re: valuing MMGG at 10% of what they have in the ground, an article on Barrick's bid for NovaGold last week (http://www.resourceinvestor.com/pebble.asp?relid=22356 ) states:
There are many ways to value juniors, including the following. The late Julian Baring, used a simple rule of thumb for valuing metal shares.
"Buy up to 10% of the in situ value of a deposit using current metal prices, hold up to 40% and sell above 40% taking no prisoners!!!!"
The article goes on to use NovaGold's total resources, most of which are inferred, to value NovaGold. MMGG, as a U.S. company, has no "inferred" resources, though it probably could hire a certified Canadian geologist to estimate a huge "inferred" resource using their many thousands of promising drill samples separate from their proven zinc.
Just based on their independently verified 5 billion pounds of zinc (http://www.metalin.com/03-18-05.pdf ), which is actually much more than that using a more realistic cutoff grade lower than 5%, MMGG is valued at well under 2% of metal in the ground. If they estimated "inferred" resources and used a lower cutoff grade as with NovaGold, it's probably valued around 1% of metal in the ground.
For a late-stage project that could be one of the biggest new zinc mines in the world, that's an amazing bargain, especially considering their safe North American location with great infrastructure and weather. Once they get off the bulletin board, the upside for MMGG is staggering. |
