Mariana Resources MRLDF "Deal or no deal ? " - 500 Beiträge pro Seite

[o-z]

Mir ist aufgefallen das es für die Company noch kein Forum hier gibt , eigentlich schade scheint ein interessanter Wert zu sein über den man auch ziemlich kontrovers diskutueren kann wie mir klar wurde als ich einen Artikel und vor allem die Komentare dazu auf Seeking Alpha gelesen habe.
Deshalb möchte ich das hier auch mit dem Artikel und einigen ausgewählten Komentaren beginnen, wer möchte einfach den rest bei SA nchlesen


Summary

Mariana Resources is the highest grade discovery of the past 15 years.

Despite drill results that have dwarfed the previous highest grade discoveries, the company's share price has barely budged.

I see a fair valuation of $270 million on Mariana Resources' share of the Hot Maden Project.

2016 was an exciting year for gold juniors as many ramped up exploration efforts on the back of a rising gold (NYSEARCA:GLD) price. While there were many discoveries made, none of them came close to rivaling the relentless reporting of high-grade intercepts from Mariana Resources (OTCPK:MRLDF). Mariana only began drilling at its Hot Maden Project 18 months ago, but the company has already delineated a resource that would make most management team's mouth water. Despite the outstanding drill results of late, the company's share price has not budged. This is a buying opportunity for investors, as Mariana will only be thrown out with the GDX bath water for so long. I have added to my position on the recent weakness, and expect a significant re-rating this year.

(Source: Company Presentation)

The Hot Maden Project currently hosts a resource of 3.8 million gold equivalent ounces, at an average grade of 15 grams per tonne gold equivalent. Included in those 3.8 million ounces, is an ultra-high grade zone that contains 2.4 million gold equivalent ounces at an average grade of 36.9 grams per tonne. This ultra high-grade zone is unheard of in the junior mining space, and is incomparable to any projects currently being explored.

I have built the below table to give a snapshot of what Mariana looks like compared to some of the highest grade projects in the world. As we can see from the below image, Mariana's Hot Maden Project has an average size resource compared to its peers, but grades that dwarf other resources. The only resource comparable to Hot Maden is Pretium's (NYSE:PVG) Brucejack deposit which holds 8.1 million ounces of gold at an average grade of 16.1 grams per tonne. The big difference between Mariana and Pretium? Pretium is valued at $1.5 billion dollars, and Mariana is valued at $115 million dollars. It should be noted that Mariana only owns 30% of the Hot Maden Project, therefore the valuation of the Hot Maden Project is closer to $380 million. Having said that, there is still a massive disparity in valuations between the two projects.

(Source: Author's Table)

(Chart Legend for grades of resources: Blue: 0-5 g/t gold, Purple: 5-10 g/t gold, Red: 10-15 g/t gold, Pink: 15-20 g/t gold)

As you will see from the above table, I have included two separate spots for Mariana Resources. The first is Mariana based on their 2016 resource, and the second is where I believe Mariana's resources stand currently. The company released its resource estimate for Hot Maden in mid July, but I do not believe this report to be representative of the current resource. Since this summer, Mariana has released a few batches of drill results that put their previous ones to shame. I will give you a few examples below.

(Source: Company Presentation)

Most Significant Drill Intercepts used in July resource estimate:

1. 83 meters of 15.9 grams per tonne gold

2. 95.5 meters of 32.1 grams per tonne gold

3. 71 meters of 32.7 grams per tonne gold

Most Significant Drill Intercepts reported after July estimate:

1. 61 meters of 82.2 grams per tonne gold

2. 69 meters of 62.7 grams per tonne gold

As we can see from the results reported since July, the grades have more than doubled over previous record intercepts. What's most impressive is that this massive increase in grades is despite the thickness of the holes staying very close to the previous average. This is a game-changer for the project, and should place Hot Maden's average grade much closer to 20 grams per tonne gold equivalent. In addition to this, it is likely to move the need substantially in terms of resource size. If Mariana were to do a resource estimate today at Hot Maden, I would expect to see the resource increase by over 40%. My new projection is for 5.6 million ounces at an average grade of 19.0 grams per tonne gold.

(Source: Company Presentation)

Why is this significant?

