Coach,
Have you taken a look at JNY? Their market cap is less than 10 million and their Mexico property "Vianey hosts a non 43-101 compliant historical resource of 345,020 metric tonnes in all categories, grading 2.13% lead, 3.66% zinc and 269 grams of silver per tonne." Here is an article about the company.
BTW, are we going to get any drill results from CS, IPT, SPM, or UC in the near future?
Happy Festivus!!!
John
Unknown Junior Offers Multiple Routes to Shareholder Upside
By Michael J. DesLauriers
03 May 2006 at 06:28 PM EDT
TORONTO (ResourceInvestor.com) -- Very rarely these days does one come across a junior developer with a market capitalization under C$10 million. For that reason, Resource Investor was surprised to discover that the market had overlooked Journey Resources [TSXv:JNY], a company with not one, but three exciting development projects in the U.S. and Mexico, and a market valuation net of cash of only C$5 million.
As most readers are aware, from the discovery stage to production, it can take upwards of 5 years, and these days probably more like 10 years. The advantage of development stories therefore is the more immediate gratification for investors, who can take advantage of robust metal prices and investor enthusiasm while they exist and not have to wait 10 years for their reward - cash flow and higher valuations.
Projects
Journey has three such development projects, but we will focus on just two of them today.
The company is currently earning into 50% of the Empire copper-gold project in Idaho (a historical producer, with facilities on site) by way of $2 million in spending, and plans to put 65 holes in it over the next year. The focus will be on drilling, metallurgical testing, permitting and feasibility, with a view to achieving production in early 2008.
Journey’s focus is specifically on the AP Pit, a zone of near-surface mineralization located at the southern end of the property. The mineable portion of the deposit is estimated as 33 million tonnes grading 0.44% copper, 0.20% zinc, 0.25 gpt gold and 6.6 gpt silver at a 1:1 mining ratio with recoveries estimated at 70% gold, 60% silver, 80% copper and 60% zinc.
According to a scoping study completed in 2005, the mine can be put back into production at an annual rate of roughly 10 million pounds of copper and 27,000 ounces of gold over 9 year life, for a CAPEX of roughly $15 million - the company hopes to debt finance the project once they have a positive feasibility study in hand.
Using those figures the study arrives at an IRR of 144% at $1.55/lb copper and $450/oz gold. Clearly, at current prices the number is vastly higher, and the company could easily generate cash flow net to its interest of 50+ cents per current share.
The other project we’re going to examine is the Vianey Mine silver concession in Guerrero State, Mexico. In view of what the share prices of most silver companies have done recently, it’s a wonder that JNY stock has gone absolutely nowhere.
Vianey hosts a non 43-101 compliant historical resource of 345,020 metric tonnes in all categories, grading 2.13% lead, 3.66% zinc and 269 grams of silver per tonne. Journey recently took on a J/V partner on the project for $1 million in spending and the issuance of 1.1 million shares over the next year. Spending will be directed towards confirming the resource as well as determining the continuity of the mineralization along strike and at depth (where there would appear to be significant potential).
The goal going forward will be to expand the resource and move to production. That said, at current metals price the rock at Vianey is worth somewhere in the neighborhood of $270/tonne, and can be produced quite profitably by way of contract milling, albeit not on a company making scale.
Conclusion
The math for investors is very simple on this play – with shares in the company going for 33 cents and a valuation of just C$5 million net of cash, the downside risk is extremely limited. Based on the roster of interesting development projects JNY has put together, the potential upside reward could be quite substantial, and on a comparative basis (and everything must ultimately be assessed by way of comparison), the company would appear to represent considerable value. |
