Morro Bay (V.MRB) offers Mexico silver upside at ground floor stock price

Stockhouse Editorial
1 Comment| January 28, 2014


The following is a Q&A interview with Morro Bay Resources President, Director and CEO, John Zang.

The stock just started trading under the symbol (TSX: V.MRB, Stock Forum).
 
John, I understand you recently entered into an option agreement to acquire the Peñoles Project in Mexico.
 
Can you tell us a little about the history in this prolific gold & silver district?

The Peñoles Project optioned to Morro Bay consists of approximately 36,000 hectares (88,950 acres) located in the State of Durango, Mexico, along the Durango Silver Belt. The lands optioned to Morro Bay include two mines which were formerly worked during the late1800’s and into the 1900s.

In fact, the historians out there will be interested in knowing that these two mines were essentially the first mines operated by Peñoles Comprometido con México, one of Mexico’s largest active mining companies. Peñoles continues to own the rights to land all around the Morro Bay lands.
 
Are there active mines in the area now?

Yes, of course. Not only are we excited about the history of this site and the fact it previously was in commercial production, but also there are many active mines in the Durango region of Mexico. Other senior companies in the Durango trend include Endeavour Silver Corp. (TSX: T.EDR, Stock Forum) Mag Silver Corp. (TSX: T.MAG, Stock Forum)
and Orko Silver which was taken over in April 2013.

In addition, Argonaut Gold Inc. (TSX: T.AR, Stock Forum) is within 100 kms with similar gold grades to what was seen at El Capitan on the Morro Bay option lands. In fact, Argonaut is currently producing around 75,000 ounces of Gold per year from its Castillo mine in the area. At Morro Bay we hope to follow in the footsteps of these companies as we proceed with the exploration and hopefully development on the lands optioned to us.


 
What are Morro Bay’s plans moving forward?

Our first priority is to carry on with the exploration program that has been undertaken to date. Even before closing on the transaction last week we were actively planning the next steps for the exploration program. As a result, we should see additional test holes drilled commencing in February.
 
That is exciting news, indeed. Where do you plan to focus this drilling?

Our focus will be around the San Rafael mine workings. This was one of the prior turn of the century Peñoles’ mines.

Like I referred to before, there has been considerable exploration activity on the optioned lands prior to our acquiring the lands. We hope that this next phase of exploration can further compliment these results.
 
The lands appear to have some very attractive results from previous workings. What are some of these highlights?

Obviously with the historical silver mine workings located on the lands, it comes as no surprise that silver mineralization was identified during the prior exploration programs.

However, the extent of the silver mineralization was shown to be larger than first anticipated. In addition, the El Capitan region on the optioned lands returned significant gold results. In 2011 test hole CDDH 11-07  returned mineralization of 108.35 meters averaging 0.410 g/t and CDDH 11-17 returned 88.40 meters averaging 0.816 g/t (including 33.50 meters averaging 1.687 g/t).

The 2012 test hole, CDDH 12-13, intersected mineralization from surface to a depth of 131.15 meters. The entire hole returned an average grade of 0.555 g/t gold (including a 61.15 meter section that averaged 0.919 g/t gold) and was stopped in mineralization.

These results of the 2012 program are considered significant because El Capitan appears broadly similar to the Argonaut Gold’ El Castillo Mine located approximately 90 kilometers south of El Capitan.  Argonaut Gold is successfully heap leach mining El Castillo at an average grade of 0.32 g/t gold with a cut-off grade of 0.15 g/t Au.
 
On top of that, significant results were obtained from the trenching and test holes drilled around the Jesus Maria mine workings. Trench 2013-11 returned 15.4 meters averaging 420.8 g/t silver including a 2.0-meter interval that assayed 2,152 g/t silver. JM DDH 13-06 returned 11.85 meters averaging 320.3 g/t silver including a 0.9-meter interval that assayed 3,409.1 g/t silver. 

JM DDH 13-07 intersected a 2.1 meter interval that returned 279.5 g/t silver and a 4.0 meter interval that returned 532.9 g/t silver. We believe that these results demonstrate that mineralization in the Jesus Maria mine area is much more extensive than previously recognized.  Several parallel zones of a new style of vein-type mineralization (carbonate rich vein and stockwork zones) were defined in the hanging wall of the main Jesus Maria structure.
 
Obviously I cannot provide all of the results here. However Morro Bay has posted a summary of the prior test hole results on its website at www.morrobayresources.com.
 
What does those results mean to an investor?

