Morien Resources (TSXV: MOX) rallied by 11.11% this morning to hit a new 18-month high of $0.45 per share, but then saw healthy profit taking and finished the day down by 1.23% to $0.40 per share.
The #1 largest percentage gainer on the TSX Venture today was a coking coal explorer Colonial Coal (TSXV: CAD), which gained by 52.88% to $1.59 per share on massive volume of 1,593,407 shares where it now has a market cap of $277 million. Prior to NIA's suggestion of MOX, we researched CAD and every other small-cap publicly traded coal company in existence.
CAD has a measured & indicated coking coal resource of 277.7 million tonnes entirely from its Hugenot Project in British Columbia. CAD's Hugenot Project would be able to produce 3 million tonnes of coking coal per year for 31 years, but the initial CAPEX to bring the project into production is estimated to be US$661 million. It is extremely unlikely that CAD would be able to raise the US$661 million to develop the mine and even if CAD had the capital today it would still take them at least 5 years to get approval and develop the mine.
Kameron Coal's Donkin Coking Coal Mine in Nova Scotia has a measured & indicated coking coal resource of 227 million tonnes. Donkin's resource is only 18.26% smaller than CAD's resource and Donkin is already fully permitted to produce 3 million tonnes of coking coal per year for 30+ years and it is a fully developed mine with $300 million spent developing Donkin!
With CAD's market cap currently $277 million it means Kameron Coal's Donkin coking coal resource alone is worth $226.42 million. With $300 million spent on Donkin's infrastructure, it means the Donkin Coking Coal Mine is worth at least $500 million in its current state in care and maintenance. After Donkin restarts production in the upcoming months we believe Donkin will become a $1 billion coking coal mine.
MOX owns a high value 2%-4% gross production royalty in the Donkin Coking Coal Mine. A royalty in a mine is always much more valuable than equity in a mine. NIA estimates that MOX's 2%-4% gross production royalty is equivalent to owning 20% equity in Donkin. Therefore, MOX's Donkin royalty is worth an estimated $100 million today.
MOX has a strong cash position and also owns a revenue generating royalty in a Vulcan Materials (VMC) aggregate project. We estimate MOX deserves to trade immediately at a minimum market cap of $105 million, which would value MOX at $2.06 per share.
The catalyst that could drive MOX to $2.06 per share in the upcoming weeks will be confirmation in the media that U.S. MSHA consultants are either at the Donkin mine or on their way there to lend their expertise to the Nova Scotia LAE about the February 2020 rock fall that occurred in a closed off section of Donkin because Nova Scotia doesn't employ its own coal mining safety officials when Donkin is the only coal mine in the province. The only reason Kameron Coal hasn't already restarted production at Donkin is because Canada had its border closed since March 2020 and the MSHA officials couldn't travel to Nova Scotia. The border is now open and we believe the MSHA consultants have already been scheduled to travel to Nova Scotia.
MOX's market cap at $0.40 per share is an insanely low $20.36 million. This means MOX's Donkin royalty is only receiving $15.36 million in value, which according to NIA's calculations implies a value for Kameron Coal's fully permitted/developed Donkin Coking Coal Mine of $76.8 million! We know for a 100% fact that Donkin is worth many times more than $76.8 million!
CAD is now worth $277 million after gaining by 52.88% today and even in a best case scenario where CAD successfully raises $661 million for initial CAPEX, CAD's Hugenot Project won't be producing 3 million tonnes of coking coal per year until at least 5-6 years from now! Donkin is ready to restart production within months and is already fully permitted to produce 3 million tonnes of coking coal per year today!
MOX is only days away from being discovered by the same investors who are mistakenly buying CAD not realizing that MOX exists!
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. This message is meant for informational and educational purposes only and does not provide investment advice.