MXL Has Key Breakout Point of $0.28
MX Gold (TSXV: MXL) has formed a bullish wedge pattern with a key breakout point of $0.28 per share. After MXL surpasses $0.28 per share, look for it to rapidly explode into the $0.35-$0.45 per share range. Remember, MXL only has 133.87 million shares outstanding. At its key breakout point of $0.28, MXL will have a market cap of only CAD$37.48 million or USD$29 million. NIA strongly believes that MXL deserves to immediately begin trading at a significantly higher valuation. MXL is now perfectly positioned to become the world's next major high grade/low cost gold producer!
In NIA's opinion, gold is likely to average at least $1,500 per oz in 2017. Based on a $1,500 per oz average gold price, annual gold production of 25,000 oz, and extremely low all-in sustaining costs of $600 per oz – MXL could earn an operating profit in 2017 of $22.5 million! A multiple of 5-10X an estimated 2017 operating profit of $22.5 million would give MXL a market cap of USD$112.5-$225 million or CAD$145.41-$290.81 million, which would value MXL at $1.09-$2.17 per share.
After MXL's recent private placement the company is now fully funded to bring its consolidated WillaMax gold, silver, and copper project into production this year Рunder the leadership of Goldcorp (GG)'s Hugh McPherson, who decided to leave his position as mine manager of GG's Pe̱asquito gold mine to become MXL's new President and COO. Pe̱asquito is the second largest gold mine in all of Mexico and the flagship mine of GG, the world's third largest gold miner with a market cap of $16.21 billion. As mine manager of Pe̱asquito, McPherson was in charge of 1,400 employees and the production of 860,300 oz of gold per year.
The economics of MXL's WillaMax are by far the best we have ever seen for a near-term gold producer. There are two main reasons for this: 1) MXL's Willa Project contains one of the world's highest grade gold resources with an average grade of 6.67 g/t, which is an unbelievable 7X higher than the combined average gold grade of the world's five largest gold miners. 2) MXL will be trucking its Willa Project material 135 kilometres to its newly acquired Max Mill Complex – totally avoiding the huge CAPEX required to build a modern crushing complex, processing mill, tailings storage facility, and staff building on its Willa Project site.
MXL's Max Mill Complex was built by its previous owner Roca Mines at a cost of $80 million and was a major producer of molybdenum from 2007 through 2011. After it commenced production in 2007, Roca Mines saw its market cap rise to a peak of $400 million from the production of molybdenum alone! After base metal prices collapsed in 2011, Roca Mines was forced to suspend production – and with molybdenum continuing to crash further in recent years, with no recovery in sight – MXL was able to "steal" the Max Mill Complex at a rock bottom price.MXL over the past year has completely retrofitted the Max Mill Complex for the production of gold, silver, and copper. It is now fully permitted and with the turn of a key can immediately begin processing 450 tonnes of ore per day. In fact, 90% of the expansion work is now complete for allowing MXL to increase throughput to 1,000 tonnes of ore per day.
Our valuation estimates above are based on MXL processing 450 tonnes of ore per day. When MXL expands throughput to 1,000 tonnes of ore per day, not only will its revenues more than double, but the company expects to reduce its production costs even further!
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. NIA has been compensated by MXL $40,000 cash for a two-month investor relations contract. Never make investment decisions based on anything NIA says. This message is meant for informational and educational purposes only and does not provide investment advice.