Headquartered in Vancouver, Latin Metals (TSXV: LMS) (OTCQB: LMSQF), or LMS, owns a diversified gold and copper exploration assets portfolio in South America.
And that is pretty much the only way that the Company resembles a standard miner and producer. The reality is that LMS has developed a system that funds its operations without the traditional massive dilution junior miners are known for when raising funds. And they work and have worked with big global metals companies like Anglo American and Barrick.
So far, LMS seems a well-kept secret. That will likely change fast.
LMS operates on a prospect generator model, focusing on acquiring prospective exploration properties at minimum cost, followed by initial evaluation through the cost-effective exploration to establish drill targets. Latin Metals ultimately secures joint venture partners to fund drilling and advanced exploration and, in doing so, exposes shareholders to the upside of mineral discoveries while conserving capital and minimizing dilution. (Corporate website)
Many Exploration deals are smoke and mirrors with little chance of success. Latin Metals have an established time that signs consistent deals with major mining companies like AngloGold & Barrick.
- Dilution is minimized in Prospect Generator Business.
- Models such as option payments come in, and Royalties from mines flow to the balance sheet.
- Current agreements for up to $30 million of non-dilutive investment in Latin Metals and its project
- 3rd Party Companies help validate the property’s potential feasibility
Rick Rule; The idea is that the exploration business is very much like any other form of research and development business and that the principal value is the intellectual capital of the management team—the idea being, with an exploration company, that you share the financial risk of developing a project so that you don’t dilute the shares. You don’t, as an investor, cut your interest in intellectual capital, which is the most valuable asset that many of these small companies have. (Full article here.)
The preceding piece is, in true Rule style, a straightforward and easy-to-understand structure and his success in investing in these companies, both statistically and from a profit point of view.
The mining magic happens in Peru and Argentina. Let’s dig into the recent announcement of the Company’s high-grade copper mineralization at its Aquis Project.
Keith Henderson, a CEO, commented, “Our recent follow-up sampling program has outlined a large 1km x 1km area of consistent mineralization where 101 samples returned copper values of up to 2.37% copper and 236 ppm molybdenum, with a mean value of 0.13% copper and 6.4 ppm molybdenum. We are excited about these initial results, with many areas of this large 4,000-hectare property still unsampled.”
In Argentina, the latest development is to make AngloGold a partner: “AngloGold’s investment of up to USD 12.575 million for a 75% ownership interest in the Projects is a significant investment, and, if AngloGold were to exercise its top-up right for an aggregate 80% ownership, additional investments by AngloGold would include delivery of a Mineral Resource estimate and further cash payments commensurate with defined ounces to Latin Metals.”
Mr. Henderson added, “I am particularly pleased to have concluded this agreement so soon after completing a similar deal with Barrick Gold Corporation in February. Securing high-quality, technically excellent, and financially capable partners is essential to our prospect generator model. We hope to conclude other deals as we continue to market our project portfolio.”
The Projects are in Salta Province, in northwest Argentina: Latin Metals currently holds a 100% interest in each project. The Projects are located within the Argentine Puna region, the southern extension of the Altiplano of southern Peru.
The age-old question is, should a mine be run as a mine or a business that uses management expertise to monetize properties using, to a large extent, OPM and deliver lasting value for shareholders? (Not age-old, I just made it up). Relevant, nonetheless.
The other factor that should intrigue risk investors is the fact that LMS is kind of orphaned out there with an average daily volume of just over 10k, a market cap of 20% over CDN$5million and a raft of relevant news regarding decent funding deals it has done to grow the Company; and eventually deliver what appears to be a good shot at decent investor returns. Hell, if it moves from here to even shy of CDN$0.20 a share, that’s about a 100% potential return. And at this level, they are not likely to tie up even a meaningful amount of investment capital.
This means that due to process and management savvy, it may eventually become a meaningful amount of investment capital. And besides, anything that has cool moves in what tends to be a reasonably pedantic sector? All over it.
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