What makes Maritime different from other junior gold stocks?
Maritime Resources (TSX: V.MAE, Stock Forum) is a small company with a significantly sized, high quality gold resource in a very safe and supportive jurisdiction that can be put into production quickly and with low capital requirements. We have recently received a NI 43-101 compliant Resource Estimate that has confirmed our belief that a lot of gold was left in the ground after a former operator closed the mine in 2004, at a time of very low gold prices. All underground infrastructure remains in place, and the mill that processed the ore is still available to take feed from us. The key takeaway for our story is that we have high grade ore and we can quickly move towards restarting the operation.
What are your thoughts on the valuation of gold resource stocks?
If you have been following Canaccord’s Gold In Situ valuations for the last few years, you are aware that valuations have plummeted in the last three years by about 80%. In the fall of 2010 a composite that tracked the market cap of about 40 different gold resource companies peaked at $160/ounce of gold resource in the ground, and today it is averaging just $35/ounce. Comparatively, gold bullion has fallen by only 25%. Gold in the ground is now very cheap, and in my opinion it is undervalued. We haven’t seen it this low since it briefly touched this level in the market crash of late 2008.
How does Maritime's valuation compare?
Having recently received our first 43-101 compliant Resource Estimate, we are now able to compare ourselves to the rest of the junior gold universe. On the same basis that Canaccord uses for their valuations, we are currently valued at just $10/ounce of gold in situ, compared to the average of $35. Even if we were to do no further work on the property, Maritime shareholders stand to gain as our valuation approaches the average of our peers, and also as the overall In-Situ valuations recover to more typical levels. We have no intention of sitting still and waiting for our valuation to catch up with us, and will continue working to add value to our property. In addition to achieving a valuation level similar to our peer group, we feel that we have some significant advantages that should command a premium above the average.
What do you consider the advantages of Maritime compared to other junior resource companies?
There are many good projects in the junior gold resource universe but they may be located in remote areas of the world with no infrastructure in place, high political risk, high capital requirements for the construction of the mine and mill, and possibly technical risk if novel technology is required to treat ore that is low grade or contains deleterious elements. Maritime’s project is fortunate to have high grade and robust gold veins located in Newfoundland, which is probably the most mining friendly province of Canada. The veins are exposed on the surface, making access easy and inexpensive. The infrastructure is already in place and the mill that has been proven to have an excellent recovery of gold is still operating and looking for feed for its under-utilized gold circuit.
Tell me about your Green Bay Property
Our property is located in Newfoundland, Canada near the towns of Springdale and King’s Point. There are three mineralized deposits on the property, namely the Hammerdown and Orion gold deposits and the Lochinvar base metals deposit, with precious metals credits. The Hammerdown mine operated for four years, from 2000 to 2004. If you look at a chart of gold prices over the last 20 or more years you will see that this was the period of the lowest gold prices, and would be the time when you would not want to be using up a high grade gold resource. The mine was very high grade, producing ore at an average grade of 15 grams of gold/tonne. The ore was processed at a mill located 140 km from the mine. That mill achieved an average recovery of 97% of the gold and is still operating. It is now owned by Rambler Metals and Mining. The Green Bay property has roads, power and water at the site, with the underground ramps still in place and an experienced workforce anxious to get back to work.
What are your plans to move the project forward?
This year, we intend to continue with the field work that was suspended due to the onset of winter weather last year as well start preparing for some of the environmental baseline studies that will be necessary in order to start up the mine. The old mine workings are flooded so we will drill into the mine and extract water samples to see if treatment of the water will be necessary when we pump it out. Additionally, we want to do some metallurgical test work to examine the potential for a gravity separation circuit that could be installed at the mine to upgrade the lower grade portions of the resource, thereby bringing more ore above the cut-off grade and also reducing trucking and processing costs once the mine is in operation. The gold at Hammerdown is associated with pyrite, which has a much higher specific gravity than the waste rock and should be easily concentrated with a low cost gravity separation circuit. If time and funds permit, we would also like to continue our drilling at site to expand the known boundaries of the mineralization and to upgrade the classification of the Inferred Resources to Indicated or Measured.
Are you in a good financial position to carry out your proposed work program?
We are in good shape to conduct the work that is being recommended in the Technical Report that will be published shortly. Last year we raised sufficient funds for our work program via a Private Placement consisting of mostly Flow-through financing. The shares that were issued had warrants attached, at a premium price, that are now in the money. The shareholders who participated in the Flow-through are all very happy, having now made approximately 300% on their net investment and the warrants are in friendly hands. Exercising of the warrants will raise over $800,000, which is more than enough to fund our anticipated work. One of the best aspects of having a project located in Newfoundland is that money goes a long way, compared to projects in more remote areas. The government of Newfoundland and Labrador is also very supportive and in the last two years we have received $350,000 in grants from their Junior Company Exploration Assistance Program. We are very appreciative of their help and have been able to minimize dilution of our shareholders while we have been working towards establishing our maiden Resource Estimate.
Tell me about your alliance with Rambler Metals and Mining
The Nugget Pond mill, which processed the historic ore from our Hammerdown mine, is now owned by Rambler Metals and Mining and is currently treating ore mined from their Ming Mine. Rambler has gone through a similar experience to us over the last few years as they have rehabilitated and restarted a shuttered operation so have firsthand knowledge of what needs to be done with respect to permitting, and financing a restart. The Ming Mine is primarily a copper mine, with a respectable amount of gold in the ore. Their mill has surplus capacity to treat more gold bearing material and Rambler has a common objective as we do in seeing an early restart of Hammerdown in order to fill their circuits. Rambler is confident enough in our potential that they have invested in Maritime and now hold 17% of the company. We have a friendly relationship with them and we work well together.
Why should our audience be interested in following Maritime?
Having just taken delivery of a very encouraging Resource Estimate, the Maritime story is about to take off. We had kept quiet about our story prior to receiving this Resource Estimate, but now interest is building rapidly. We have already received enquiries from parties looking to invest in the company. We have a very clean share structure, with only 30.5 million shares outstanding, which are tightly held. We have always been very reluctant to dilute our existing shareholder base by issuing more shares. We have no intention of changing that philosophy. Interest and momentum is building and Maritime is now poised to appreciate rapidly as it achieves a proper valuation.
Disclosure: Maritime Resources is a Stockhouse client.