Good Afternoon,
I can understand the sentiment on MHREF and lack of trading, but these issues are not the problem, but rather a godsend to allow one to acquire thousand of shares at these low prices.
See, with mining companies, it isn't just about the claims and MHREF has a slew of them, with most still on paper that need to be a analyzed, but the much needed capital to bring these claims into full production.
Now, this was then and now we have their Kipawa claim that has proven reserves and just recently announced that the Quebec government has granted through a grant for $4 million. This grant is the start for infrastructure and a bridge that is needed to bring this mining site into full production. All this was the burden of time that moves mining companies at such a slow pace and in effect results in very low volume or lack there of and for that, I'm pleased to say that my accumulation has been very successful.
The full production of the Kipawa mine isn't expected to be until 2016, but the end for these prices will become history very soon. This issue is not like any other pinksheet company. This company has been methodically moving forward on it's results from two more drill holes from the recent drilling campaign on the Sakami gold project with their partner Canada Strategic Metals. This mine has the goods and albeit only a 50% partnership and will probably be reduced to 25% is still a nice bonus for the portfolio, but is being compensated in millions for the collaboration.
The Kipawa project is in partnership with Toyota Tusho and will result in great revenue. The assessment on this project when fully operation is below.
KIPAWA HREE PROJECT – FS FINANCIAL MODEL HIGHLIGHTS
Net Present Value (NPV10%) (Pre-Tax) $260 million
Internal Rate of Return (IRR) (Pre-Tax) 21.6%
Revenue $2.55 billion
EBITDA $1.37 billion
CAPEX (initial) $374 million
OPEX (annual) $78.5 million
Payback Period (Pre-Tax) 3.9 years
Life of Mine (LOM) 15.2 years
Concentrate Production (annual avg.) 3,653 tonnes
So if we are to assess this one project only, one can see a MC of at least 5 $million that is a far cry from where we are today at .08 with a MC of 1 $m.But today's price is reflective of a company that is still in exploratory stage and this will change very soon.
As I have mentioned above, this company is not run a like a pinksheet, but quite the contrary and I believe in a very short time we will reflect the true share price reflective of a MC of around 5 $m.
As the above revenue for the Kipawa mine to be 2.5 $b for the life of the mine of 15.2 years, certainly a yearly revenue of $50m would give us a trading range of .50 to .75 per share and that is on the conservative side. Let's not forget the paper claims it has in it's arsenal.
Also, the company announced a Business Development Director on April 17th. This is not by chance, but by the timing of the conclusion on the Kipawa project that will shortly become a full operating mine, but will over this summer (2014) build it's infrastructure. It will be at this point that the share price will become known and the price under .10 will be nolonger available as more and more eyes will be upon this issue.
MHREF has been quietly getting it's house in order and if you follow it's timeline, you will see bigger things are about to finally fall in place, as well as increased volume and share price.
I recommend this strong buy.
Have a good day
Varok
