Metallic Minerals Corp. (MMG:TSX.V; MMNGF:OTCQB) received a major shareholder and substantial funding to advance its La Plata project with Newcrest's US$6.3 million (US$6.3M) strategic investment, reported Couloir Capital in a June 19 research note.
The investment "values Metallic Minerals at CA$66M, nearly 24% more than the current market cap of CA$53M," Couloir wrote, and it is "a validation of La Plata's strong drill results as well as the future resource potential."
Large return potential
Accordingly, Couloir maintained its Buy rating and CA$0.70 per share fair value estimate on the Canadian explorer, currently trading at about CA$0.32 per share.
The difference between these two figures implies a significant potential return for investors of 119%.
About the transaction
Once the US$6.3M private placement by Newcrest is completed, it will own 9.5% of Metallic Minerals' issued and outstanding common shares, Couloir indicated.
"Newcrest made the investment at a price of US$0.40 per share, which was at a 13% premium to the then (May 9, 2023) 20-day, volume-weighted average price of Metallic Minerals and is at a nearly 24% premium to the current market price," Couloir added.
Also as part of the arrangement, Newcrest, given its experience and success with deposits like La Plata, will assist Metallic Minerals with technical issues pertaining to porphyry systems and underground bulk tonnage, block-cave mining operations.
Drilling to start in U.S.
Metallic Minerals will use the capital from Newcrest to advance La Plata, located in Colorado, Couloir relayed. It is about to start the first phase of an expansion drill program there, the goal of which is to expand already identified zones containing high-grade copper, gold and silver mineralization. The company aims to update the La Plata resource estimate this year.
"We see a significant expansion in the resource base at La Plata," wrote Couloir.
Update on Yukon project
In other news, Metallic Minerals announced results of last year's drilling, six holes for 642 meters (642m), of the Caribou target at its flagship Keno project in the Yukon Territory, and they were "strong" and high grade, Couloir wrote.
The mineralization encountered at Caribou had grades up to 1,310 grams per ton silver (1,310 g/t Ag), in hole CH22-05, Couloir reported and provided these highlight drill results:
- Hole CH22-01 intersected two high-grade vein intervals that include 0.5m of 348 g/t silver equivalent (Ag eq) from 91.5–92m along with 0.5m of 1,201 g/t Ag eq from 125.2–125.7m.
- Hole CH22-02 showed 0.5m of 849.8 g/t Ag eq.
Metallic Minerals is working toward completing a maiden resource estimate for Keno in H2/23.
What to watch for
Given the current and imminent work at La Plata and Keno, near-term stock catalysts are expected, noted Couloir.
They include drilling or field work news from either project, news about the initial resource estimate for Keno and news about upgrades of La Plata resources.
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