Mercator Minerals Ltd MLKKF

Hidden Value

[24~Karat]

In situ silver reserves have recently set valuation precedents in the vicinity of US$ 4.00 per ounce of future production. That is an amazing 25% discount to net present value from future value. See this link as an example: https://biz.yahoo.com/iw/070404/0235266.html Thus, ML’s upcoming 25 years of 600,000 ounces of silver production per year would carry a net present value of $60 million, or US$ 0.83 per share. If ML’s 1.1 billion pounds of copper, and 257.5 million pounds of molybdenum could be capitalized at a similarly discounted 25% NPV, the value attached to these share would be astronomical. At even a discounted 10% NPV, ML is currently worth US$ 10.375 per share, and this is derived by applying a backwardation evaluation of $2.50 to the copper and, and $16 to the moly, and is summarized by category, as follows: In situ copper value: $275 million In situ moly value: $412 million In situ silver value: $ 60 million Backwardation is a process by which the price of a commodity for future delivery is lower than the spot price. For some reason, the market applies a rather steep backwardation to copper and moly, but applies the opposite, known as contango, to silver and gold. This backwardation evaluation attributed to copper and moly could change in the time ahead. On May 7, David J. DesLauriers said in Resource Investor that “Talk of a futures market as well could take moly much higher” If it did, ML would be well advised to sell forward into that market, as it would essentially lock in a value of $20 to $30 per share. With that kind of windfall, ML could easily move on to its next major project.