Zacks Small Cap Research 
Mexivada Mining Corp (MNV)

December 2011

Mexivada Mining Corp. (V.MNV TSX-V)
Current Recommendation Outperform
Prior Recommendation N/A
Date of Last Change 03/06/2011
Current Price (12/19/11)
Six- Month Target Price
Risk Level Above Average
Type of Stock Small - Value
Industry Mining - Gold
Zacks Rank in Industry N/A
Mexivada is a junior gold exploration company
proceeding with exploration plans at many of its
properties. Management has implemented a unique
financial plan of optioning properties, laying off
exploration costs onto optionees while collecting
substantial option payments and shares of stock,
along with retaining a minority ownership in
successful ventures. Management is pursuing a
prospect on the Golden Porcupine property and on a
recently acquired adjacent property. Also, a prospect
in Hislop Township is being pursued. We maintain
our Outperform rating with a target of

52-Week High
52-Week Low

V.MNV: Zacks Co. Report OUTPERFORM

Mexivada acquires options on three properties in
Ontario and announces gold discoveries at
Golden Porcupine. Optioning of properties is
bolstering cash flow.
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KEY POINTS Mexivada is a junior gold exploration company currently proceeding with several unique properties in
Canada, Nevada and Mexico. Management s strategy is to increase shareholder value by acquiring and exploring properties near
or adjacent to proven multi-million ounce gold trends and/or significant mineral deposits. In general,
the company is involved in properties with near-term, drill-ready targets, and after a phase of
additional investigation and exploration (the company s core competency), management often seeks
a joint venture partner to further explore and develop each property, thereby laying off significant
exploration costs onto the partner and generating cash from the series of option payments. During
fiscal 2011, Mexivada reported a gain on optioning mineral properties (a new line item in the
Income Statement) of $1.7 million. Mexivada also received a total of 1,600,000 shares of stock
per the terms of option agreements.
The quality of Mexivada s properties and management s strategy of joint ventures have aided the
company s access to the capital markets in order to fund exploration costs and purchase/option
additional promising properties. Management is also conservative in its expenditures and benefits
from its cash flow model of receiving Optionees payments to help fund its own Optionor payments.
Consult our report dated March 7, 2011 for full background information and maps of the projects.
We maintain our Outperform rating with a target of
Based in Vancouver, British Columbia, Mexivada (MXVDF: OTCBB and MNV: TSX-V) is a Canadian
junior mineral exploration company that targets and acquires properties in Mexico, Nevada, Canada and
the Republic of Congo (ROC), and then explores for gold, silver, tellurium, diamonds, uranium and other
rare metals. CEO Richard R. Redfern is a Certified Professional Geologist and Qualified Person1. The
company s primary focus is on the precious metals of gold and silver; however, management is
opportunistic and also pursues tellurium, rare metal, molybdenum, diamond and uranium deposits that
are situated close to existing mines.
Management s strategy is to increase shareholder value by acquiring and exploring properties that
potentially could yield economically viable geologic deposits of precious metals, diamonds and/or rare
metals. Management primarily targets projects in areas near or adjacent to proven multi-million ounce
gold trends and the infrastructure to support both further exploration and the ultimate development of a
producing mine. In general, the company is involved with properties with near-term, drill-ready targets
and the potential of three-to-five million ounces of gold reserves. After a phase of additional investigation
and exploration to further prepare the property (the company s core competency), management often
seeks a joint venture (JV) partner to further explore and develop each property, thereby laying off
significant exploration costs onto the partner and generating cash from the series of option payments.
The company is pursuing a large number of projects: 3 in Canada (Golden Porcupine, Rypan and
Hislop), 5 in Nevada (Goldstorm, Gold Jackpot, Poker Flats, Jefferson and Ziggurat), 2 in Mexico
(Yécora and AuroTellurio in the State of Sonora) and 1 in the Republic of the Congo (composed of the
Malambani Permit). Management believes Golden Porcupine, Gold Jackpot, Goldstorm and ROC are
potentially world class gold deposit projects (multi-million ounce Au potential). Mexivada retains
controlling ownership of Rypan (100%), Hislop (100%), Golden Porcupine (80%) and in the Mexican
property of Yécora (100%). The properties under joint ventures are Goldstorm (up to 75% potential
ownership by West Kirkland), Republic of Congo (up to 70% by Zamarat), Ziggurat (up to 75% to Spartan
1 A Qualified Person is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development, or mineral project
assessment, or any combination of these; and is a member or licensee in good standing of a professional association.
