Value investors new to mining stocks might be surprised to know that high-potential opportunities might appear as if they’re worth avoiding, at least on the surface.
This is because exploration-stage miners are almost always pre-revenue, meaning they depend on strong commodities markets and raising capital to fund their drilling programs, publish economical results and create shareholder value.
It can be difficult for a new investor to take in all those zeros on a balance sheet’s top line, above nothing but expenses, and feel convicted in the belief that a profit might one day be turned.
Over the past few years, retail investors’ generally shaky hands when it comes to owning stocks, especially more volatile microcap stocks, have joined forces with high global inflation to create widespread undervaluation among junior miners, as more and more capital de-risks into the safety of bonds and cash.
Many of these stocks are reflecting no market recognition of asset quality or development potential., including the trio I’m presenting to you today, each of which is trading at an all-time-low:
Star Diamond
Star Diamond (TSX:DIAM) is a Canadian natural resource company acquiring, exploring and developing diamond properties.
It holds an interest in the Fort à la Corne diamond properties in central Saskatchewan, in an area known for massive kimberlite volumes since an initial discovery in the 1980s.
The properties are highlighted by the Star-Orion South diamond project, whose 2018 preliminary economic assessment details production of 66 million carats over 34 years at a net present value of $3.3 billion. The company is at work on a revised mineral resource estimate to enable a pre-feasibility study, which is expected within two years, to further solidify the opportunity for the marketplace.
Sitting at a 61.36 per cent loss since 2019, despite an imminent deal to own 100 per cent of Fort à la Corne, Star Diamond has clearly been caught in the prevailing macro malaise and left for dead by retail investors, who are either unprepared or unwilling to hold the miner through the approximately 16.9-year journey from discovery to production. Large, high-profile institutional investors have been perfectly happy to step in, including Rio Tinto at 19.9 per cent and Newmont at 12.18 per cent.
George Read, senior vice president of corporate development, spoke with Stockhouse’s Brieanna McCutcheon about the potentially value-accretive opportunity to practice carbon capture at Star-Orion.
Max Resource
Our next mining value stock pick is Max Resource (TSXV:MAX), a mineral explorer focused on sediment-hosted copper. The company’s flagship Cesar copper-silver project in Colombia resides along the Andean belt, the world’s largest producing copper belt, with easy access to infrastructure developed by global majors Glencore and Chevron.
Max Resource and partner Endeavor Silver are developing Cesar into a copper mine to fuel exponential growth in the energy transition, guided by the 20-km Uru copper silver zone (7 m at 8.5 per cent copper and 143 g/t silver), the 3.7-km Conejo copper-silver zone (average of 5 per cent copper), and the 32-km AM zone (grading as high as 34.4 per cent copper and 305 g/t silver).
Exploration as of late continues to unearth high grades and delineate new targets, including two additional mineralized outcrops in 2024 at the AM-14 target, which lies along a 15-km trend that has graded as high as 24.8 per cent copper and 230 g/t silver.
Brett Matich, Max Resource’s president and chief executive officer, sat down with Stockhouse’s Coreena Robertson to discuss the new outcrops at AM-14.
As Max continues to extend the copper-silver footprint at Cesar, its investors continue to leave en masse, causing the stock to give back more than 95 per cent of its value since 2019. This dynamic leaves seasoned allocators with a potentially exponential entry point worth their full consideration.
Fokus Mining
Our final mining value stock pick for this week is Fokus Mining (TSXV:FKM), an active acquirer and explorer of precious metal deposits in Quebec. The company’s flagship 2,865.54-ha Galloway gold project lies just north of the Cadillac-Larder Lake deformation, which houses numerous gold mines and deposits from Kirkland Lake, Noranda, Cadillac, Malartic and Val-d’Or, and has yielded more than 100 million ounces over the past century.
Fokus has identified numerous mineral occurrences in the western portion of its claims, including GP, Hendrick, Hurd and Moriss, affording Galloway a March 2023 mineral resource estimate of more than 1.4 million troy ounces of gold inferred.
Drill results have been consistently positive across more than 40,000 m from 2020-2022, in addition to 2023 highlights of 33 m grading 1.20 g/t gold from the RB zone and 5 m grading 51.13 g/t gold from Moriss. Chief executive officer Jean Rainville spoke with Stockhouse’s Brieanna McCutcheon about why the company is following up the Moriss highlight with a 1,250 m drilling program.
The prolific nature of Galloway’s mining district, the expansion potential across the project’s main zones, and Rainville’s more than 40 years of experience in finance and mining company leadership make Fokus’ almost 90 per cent fall from its all-time-high a compelling starting point for further investigation, especially as gold remains in record-breaking territory.
Join the discussion: Find out what everybody’s saying about these mining value stocks on the Star Diamond, Max Resource and Fokus Mining Bullboards, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Star Diamond, Max Resource and Fokus Mining, please see full disclaimer here.