Based on my new projections for Hot Maden, the project would take over the #1 seat held by Pretium for the highest grade project in the world. Not only would this put Mariana on the map and onto the radar of gold majors, it would also do wonders for the project's economics. Pretium Resources has stated it expects to produce gold for all-in sustaining cash costs of sub $500 / oz at their Brucejack project in British Columbia. Based on Mariana Resources recent drill results, I do not think $450 / oz all-in sustaining cash costs is a stretch for them. Not only does Mariana have similar grades to Brucejack, but they also have copper credits which makes their ore more valuable.

Valuation

Putting a valuation on a project that is only 30% owned and in a less favorable jurisdiction is never easy. Mariana's Hot Maden Project is located in Turkey, and I have received much criticism about highlighting a junior exploring in an inferior jurisdiction. What critics of my investment thesis fail to understand is that the highest grade discoveries in the world get a free-pass on their location. The famous Fruta Del Norte discovery by Aurelian was located in Ecuador, but this did not stop Kinross (NYSE:KGC) from paying $1.2 billion for the project. Ventana Gold was located in Colombia, and Eike Batista had no problem forking over $1.5 billion for the junior miner. These are the two highest grades discoveries of the 21st century, and they are nowhere near the discovery that Hot Maden is. Hot Maden has grades at least 50% higher than both projects, with a resource that continues to grow. I do not believe Hot Maden will be any different than Aurelian or Ventana, and expect a gold major to take out their 30% stake if the valuation remains at this level.

Ok, back to trying to put a valuation on this project...

I have compared Mariana to the 3 highest grade discoveries of the 21st century in the below table. I have found the average for the three highest grade discoveries, and then compared Mariana based on resource size, resource grade, and current valuation. As we can see in the below table, I have used Mariana as of 2016 and Mariana as of 2017. Mariana (2016) refers to the company as of July, and Mariana (2017) refers to my updated model for the company with the recent drill results included.

(Source: Author's Table)

As we can see from the above table, Mariana has higher grades than the average gold project. The average grade of the 3 comparable projects is 9.7 grams per tonne gold, and Mariana's resource is 50% higher at 15.0 grams per tonne gold. The project has a smaller resource than the average project, but based on my updated model is only slightly below the average (5.6 million ounces vs. 7.1 million ounces). The average value per oz of the 3 comparable projects is $228.21 / oz, but it would be unfair to value Mariana based on this metric. I believe Mariana's value per oz deserves a discount as they are located in a less favorable jurisdiction than the gold projects it's being compared with. In addition to this, we must calculate for Mariana's 30% stake of Hot Maden.

In an attempt to be as conservative as possible, I have used a 30% discount on the average value per oz of $228.21 when placing a valuation on Mariana. This gives us a fair value of $159.74 on Mariana's ounces. So how does Mariana stack up based upon these values?

Mariana currently has 124 million shares outstanding, and a share price of $0.89. This gives the company a market capitalization of $111 million dollars. Based on Mariana's resource as of July, the company's share of Hot Maden is 1.14 million ounces. This gives the company a valuation of $98 / oz, well below the fair value of $159.74 / oz. If we use my updated model for Mariana's current resource size, the disparity between current and fair value grows even larger. Based on 5.6 million ounces, Mariana's 30% share is a resource of 1.68 million ounces. Using my updated model, Mariana is currently being valued at $67 / oz. This is less than half of fair value, and deserving of a significant re-rating going forward. The fair value of Mariana's project is $268 million dollars, or a share price of $2.17 (US). This is more than a double from the current share price, and this is assuming no new discoveries are made at Hot Maden.

Risks associated with my thesis:

Investing in junior gold companies always has its risks, as there is no guarantee of future cash flow. Having said that, I can't imagine any scenario where Hot Maden does not move towards production. The project should be economic even at a gold price of $600 / oz, as I expect all-in sustaining cash costs to come in below $500 / oz. The updated PEA expected any week now should confirm this, and will give the market a better idea what it's working with at Hot Maden. While the country risk is certainly present for Mariana, I do not see it as a deal-breaker. Both Ventana Gold and Aurelian Resources were also located in less favorable jurisdictions, but still commanded massive premiums for their ounces. Kinross Gold and Eike Batista did not think twice about paying over $1 billion for either company, and I don't believe Mariana will have any trouble selling its stake or moving to production either. Finally the price of gold is always a risk for junior gold companies. Due to the fact that I am projecting all-in sustaining cash costs of sub $500 / oz for Hot Maden, the company should weather any decline in the gold price better than any other junior.

