind of extremely bearish" analysis... even after all of this, doesn't anyone recognize the oldest trick in the book here of a classic pump and dump in the valuation of this stock?

Please say, "Yes. I see it. I just am in denial because I already spent the money that I hoped to make when the CDN flying carpet company caused my worthless TRCH stock to trade to infinity and beyond." This type of a confession for less experienced retailers would be completely understandable. In fact, it is the exact psychology that the pump and dump conmen at TRCH are relying upon to pull this last ditch, last resort, desperate caper off at your expense.

I know you are not happy with my 35 years of experience trying to save you from severe losses on this trade. I very much hope that this effort is helpful. Whether you sell at higher prices now, or at painfully lower prices later, it won't matter to me. I have sold this flaming dumpster fire short today, and I will get paid (alot) on this short no matter what. But hopefully, this post will help a few people to save a few dollars. Of course, there are always the, "I'm going down with the ship!" crew... the "I'm not blanking selling!" guys that saw Leonardo in the movie and like to post his meme on social media. These rocket scientists generally have a painful experience in the market. Anyways, GLTA and hoping that at least one open-minded traders is helped by this comment.

You have a 16% success rate with average return of -30%! LMAO


White Diamonds opinions fall short in explaining why Torch's land has no value. For current shareholders, one should look to White Diamond's previous articles on Torch and understand its bias to the short thesis. There are many benefits to METTA gaining a NASDAQ listing including value. Companies falling from compliance experience huge loss in value. The Torch land sale is a bonus to be paid to shareholders, it does not go to the value of the stock except maybe leading up to the merger. I also question White Diomonds motive for claiming the land is wortless. The only agreement I have with this article is that when one invests in speculative stocks there are risks.


Remind the reader of your call on Cleanspark...asswipe 😂😂


@taketake1 LoL 😆 😂 🤣

CLSK now +$35 and $42.60 OTH. Let them short , we will take their money once again.
Bull & Bear Trading profile picture

@taketake1 Stay classy. Let's not have the SA forums devolve into the worthless stuff you see on other less useful social media.

Disagreement makes a market. Having sellers provides liquidity for buyers. No need to get nasty.

Also, have you never been wrong on an idea? Does this mean that all of your ideas are wrong? Of course not. Can't think of a single top analyst on Wall Street who hasn't been wrong. Even Buffet gets a few wrong.

Go sing a few rounds of, "Humble and Kind," by Tim McGraw and the world will be a better place.

3.7 billion barrels of oil and gas is worthless? . They are merging with a growth company with revolutionary products . Tesla being a future potential customers as well. Good luck with your short position


Source of the potential value of trch assets. Worthless you say!!!

White Diamond Research profile picture

@DR Alex P If you like MMAT.CN, then you should just buy MMAT.CN. TRCH has about 3x MMAT.CN's market cap, and they'll only get 25% of the combined company. So buying TRCH is the equivalent of buying MMAT.CN at about $25 CAD per share, plus you'll get whatever TRCH sells its assets for.

As far as what TRCH's assets are worth, you can look at my report from 2019 that analyzes this. It's land that no established oil and gas company will pay for more than a pittance. But we'll see who's right in a few months, the conclusion will happen relatively soon on this one.

@White Diamond Research I am long TRCH because I believe in the value of their oil and gas assets. I am fine with 25% of the new combined company + 75% of preferred stock dividend in trch. Good luck in your trade.


I guess arbitrage value of Meta was not considered

White Diamond Research profile picture

@thaddeusresearch23 There is no arbitrage value for Meta, other than going on the Nasdaq. TRCH will be an empty shell by then, but Meta shareholders will lose 25% of equity that will go to TRCH shareholders. So I expect both TRCH and MMAT.CN to fall prior to the merger, but TRCH will fall more.

@thaddeusresearch23 I have to say, what ever he shorts. I am buying! lol
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About MMAT

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on MMAT

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.