Matamec Explorations Inc. (CVE:MAT) (PINK:MHREF) traders got excited when Toyota approached the company with a mutually beneficial proposal.
MAT has been attracting a lot of attention recently. The stock price increased around 18.8% halfway through Tuesday’s session under one of the heaviest trading volumes recorded over the past year.
The commotion came about after the company announced on December 12 they have signed a non-binding memorandum of understanding with Toyota Tsusho Corp., which is part of Toyota Motor Group. Toyota’s interest lies in the Kipawa heavy rare earths deposit, which would favor their electric vehicle business if secured under good conditions.
This deal bodes well for Matamec, which doesn’t have that much working capital. Under the MoU companies would fast track the development of Kipawa, possibly form a joint venture and upon satisfactory results Toyota Tsusho would provide financing until a production stage is reached.
The definitive joint venture agreement will be preceded by two due diligence phases when the companies will work to prepare a preliminary economic assessment and negotiate the agreement itself upon receiving results. Matamec would retain 51% ownership of Kipawa under the joint venture.
MAT stock price jumped significantly upon the MoU announcement, but this also brought their market cap to the unrealistic level, which doesn’t look very stable considering the announced agreement was non-binding and a ‘no go’ could be given at any time before the joint venture is formed.
