Mexivada option strategy to pay off over next 12 months - Analyst Blog
Date : 06/13/2011 @ 7:26AM
Source : Zacks
Stock : Mexivada Mining Corp (GM) (MXVDF)
Quote : 0.0946 0.0 (0.00%) @ 2:05AM
Mexivada option strategy to pay off over next 12 months - Analyst Blog
Steven Ralston, CFA
Mexivada option strategy to pay off over next 12 months
Mexivada (MNV.V: TSX-V and MXVDF) continues to proceed with exploration plans at many of its nine properties with positive news flow expected throughout 2011. But in particular, management’s unique financial plan of optioning properties will bear fruit over the next 12 month with inflows of $500,000.
In March, Mexivada amended the option agreements on its Ziggurat and Poker Flats properties in Nevada that require option payments of $110,000 over the next year while Goldstorm will generate $75,000 and Gold Jackpot $200,000 in option payments. In addition, the Mayoko property in the Republic of Congo will bring in $100,000. Also Trilogy Mining is scheduled to make a $25,000 option payment on the Jefferson property.
Mexivada’s management employs a unique financial cash flow model. By optioning certain properties, Mexivada benefits from a series of substantial cash option payments and shares of stock issued by the optionees. In addition, the optionees are required to commit to considerable exploration costs and sometimes the delivery a mining pre-feasibility study and/or a NI 43-101. If the project is successful, Mexivada retains a minority ownership position. If unsuccessful, Mexivada benefits from option payments, the receipt of shares of stock, further exploration of the property and the retention of 100% ownership in the mining rights.
The next 12 months should see the fruition of this option cash flow model. In addition to the $500,000 in option payments, Mexivada is also scheduled to receive 1,900,000 shares of Spartan Gold (SPAG:OTCBB), Sphere Resources (SPH: TSX-V) and 150,000 shares of West Kirkland Mining (WKM: TSX.V). If Trilogy Mining successfully completes an initial public offering (IPO), Mexivada will also receive 100,000 shares of Trilogy. With the receipt of these shares, Mexivada’s balance sheet will benefit from increased marketable securities bolstering the current asset and equity categories
The strategy of Mexivada’s management is to acquire and explore properties near or adjacent to proven significant mineral deposits, and after a phase of additional investigation and exploration (the company’s core competency), management often seeks a joint venture partner to further explore and develop each property, thereby laying off significant exploration costs onto the partner and generating cash from the series of option payments. This strategy will certainly benefit the company financially over the next 12 months.
We reiterate our Outperform rating on Mexivada, and our target of $0.25. Management continues to successfully execute on its strategy and find joint venture partners to further explore and develop its properties, while receiving cash from the series of option payments.
For a free copy of the full research report, please email scr@zacks.com with MNV.V or MXVDF as the subject.
Follow Zacks Small Cap Research on Twitter at Twitter.com/ZacksSmallCap
My posts are entertainment only
I hate theives and Liars
