undervalued gold junior with PE < 3 Axmin Inc (axm.v/axmif) is a value play because it has $2 million/yr gold royalty stream and market cap is only $5 million.
-Market cap is only $5 million and they are now receiving C$2 million/year in royalty income from Teranga Gold:
From the 2016 Q1 report: Royalty income in the amount of $457,259 has been recognized in the three months ended March 31, 2016. Over 4 quarters this works out to nearly $2 million or .013 cents per share. This income is from Teranga Gold's Gora gold mine and is expected to continue for several more years:
https://web.tmxmoney.com/article.php?newsid=82540801&qm_symbol=AXM
There are also additional highly prospective but less advanced exploration properties under a similar 1.5% NSR terms with Teranga Gold that could kick in after the Gora deposit is mined out.
-market cap is currently under C$5 million and this use to be over $100 million in the past. Also Axmin has raised and invested over $100 million into their gold projects all over West and Central Africa:
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=AXM&x=60&y=17&time=13&startdate=1%2F4%2F1999&enddate=7%2F23%2F2016&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=2&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=8
-Stock was lying dormant and below the radar for a couple of years and is now due for a rerating for the following 2 catalysts:
1)$2 million royalty stream has just kicked in
2)Their flagship gold project is in Central African Republic which is just coming out of a period of strife after having recently had a free and fair presidential election. And the IMF is now supporting the CAR:
https://www.cpifinancial.net/news/category/investments/post/36949/imf-approves-115-8-million-arrangement-for-the-central-african-republic
-Only 130 million shares million shares outstanding with 63% of shares outstanding held by 3 insiders:
https://apps.cnbc.com/view.asp?country=US&uid=stocks/ownership&symbol=AXM-V&country=CA
The 2 biggest shareholders are Chinese and my thinking is that they are looking to sell the project to a Chinese SOE. The third shareholder Jean-Claude Gandur is an European billionaire who sold his African oil company to the Chinese for $6 billion almost 10 years ago and so could also draw on his chinese contacts to help sell the company to them.
-John Embry of Sprott use to like Axmin a lot in the past:
https://www.stockchase.com/company/view/116/0/Axmin-Inc/AXM-X
-There are no plans for further share dilution until they are ready to resume work on their flagship Passendro gold project, thanks to the $2 million/yr royalty income stream. Passendro is a 200,000 oz per year gold mine with a Bankable Feasibility Study already completed. It is currently on hold until they can negotiate a license extension with the Central African Republic (CAR). This is only a matter of time since the CAR just completed what was widely acknowledged to be a fair election for a new president a few months back. Millions of low cost open pit gold oz in the ground must be worth something even in the CAR, with the price of gold headed back to $2000. Axmin is a first mover into the CAR and has invested over $100 million into the country since they first got involved 15 years back to get their Passendro project to this stage.
-The Passendro project was shown to be very robust at US$1100 gold price with a $340 million NPV, 32% IRR and low cash costs of US$484 per oz. Passendro should be worth another C$10 million (or US$7.5 million) right NOW at least would you say ? This should give a no brainer total valuation of 15 cents per share to Axmin today.
https://www.northernminer.com/news/south-african-dealmaker-roach-finds-us-100m-for-struggling-axmin/1000535923/
>>Should the debt and equity financings go ahead as planned, Roach figures Axmin could put Passendro into production by the end of 2013. With production forecast at 205,000 oz. gold over years one to three, and an average of 163,000 oz. gold over an 8.3-year mine life, Passendro’s economics look robust, even assuming a US$1,100 gold price. The recently updated feasibility study considers conventional open-pit mining using an owner-operator mining fleet, and a 2.8-million-tonne-per-year gravity carbon-in-leach process plant. It estimates an internal rate of return of 32%, a net present value of US$340 million using a 5% discount rate and fairly low cash costs of US$484 per oz.<<
Looks like the IFC was/is intending on sponsoring and helping the Passendro project:
https://www.imf.org/external/pubs/ft/scr/2012/cr12240.pdf
>>
Box 1. Strengthening Natural Resource Management1
C.A.R.’s natural mineral resources have not been tapped on a large scale. Mineral exploitation is currently entirely dominated by artisanal production and concentrated mainly on diamond mining and, to a lesser degree, gold. There are proven deposits of diamonds, gold, and uranium. Oil exploration is underway in some parts of the country.
The Passendro Gold Mining Project. Located in the south central region, 170 miles northwest of the capital, Bangui the project features a 25-year mining license covering
137 square miles and two surrounding exploration licenses covering 386 square miles. The total capital costs of the project are expected to be about US$270 million. The International Finance Corporation (IFC) is considering participating in the project with US$50 million equally divided in equity and debt to a Canadian-based company, AXMIN, which has a strong presence in central and western Africa. IFC’s involvement in the development of this gold mining project is consistent with its ongoing engagement in bolstering postconflict reconstruction efforts in C.A.R. The IFC has agreed to play a lead role in coordinating the overall financing package for a group of development finance institutions. The IFC's commitment to arranging this financing package is subject to satisfactory technical, legal and environmental due diligence, execution of acceptable terms and documentation, as well as obtaining final Credit Committee and Executive Board approvals. IFC has already started the process of appraising the project.
Expected Impact. Successful development of the Passendro Project would likely catalyze mineral exploration in C.A.R. and create incentives for other mining companies to explore business opportunities in the country. As the first industrial mine in the country, the project can also establish benchmarks for environmental, social, and community practices, in line with IFC’s Performance Standards. C.A.R. has demonstrated a commitment to extractive industry revenue transparency by attaining EITI compliant status in March 2011. Although revenue flows to the government arising from the project are expected to be moderate, the project will contribute to broadening C.A.R.'s limited revenue base. In addition, the mine is expected to employ between 615 and 670 workers, mainly local hires. The project will generate employment throughout the supply chain as well, an effect which could be magnified with technical assistance from the IFC’s Advisory Services through IFC's linkage programs. It will also support community development initiatives to increase the percentage of locally distributed revenue.
Framework for Natural Resource Management. TA will be provided by the IMF and other organizations to assist the authorities in putting in place legislation that is in line with international best practices and would ensure C.A.R. gets the most out of the exploitation of its natural resources. In particular, the Fiscal Affairs Department of the IMF will provide a desk- based assessment of the mining code and determine further TA needs, based on the conclusions of the assessment.
<<
-As of July 2015 in this country engagement report (CEN), it looks like the IMF is still intending to proceed with their support for passendro project:
https://documents.worldbank.org/curated/en/726401467991967379/text/96209-CEN-P155053-IDA-R2015-0208-IFC-R2015-0212-MIGA-R2015-0059-Box391505B-OUO-9.txt