Investment opportunities not all gone from junior resource sector.
[Editor’s note: The following article first appeared as an entry to Bottom Blog on October 13. To read the original entry, click here.]
The brutal sell-off over the past few weeks has left global equity markets in shambles. Hit hardest are micro cap mining and exploration companies, as they are in a sector relying solely on external investment to keep their programs advancing.
The taps of finance have all but been shut down, and brokerage and institutional firms are holding on to whatever cash they have left in preparation for the worst.
There are hundreds of companies who have been forced to dramatically slow down or even halt exploration and development efforts in order to stay afloat. As a result, they find themselves caught in a quagmire - do they massively dilute their stock to continue operations, or halt operations all together and wait for better times? Either way, it has turned into a hostile environment for those companies whose kitty is running dry.
In light of this stark reality, I have uncovered a few exceptional junior explorers who are fortunate enough to be flush with cash - enough to last them several years without need of additional financing.
Commerce Resources Corp (TSX: V.CCE, Stock Forum): 19 cents
I have covered CCE in earlier blog installments. For more detailed information on their strong fundamental position, please visit the following blog link: http://www.stockhouse.com/Blogs/ViewDetailedPost.aspx?p=82751
Late last year, the company successfully raised over $32 million at $1.20/share. They still have over $22 million safely tucked away, and are aggressively continuing the exploration and development of the massive Blue Ridge tantalum and niobium deposit in northern British Columbia. At today’s metal prices, the deposit could be valued in the multi-billions. The Eldor niobium deposit in Quebec continues to show strong indications of another elephant deposit in early stages. Last week saw heavy trading volume, as various funds continue to unwind their position in juniors; however, all the stock has been picked up and put into safe, long term hands. The stock is trading at just above CASH VALUE, with zero value being given to billion of dollars worth of in situ tantalum and niobium.
IMA Resources (TSX: V.IMR, Stock Forum): 32 cents
Talk about a stalwart in tough times! In the light of the stock market rout, shares of IMA held steady throughout. IMA had its share of trouble last year, as it lost a court battle over a massive silver project in Mexico, the highly publicized battle over Navidad. The stock tanked from nearly $4.00 to a low of 29 cents, but the silver lining showed up in the form of IMA getting back $25 million in cash from the project. With 57 million shares outstanding and $23 million in the bank, IMA is trading at less than cash value, yet it is starting to drill its recently acquired Island Copper project in B.C. This monster is host to a 43-101 compliant 230.9 million tonnes of ore containing 2.29 million ounces of gold and 1.425 billion pounds of copper, as well as an inferred resource of 52.8 million tonnes containing 326 million pounds of copper and 0.64 million ounces of gold. The deposit also contains undefined molybdenum mineralization. IMA retains an option to earn a 70% interest in this project.
Phoscan Chemical Corp (TSX: V.FOS, Stock Forum): 27 cents
I never though I'd see the day when FOS would trade under 30 cents again, but here we are. The company successfully raised over $72 million in the past 12 months and lays claim to the Martisan phosphate property located in northern Ontario. The deposit has a 43-101 compliant resource of 62.2 million tonnes of Measured and Indicated P2O5 grading 23.55% and 55.6 million tonnes at 22% in the Inferred category. They have successfully completed a Pre-feasibility study, and are advancing plans for a 400,000 tonne/year processing facility. Once in production, the project will generate anywhere from a low end of $265,000,000 and a high end of $499,000,000 PER YEAR IN EBITDA, off a topline revenue in the multi-billions. The company currently has approximately 177 million shares outstanding, fully diluted and enough cash to bring it to full bankable feasibility; at which point production plans and design will commence. With a current market cap of approximately $50 million, you are buying the world’s next major phosphate miner for pennies on the dollar.
These companies are my top three “cashed up juniors.” I continue to dig for more. If you have any comments or have your own favorite cashed up junior, please share with us in the comment section of this blog.
Disclosure: Author holds shares in CCE and FOS, and intends to purchase shares of IMR in the near future.
For more from Andrew Delic, visit Bottom Blog on Stockhouse.