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Gold and Sphere Resources), Poker Flats (up to 75% to Spartan Gold and Sphere Resources), Gold
Jackpot (up to 75% to Sphere Resources), Jefferson (up to 90% by Trilogy Mining) and AuroTellurio (up
to 80% to California Gold). Mexivada prefers a collegial relationship with its Optionees to better share the
geological and historically available information about specific properties, along with background
knowledge about analogous formations with proven deposits.
Junior gold companies with successful projects are potential targets for larger producers, which are
seeking acquisitions for growth. Mexivada could become an attractive acquisition candidate for a major
gold production company.
The company has been very successful in obtaining capital through private equity fund raising. In
fiscal 2011, Mexivada has raised $1.86 million from private placements of common stock and the
exercise of warrants. In the prior fiscal year, the company netted $1.02 from the issuance of stock. Since
exploration programs are capital-intensive, sources of cash are necessary to continue exploration
programs. The company has accessed the capital markets several times since its Initial Public Offering
(IPO) at C
.50 per share on November 30, 2005, when Mexivada became a publicly traded company on
the TSX Venture Exchange. In addition, management attempts to match cash inflows from Optionee
payments with cash outflows for its own Optionor payments. The Canadian dollar is the functional
currency of the company.
Purchase of Rypan claims - Ontario
In mid-September, Mexivada entered into an option agreement to purchase a 100% interest in 4 claims
(known as the Rypan claims) adjacent to its Golden Porcupine property in Deloro Township, Ontario. The
fault systems and quartz veining on the Golden Porcupine property may extend into these claims,
formerly associated with Rypan Porcupine gold mines. Mexivada conducted core drilling on these claims
in late 2011, and three drill holes have been completed. Mineralized drill intercepts were encountered,
but specific assays have not yet been reported. If the mineralization extends to the veining extends to in
the Clorinda structural zone on Mexivada s Golden Porcupine property, the lateral extent of the system
may extend over 1.1 kilometers (see Golden Porcupine recent news below). Flow-through cash funds in
Mexivada's treasury funded the drilling program.
In order to earn a 100% interest in the four Rypan claims, Mexivada must compensate Ranger
Exploration (P. C. Robert and W.T. Kornik) with $25,000 and 500,000 shares of Mexivada stock upon
signed (already paid and issued, respectively) and structured payments of $25,000 in cash and 500,000
shares of Mexivada stock by the first anniversary of the agreement. Ranger Exploration retained a 2%
net smelter returns royalties (NSR).
Fire assay confirms gold discovery at Golden Porcupine Property - Timmins, Ontario
Mexivada completed 12-hole core drilling program (Phase 1) at its Golden Porcupine property near
Timmins, Ontario. Earlier this year, Mexivada conducted sampling based on a new enzyme leach
geochemical survey of B-horizon soils in the southeastern part of the property that showed anomalous
areas of gold, arsenic, antimony and molybdenum. Starting in mid-September, Mexivada began
advancing the exploration of its Golden Porcupine property through a Phase 1 drilling program. Having
funded a 5,000+ meter NQ (47.6 mm inside diameter) core drilling program with flow-through cash funds
already in Mexivada's treasury, drilling intercepted multiple zones of gold mineralization in excess of 1.0
g/t Au, which have been confirmed by fire assay.
Two areas drilled were an open pit style gold target area known as Big Bif and a gold-hosted vein (Dome
Mine-Delnite Mine style) in and adjacent to fault structures known as the Clorinda shear/vein system.
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Trenching was also conducted to expose additional rock outcrops and to gain more exposures. The Big
Bif area is defined by elevated gold geochemical anomalies revealed by ground magnetic and induced
polarization (IP) surveys. Two drill holes tested the Big Bif target area in late September. Mineralized
zones were intercepted, but specific assay results have not yet been reported. Mexivada discovered a
new zone of quartz vein systems in the Clorinda structural zone near the Deloro fault sector. Stripping
has confirmed that the quartz veining extends 120 meters in length and up to 15 meters in width.
