Value Microcaps Motherboard

[alohamart]

Don't worry about MMG. It's only pulled back some from profit taking after more than doubling in a month. It's still a much better value that BWRLF and should outperform it over the long run:

http://www.siliconinvestor.com/readmsg.aspx?msgid=22964401
To: koan who wrote (24020) 11/1/2006 11:48:10 AM
From: Mr. Aloha Read Replies (3) of 24640

Breakwater warrants definitely have a lot of leverage on zinc, and much more than a bigger company like HudBay (HBM), but MMGG gives the best leverage on proven zinc resources in the zinc game:

BWR:
Myra Falls = 8,647,000 tonnes at 7.8% (674,466 tonnes contained zinc)
El Mochito = 3,195,000 at 8.2% (261,990 tonnes)
El Toqui = 3,420,000 at 8.4% (287,280 tonnes)
Langlois = 4,980,700 tonnes at 11.15% (555,348.05 tonnes)
Total = 1,779,084.05 tonnes contained zinc, or 3.9 billion pounds
(from http://www.breakwater.ca/operations/myra.cfm , http://www.breakwater.ca/operations/mochito.cfm , http://www.breakwater.ca/operations/toqui.cfm , and http://www.breakwater.ca/operations/langlois.cfm)

459,503,549 fully diluted shares outstanding x 1.58 CAD = 726,015,607 CAD x .89 = $646,153,591 fully diluted market cap
(from http://www.breakwater.ca/investor/securities.cfm )
3.9 billion pounds / $646,153,591 = 6.04 lbs. of zinc per dollar invested
BWR warrants give you 92.7% more leverage at .82 (1.58/.82 = 1.927), so you get 11.6 lbs. of zinc per dollar invested with the warrants


HBM:
Zinc reserves = 21,400,000 tonnes of 5.3% (1,134,200,000 tonnes contained zinc), less about 85 million mt reserves mined in this year’s production so far,
leaving approx. 1,050,000 tonnes contained zinc reserves remaining
Resources = 4,900,000 tonnes of 7.4% zinc (362,600 tonnes) resources = 800 million lbs
Total = 1,412,600 tonnes contained zinc, or 3.11 billion lbs.
(from http://www.hudbayminerals.com/oreReserves.php ) on 1/1/06

124,796,513 shares outstanding (unclear what fully diluted is) x 19.15 CAD = $2,389,853,223.95 CAD x .89 = $2,126,969,369 basic market cap
(from http://www.hudbayminerals.com/investorRelations.php )
3.11 billion lbs. / $2,126,969,369 = 1.46 lbs. of zinc per dollar invested


MMGG:
Iron Oxide Manto = 28,042,538 tonnes of 7.04% zinc (1,974,185 tonnes contained zinc)
(from page 29: http://www.metalin.com/Metalline,%20Sierra%20Mojada,%20Zinc%20060625.pdf )
Smithsonite Manto = 5,431,050 tonnes of 12.08% zinc (656,070.84 tonnes)
(bottom of page 1: http://www.metalin.com/03-18-05.pdf )
Total = 2,630,255.84 tonnes contained zinc, or 5.8 billion lbs.

49.7 million shares fully diluted x 2.87 = $142,639,000 fully diluted market cap
5.8 billion lbs. / $142,639,000 = 40.66 lbs. of zinc per dollar invested


The zinc producers deserve a higher valuation than the preproduction MMGG, but assuming MMGG can get to production, it definitely gives much more leverage to zinc than BWR or BWR warrants, even after the recent recovery of the stock. Assuming BWR gets to full production with all four of its zinc mines, its warrants definitely give much more leverage to zinc than HBM.

BWR’s higher costs and not being in full production yet give it a big discount to HBM, and MMGG’s lack of a listing on a major exchange and not having completed the feasibility study yet give it a big discount to both BWR and HBM. Higher zinc prices give MMGG the added benefit of improving their project economics and likelihood of going to production.

With the extreme likelihood that MMGG will get listed on a major exchange and have a very positive feasibility study (given the same team produced a positive feasibility study and got the similar Skorpion mine into production when zinc was 35 cents), I think MMGG, despite its recent recovery, still is the best value out there, bar none.