MPM TECHNOLOGIES, INC.
199 POMEROY ROAD
PARSIPPANY, NJ 07054
December 31, 2008
Ms. Tracie Towner
United States
Securities and Exchange Commission
Division of Corporate Finance
Washington, D.C. 20549-0405
Re: MPM Technologies, Inc.
Form 10-KSB for Fiscal Year Ended December 31, 2007
File No. 0-14910
Dear Ms. Towner,
Thank you for your assistance in our conference telephone call last week. This
letter will again be in response to your July 31, 2008 comment letter.
We propose to make the following changes to our December 31, 2007 Form 10-KSB
for the fiscal year ended December 31, 2007:
Under the caption "MPM MINING, INC.", we would change the wording regarding
management's intention to hold the properties as an investment. We would also
remove the wording regarding the joint venture partner. Instead we would write
the following for the first and second paragraph under the referenced caption:
"The company owns 7.5 patented claims and 2 unpatented claims, and leases 7
patented claims with options to purchase on approximately 300 acres in Montana's
historical Emery Mining District. It also owns a 200-ton per day onsite
floatation mill. Companies such as Exxon Corporation, Freeport McMoran Gold
Company and Hecla Mining Company in addition to MPM Mining have conducted
extensive exploration in the area.
MPM management believes that resuming mining operations is a way to generate
positive cash flows and mitigate the continuing losses from other operations
given the current market prices and conditions for precious metals. Accordingly,
management will investigate its needs to make this happen."
Under the caption "Item 2. Properties", we would remove the last two sentences
in the fourth paragraph.
On the Consolidated Balance Sheet for December 31, 2007, we would change the
caption "Mineral property held for investment (Note 10)" to "Mineral property
(Note 10)".
At December 31, 2007, mineral properties with a carrying amount of $1,070,368
were tested for recoverability. A cash flow table was prepared to illustrate the
expected returns assuming that mining operations would be starting in started in
mid-2010. F.or the years 2008 and 2009, MPM management will be actively seeking
a joint-venture partner for its mining operations. Failing that, MPM will
restart mining operations on its own. It was also assumed that the properties
could be mined nine to ten months out of the year (or 200 working days) except
for 2010 for which four to five months was considered (100 days).
The following table illustrates the calculation of the weighted average for gold
and silver based on the testing that had previously been done on the mining
properties
Location Estimated Gold Ounces Estimated Silver Ounces
- -------- --------------------- -----------------------
Emery Mine 21,554 891,712
Emery Stockpile 4,663 166,317
Bonanza 28,852 450,273
Hidden Hand 25,660 --
---------- ----------
Total estimated ounces 80,729 1,508,302
Total estimate tonnage 523,998 315,379
Weighted average estimated
yield per ton 0.154 4.783
The following table shows by year the range and probability of possible cash
flows expected to result from mining the properties over the next ten years
beginning in 2008. It also shows by year the computation of expected cash
flows.The significant assumptions in preparing this table are that the estimated
costs involved with restarting the mining operations of $300,000. The market
price of gold was assumed to be $600 per ounce, and $12 per ounce for silver.
The costs of extraction are expected to be $400 per ounce of gold and $8 per
ounce of silver (67% of market price). The table also shows three production
levels. The probability that production will be 150 tons per day is 50%. The
probability that production will be 175 tons per day is 30%, and for 200 tons
per day is 20%.
Total Cash Flow Probability Expected
Year Estimate (Market) Assessment Cash Flows
- ---- ----------------- ---------- ----------
2008 (4,000) 50% (2,000)
(4,000) 30% (1,2000)
(4,000) 20% (800)
----------
(4,000)
2009 (4,000) 50% (2,000)
(4,000) 30% (1,200)
(4,000) 20% (800)
----------
(4,000)
2010 448,800 50% 224,400
573,600 30% 172,080
698,400 20% 139,680
----------
536,160
2011 1,497,600 50% 748,800
1,747,200 30% 524,160
1,996,800 20% 399,360
----------
1,672,320
2012 1,497,600 50% 748,800
1,747,200 30% 524,160
1,996,800 20% 399,360
----------
1,672,320
2013 1,497,600 50% 748,800
1,747,200 30% 524,160
1,996,800 20% 399,360
----------
1,672,320
2014 1,497,600 50% 748,800
1,747,200 30% 524,160
1,996,800 20% 399,360
----------
1,672,320
2015 1,497,600 50% 748,800
1,747,200 30% 524,160
1,996,800 20% 399,360
----------
1,672,320
2016 1,497,600 50% 748,800
1,747,200 30% 524,160
1,996,800 20% 399,360
----------
1,672,320
2017 1,497,600 50% 748,800
1,747,200 30% 524,160
1,996,800 20% 399,360
----------
1,672,320
The following table shows the computation of the present value of the expected
flows; that is, the sum of the present values of the expected cash flows by
year, which are calculated by discountiing those cash flows at a risk-free rate.
Risk-Free Expected
Expected Rate of Present
YEAR Cash Flows Interest Value
- ---- ---------- -------- -----
2008 (4,000) 5.0% $ (3,628)
2009 (4,000) 5.1 (3,446)
2010 536,160 5.2 437,755
2011 1,672,320 5.4 1,285,631
2012 1,672,320 5.6 1,204,526
2013 1,672,320 5.8 1,125,641
2014 1,672,320 6.0 1,047,979
2015 1,672,320 6.2 972,029
2016 1,672,320 6.4 898,221
2017 1,672,320 6.6 826,933
Total $7,791,643
We have therefore concluded that there is no impairment of this asset from its
recorded amount.
Sincerely,
Glen Hjort
Chief Financial Officer
cc: Michael J. Luciano
President & Chief Executive Officer