Management interprets the length to be at least 700 meters in strike and, if the veining extends to the
mineralization intersected in the Rypan drill hole, the lateral extent of the system may extend over 1.1
kilometers. If the fault systems and quartz veining on the Golden Porcupine property extend into the
Rypan claims, the Clorinda structural zone would be the largest quartz vein system discovery south of
the main Destor-Porcupine fault made at Timmins in the last 75 years.
Mexivada options two mineral properties in Hislop Township - Ontario
In September 2011, Mexivada entered into option agreements to acquire 100% interests in two mineral
properties located in Hislop Township near Matheson, Ontario (east of Timmins and west of Kirkland
Lake). The two mineral properties are composed of an 8-unit claim group 4251933 and a 4-unit claim
group 4255022. On September 20, 2011, Mexivada entered into an agreement to acquire a 100%
interest of the 4251933 property from 2205730 Ontario, Inc. for 200,000 shares of Mexivada common
stock (issued in November) and a 2% net smelter return royalty (NSR). Mexivada may purchase the NSR
for $1,000,000. On September 26, 2011, Mexivada entered into an option agreement to acquire a 100%
interest in the 4255022 property from Pierre C. Robert of Timmins, Ontario, Inc. for the following staged
payments: $50,000 and 1,000,000 common shares at TSX-V approval (paid and issued, respectively),
$100,000 and 1,000,000 shares by October 31, 2012; $200,000 and 1,000,000 shares by October 31,
2013 and $500,000 and 1,000,000 shares by October 31, 2014. The property is subject to a 2% NSR,
which Mexivada can purchase 1% for $1,000,000.
Management is pursuing the 8-unit claim group 4251933 due to its proximity (175 meters) to 11 recent
holes drilled in a tight pattern by St. Andrew Goldfields (SAS: TO) that discovered gold mineralization. A
magnetometer-very-low-frequency (VLF) survey conducted by Katrine Exploration of Kirkland Lake,
found a north-south magnetic low, indicating a northerly-trending water-filled fault zone. A drill rig was
contracted from Laframboise Drilling for a 2,000+ meter program using flow-through cash funds in
Mexivada's treasury. One drill hole is complete, a second in progress and a third planned. A small batch
of rush samples (from the first drill hole) assayed in excess of 1.0 g/t Au. The second drill hole has
intersected multiple zones of mineralization, which have not been assayed but have been visually
Also, Mexivada conducted a magnetometry plus VLF survey on the 4255022 property. The survey
defined a 147 Zone-type gold target. Mexivada is testing the target with a drill program funded with flowthrough
funds in Mexivada's treasury.
Goldstorm property - Nevada
West Kirkland Mining (WKM: TSX-V) appears not to have conducted any physical work or drilling on the
Goldstorm property in 2011; therefore, this month (December) West Kirkland will be liable for a
$50,000 drilling clause penalty fee, along with the $75,000 annual scheduled lease payment and
150,000 WKM shares, if the lease on the property is to continue in force. The option agreement was
signed on December 21, 2009 whereby West Kirkland could earn up to a 75% interest in the Goldstorm
property by paying annual cash lease fees and issuing annual allotments of shares of WKM stock, along
with drilling at least 2,000 meters of core drill holes by December 31, 2011. According to West Kirkland
Mining s mid-year report (as of June 30, 2011), only two holes totaling 813.57 meters were drilled on the
property in 2010 and further drilling is being contemplated at this time. Mexivada has not received any
geological data pertaining to these drill holes and has not been informed of plans for any further work in
2011 by West Kirkland Mining.
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Ziggurat and Poker Flats properties - Nevada
Mexivada received 800,000 shares of Sphere Resources (SPH: TSX-V) as part of the restructured
option agreements for the Ziggurat and Poker Flats properties in Nevada.
AuroTellurio (Chuchu Estrella Property) - Mexico
On August 8, 2011, Mexivada optioned up to 80% of its AuroTellurio properties (La Viuda and La Viuda-
1) to California Gold Corp. (CLGL: OTCBB) for annual cash payments and shares of California Gold
common stock to Mexivada over the next four years. Mexivada received the initial payment of $10,000
and 250,000 restricted shares at closing. In addition, California Gold must invest $3,000,000 on
exploration of the property.