Summary

I believe Mariana's exploration success to date to be the tip of the iceberg, and expect further discoveries to be made. The project is littered with gold, and is the highest grade gold discovery in the past 15 years. It took Ventana Gold nearly 200 drill holes to delineate a deposit with 4 million ounces of gold in Colombia. Thus far it has taken Mariana 65 holes to delineate the same size resource at exponentially higher grades.

(Source: Company Presentation)

The company has barely scratched the surface in terms of exploration at Hot Maden, and has potential for new discoveries both north and south of their current limit of drilling. To the south is the pre-1923 Russian Mining Zone, a highly prospective target which will soon be drill-tested. The Main Zone and Southern Zone remain open in all directions, as well as at depth.

Mariana Resources remains my top gold stock for 2017, and my opinion is the best investment opportunity since Ventana Gold in 2009. Ventana Gold was still an early stage explorer in 2009, but its discoveries eventually commanded a valuation of over $1.4 billion. Mariana's drill results dwarf those of Ventana Gold, and I expect the company to see a significant re-rating after the release of its PEA and Pre-Feasibility Study. The market can only ignore Mariana for so long, and I expect it's only a matter of time before the company begins to move towards my fair value of $2.17 US. I remain long in all of my investment accounts, and Mariana is my top holding among the gold space.

(Source: CIBC Investors Edge Account)

(Source: TD WebBroker Account)

For full transparency I have shown my two main investment accounts above where I hold Mariana Resources. I have a total of 7% of total assets in Mariana Resources, and plan to add to this position on further weakness.

Disclosure: I am/we are long MRLDF, GLD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[o-z]

Kommentare:

Thanks, Taylor. Interesting junior miner. Two questions. One, any concerns about political or civil instability at any of its mining locations? And two, even though you project that this company has very low all-in costs, how far would you anticipate that this would pull back if gold and/or the market declined? In other words, are you fully invested or are you anticipating a pull back price range to add to you position? Thanks.



No concerns as of now, the company is located in eastern Turkey and no projects in the area have been affected to date.

Unlike the majority of gold stocks, Mariana is actually up from October, and made new highs in November. It pulled back roughly 20% from its 52-week highs, but is now sitting only 10% from all-time highs. I do not see the stock going under $0.80 cents US unless gold drops below $1,100 / oz.

I'm not expecting a pullback, and believe we already have seen the pullback. The most recent drill results released on the 20th likely put a floor under the stock as the team has released another game-changing set of drill results, and the highest grade drill results reported over an interval this thick in the past 15 years for any company.

Mariana represents around 7% of my total assets, and I would move this allocation to a maximum of 9%, so I have accumulated about all I plan to. I've saved a little room incase it goes lower, but do not see it pulling back much more.

Taylor




Isn't this located in TURKEY??? If so, why no mention of this, which brings EXTREME location/nationalization risk into the picture under the maniac Erdogan...??? OR did I miss the disclosure under RISK???





Taylor Dart, Contributor
Comments (2435) |Following |Send Message
Author’s reply »
Hi Tucson,

Think you may have missed it, not only did I place a 30% discount on Mariana's valuation due to its location, I also wrote this paragraph:

Putting a valuation on a project that is only 30% owned and in a less favorable jurisdiction is never easy. Mariana's Hot Maden Project is located in Turkey, and I have received much criticism about highlighting a junior exploring in an inferior jurisdiction. What critics of my investment thesis fail to understand is that the highest grade discoveries in the world get a free-pass on their location. The famous Fruta Del Norte discovery by Aurelian was located in Ecuador, but this did not stop Kinross (NYSE:KGC) from paying $1.2 billion for the project. Ventana Gold was located in Colombia, and Eike Batista had no problem forking over $1.5 billion for the junior miner. These are the two highest grades discoveries of the 21st century, and they are nowhere near the discovery that Hot Maden is. Hot Maden has grades at least 50% higher than both projects, with a resource that continues to grow. I do not believe Hot Maden will be any different than Aurelian or Ventana, and expect a gold major to take out their 30% stake if the valuation remains at this level.

[KMST]

Mergernews!!! 80% premium von Sandstorm Gold