https://etfdailynews.com/2014/07/21/miners-must-control-costs-to-improve-share-prices/3/
BK: Mega Precious Metals Inc. (MGP:TSX.V) is a Canadian development story that I’ve followed for almost three years. It has done a great job of bringing along its Monument Bay project up north of Winnipeg, Manitoba. Monument Bay is in a relatively unmined, undisturbed area with a lot going on in its mineralogy.
Mega Precious seems to have found mineralization along a few tentacles of the octopus. Then it followed the trends until it now has a good handle on where the big central part of the octopus is.
One thing that further improves the Monument Bay project is high assays for tungsten. Tungsten is a gold indicator. When you find tungsten with a mineral called scheelite, you almost invariably find gold. The bimetallic play improves the economics in both directions. The tungsten helps pay for the gold; the gold helps pay for the tungsten.
In the past two years, Mega Precious’s Monument Bay project has gone from a fundamental resource of 1 Moz of what’s called “Inferred” gold equivalent to 3.6 Moz of Measured, Indicated and Inferred—with 2.9 Moz of that Measured and Indicated, and 0.7 Moz Inferred. The company has raised money and spent it wisely. It is scrupulous in abiding by the Canadian environmental laws and in dealing with the First Nation issues, while very efficiently and effectively adding ounces to the bottom line.
TGR: Mega Precious is in the midst of a private placement. What’s its next catalyst?
BK: The next thing we expect from the company is more ounces. Meanwhile, Mega already has a higher ore grade—1.4 grams per tonne (1.4 g/t)—than Detour’s 1 g/t, which is an up and running mine.
Mega illustrates how many developers are building resources that will attract a larger mining group to come in and take them out. As large mining companies
mine out their reserves, analysts take note and lower their share prices. That drives the big miners and intermediate miners to buy up the smaller developers. They are looking for companies that can be accretive to their operation by adding ounces efficiently.
The farther along the target company is toward basic mine development, the better. I think it’s asking a lot for an exploration team to go out, find the gold, drill it, give the acquirer the ounces and build a mine, too. The bigger companies understand that good developers can deliver an accretive asset. Then, the idea is that they take them out for a fair price—although the market is fickle, as we all know.
The plays we’ve talked about today—Detour Gold and GoGold are in production, Balmoral, Pershing and Mega Precious are developers—are all proceeding very crisply along the right path to becoming very attractive assets. All five ideas could reward investors.