Fiscal 2011 year-end results
On November 23, 2011, Mexivada reported results for the fiscal year ending June 30, 2011. The
company reported a loss for the year of $3,632,670 versus a loss of $861,052 during fiscal 2010 primarily
due to a write-off of $2,965,785 (the acquisition costs and exploration expenditures) related to the
Republic of the Congo property, a $962,500 impairment on marketable securities and an unrealized loss
on fair value adjustment of $599,716 on the shares and warrants of Spartan Gold, which were partially
offset by a $1,702,666 gain on mineral property options for the Ziggurat and Poker Flats properties.
Professional fees increased 123% to $247,755 from $111,210 in fiscal 2010 due increased in legal fees
related to properties and an increase in preparing the annual audited financial statements. Also stockbased
compensation (a non-cash expense) increased 29.4% to $270,450 compared to $209,075 in the
prior fiscal year.
During the fiscal year, drilling and exploration expenditures of $672,270 were undertaken in the Republic
of Congo ($378,249), Nevada ($142,893), Mexico ($117,457) and Canada ($33,671). As of June 30,
2011, working capital was $1,117,569, including cash of $737,234. Working capital increased 465% from
$198,437 at the end of fiscal 2010, primarily due to $1,861,289 received from three private placements
and the exercise of warrants. Management believes that the company has sufficient cash on hand to fund
operating expenses through fiscal 2012; however, additional capital must be raised to conduct further
exploration on its properties.
Private Placement completed
On December 16, 2011, Mexivada Mining announced the closing of a non-brokered private placement
of 7,000,000 flow-through units (at
.10 per flow-through unit) raising net proceeds of $665,000.
MineralFields Group, a mining fund that offers tax-advantaged super flow-through limited partnerships to
investors throughout Canada, purchased the entire offering. Each flow-through unit consists of one flowthrough
common share and one non-flow-through share purchase two-year warrant exercisable at
per share during the first year and
.20 during the second year. Mexivada will to use the proceeds to
explore its Canadian properties.
Republic of the Congo Property (the Malambani Research Permit)
Despite continuing its exploration program on the Malambani permit, Zamarat Mining Ltd. (Mexivada s
optionee partner) abruptly halted work and left the country in late July. Recent contact with the
management of Zamarat Mining indicates that exploration work may recommence and that the research
permits held by Compagnie Miniere du Chaillu (68% owned by Mexivada and 32% owned by Zamarat
Mining) will be renewed with the Ministry of Mines and Geology in Brazzaville. Zamarat Mining must pay
$100,000 to Mexivada by December 31, 2011 in order to keep its option agreement with Mexivada in
good standing. Since Zamarat Mining was incommunicative with Mexivada at the time of filing its yearend
results for fiscal 2011, Mexivada wrote-off the (abandoned) Republic of the Congo property ($14,400
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in mineral property costs and $2,965,785 of deferred exploration costs) and recorded contingent claims
of $300,000.
Through its subsidiary, Compagnie Miniere du Chaillu, Mexivada controls 5 exclusive Permis des
Recherches (PR) concessions for diamonds and gold & connected substances, and one prospecting
permit for gold at Moussondji. Collectively, these concessions and permit are known as the Malambani
Research Permit, a six-year permit effective September 12, 2006, renewable annually and extendable for
two additional two-year periods before the company must apply for a mining exploitation permit.
In January 2011, Mexivada optioned up to 70% of its Republic of the Congo properties to Zamarat Mining
Ltd. for structured payments of $175,000 between January 28, 2011 and December 31, 2012, of which
$100,000 must be paid before the end of 2011. In addition, Zamarat must invest $4.5 million in
exploration and development expenditures by December 31, 2013.
The management of Mexivada is employing a unique financial cash flow plan. By optioning certain
properties, Mexivada benefits from a series of substantial cash option payments and shares of stock
issued by the optionees. In addition, the optionees are required to commit to considerable exploration
costs and sometimes the delivery a mining pre-feasibility study and/or a NI 43-101. If the project is
successful, Mexivada retains a minority ownership position. If unsuccessful, Mexivada benefits from
option payments, the receipt of shares of stock, further exploration of the property and the retention of
100% ownership in the mining rights.