Well, we are still in the explorations stage of course, but the optioned lands have already had over $5 million expended on them. So there is considerable data to work with. As an investor, I would want to see indicators of viable mineralization on the lands and I would want to see analogous successful operators in the area. I believe, the optioned lands have each of those.



At Morro Bay we are excited, and I think investors should be excited, to access the opportunity to invest in a project at ground floor share prices, but which in fact has already seen significant exploration and positive results from that exploration.
 
How is Morro Bay Resources in a unique position to be successful so that investors should look at acquiring your stock today?
 
As an investor I would consider four key elements.
  • Our quality property;
  • Our strong Balance Sheet;
  • Our strong team; and
  • Our low stock price.
 
I will elaborate. I believe the quality of the lands optioned to Morro Bay is clear, but on top of that Morro Bay’s strong Balance Sheet differentiates us from many other junior miners. As an investor I would consider whether Morro Bay has the capital to execute on the program by which it can exercise the option on the lands.

The fact is Morro Bay does have the capital both to complete the exploration program and the cash payment required to exercise the option on the lands. Personally, I believe one of the problems facing many junior minors  is the fact they do not have sufficient capital to complete their planned programs.

Morro Bay is in a strong financial position, we do have the capital to exercise the option on the lands. Even prior to the recently completed private placement which raised gross proceeds of over $630,000, Morro Bay has cash of over $2.5 million and debt of less than $20,000. Our strong Balance Sheet should be seen as removing a great deal of risk for our investors.

It is rare these days to find a junior mining company with the potential that the optioned property brings and a strong Balance Sheet to pursue that opportunity further. Morro Bay has put together the team to take advantage of the opportunity and as this transaction has only recently been completed, I believe there is significant upside in our share price. 
 
Can you elaborate on the team you brought together?

I am excited about the expertise we have recently added to the Morro Bay Board of Directors. We have added Elmer Stewart, Carl von Einsiedel, and Garth Kirkham to our Board. All three of these individuals bring with them significant mining experience.   
 
Elmer Stewart has a Masters Degree in Geology and over 33 years of domestic and international experience in mining and mineral exploration. Mr. Stewart is President and Chief Executive Officer of Boxxer Gold Corp. (TSX: V.BXX, Stock Forum) and of Copper Fox Metals Inc. (TSX: V.CUU, Stock Forum).
 
Mr. von Einsiedel has been a director and CEO of Sierra Madre Developments Inc. since May 2009 and, as a result, he has lead the prior development on the optioned lands. His knowledge of this prior work in Durango will be very valuable as we move forward. Mr. von Einsiedel has a BSc. (Geology).
 
Mr. Kirkham also has a BSc. (Geology). He is a fellow of the Society of Economic Geologists. He is a member of the Canadian Institute of Mining, the Association of Mineral Exploration of BC and the Prospectors and Developers Association of Canada.

He has also been awarded as Distinguished Member by the Geological Association of Canada; the Barlow Memorial Medal, the Boldy Award, the Sproule Award and Distinguished Lecturer by the Canadian Institute of Mining and the Award of Merit by the Northwest Territories and Nunavut Association of Engineers, Geologist and Geophysicists. Mr. Kirkham is a member of the advisory board for Kaminak Gold Corp. (TSX: V.KAM, Stock Forum) and is a director of Romios Gold Resources Inc. (TSX: V.RG, Stock Forum) and Kivalliq Energy Corp. (TSX: V.KIV, Stock Forum).

John Zang, President, CEO Mr. John Zang has been Chief Executive Officer and Director of Verity Energy Ltd. since May 2010; Director of Touchstone Exploration Inc. Since June 2010; He was member of the Board of Directors of RMS Systems Inc. (an energy equipment and services company) from September 2008 to November 2013.Prviosuly he was also a senior officer of Argonauts Group Ltd., Argo Energy Ltd., and Sequoia Oil & Gas Trust.

Disclosure: Morro Bay Resources is a Stockhouse client.

Tags: CONGLOMERATES

Rate this article
0.5 stars
v
Usefulness

Clarity

Credibility

Comments

Sophia123
Hiya EVERYONE. What is up with all the Energy people and the Lawyer running this gold and silver explorer??? Plus 7 Directors??? And the Directors are heavy weighted to energy stuff to. Are they looking for oil and gas to or what?? This article did not talk about that stuff. TIA
3 stars
February 11, 2014
Rate this comment
5 stars
v
Usefulness

Clarity

Credibility

Leave a Message

You must be logged in to access this feature.