As a junior gold exploration company, Mexivada cannot be valued on a revenue, earnings, book value or
cash flow basis. Management s strategy is to increase the value of each of its properties through valueadded
investigation and exploration (the company s core competency), including but not limited to
geological mapping, geophysical surveys, geochemical analysis, field sampling, excavator trenching,
exploratory drilling, analyzing historical work on the property, and especially referencing analogous
geologic formations. Armed with new information, management attempts to option the properties to other
parties who will further explore and ultimately mine the property, from which Mexivada retains a portion of
future revenues and some equity interest to participate in the property s development and any potential
new discoveries. More sophisticated methodologies based on market capitalization-to-reserves, average
ore value per tonne, per-ounce costs or cash profit margins per ounce produced also are not germane.
Therefore, an alternative valuation technique based on book value is the only appropriate alternative,
especially in comparison to junior gold companies employing a similar exploration-discovery stage
strategy to Mexivada s.
Book value of a junior gold exploration company represents the equity capital that has been raised to
acquire the minerals rights on properties and to conduct exploration programs. An amalgamation of
information is encapsulated within the raised capital total, including the quality of the properties (both in
terms of mineral potential and political stability) and the exploration results from introductory geochemical
surveys to assay results from drilling programs. Therefore, book value captures the complex valuation
potential of the company s base gold resource value potential by sophisticated investors, most with
expert knowledge of a junior gold exploration companies in the exploration phase with no stated
revenues. Hence, we find the use of book value is a valid and appropriate metric by which to determine a
junior gold exploration company s valuation.
Kaminak (KAM: TSXV) and Pelangio (PX: TSXV) appear similar to Mexivada. Kaminak and Pelangio
operate in the exploration-discovery stage, focusing on the acquisition and exploration of gold properties.
Both companies have not reached the gold production phase, and hence, do not yet generate revenues.
Also, Kaminak and Pelangio initiate exploratory drilling programs after conducting geochemical analysis
of their properties. Therefore, Kaminak and Pelangio should be analyzed as benchmarks for the valuation
of a junior gold company without a resource calculation.
In late October 2009, Kaminak announced results from a trenching program of 11.72 g/t over ten meters
from one trench and 8.56 g/t over 15m from the other trench. Prior to the discovery 2010, Kaminak s
stock traded in a range between 1.4 and 2.2 times book value. After the announcement, the stock rallied
to 3.2 times book value. Thereafter, stock steadily expanded its valuation to 3.7 times book. In late May
2010, the results of a successful drilling program (17.1 g/t over 15.5 meters) were announced, and the
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stock rallied to 7.1 times book value; in August 2010, after additional announced discoveries (15.9 and
21.3 g/t over 5 and 8 meters, respectively), the stock rallied further to 16.1 times book.
The valuation of Pelangio is more complex than Kaminak case, since Pelangio has two flagship
properties (Manfo and Obuasi). In addition, Pelangio operates in Ghana instead of the Yukon Territory of
Canada. Nevertheless, due to the announcements in the fourth quarter of 2010 concerning the
successful drilling program on the Manfo property, Pelangio s stock began trading between 2.0 and 3.2
times book (C
.75 and C$1.25). Currently, Pelangio is trading at 1.24 times book value
After the initial speculative flurry after the company s IPO in late 2005, Mexivada s stock has traded in a
relatively consistent range between 0.8 and 1.7 times book value. With management s commitment to an
exploration program in Ontario, we expect Mexivada s stock to trade between 1.4 and 2.2 times book
.08 and C
.12). Since our last report, Mexivada s book value has declined 53% to $3,005,316,
primarily due to a write-off of $2,965,785 (the acquisition costs and exploration expenditures) related to
the Republic of the Congo property. Therefore, our intermediate-term single-point target is
based on a 1.7 times book value valuation.
The stocks of junior gold companies have a unique trading profile. The stocks tend to mark time,
trading sideways-to-down, during an incubation phase until a discovery from a drilling program is
announced. Significant positive results are the stimulus for upside gaps in stock s price in a mark-up
phase as the new information is discounted by first-movers. Generally, the price appreciation continues,
albeit at a slower pace, usually on heavy volume until the newly created demand instigated by the
announcement of the discovery is fulfilled. After the initial rally, another period of time of sideways-todown
action occurs. Often the stock retraces some, or sometimes all, of the prior price-appreciation
during this digestion phase. If and when a subsequent discovery is announced from a follow-on drilling
program, another mark-up phase is set in motion.
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