Fortunes can be made when a new mine is found, or lost in the pursuit of one.
Mines are by definition a finite resource, constantly in depletion.
Large mining companies often outsource the risk-and reward of finding new mines to smaller, riskier ventures.
When a new economic deposit is found the majors will often gobble up the juniors at astounding premiums.
Take Diamond Fields International, a penny stock mining startup first financed in 1994 at $0.10 per share. The stock went to $196 within 2 years after discovering a rich nickel mine in Eastern Canada.
For every Diamond Fields, there are scores of failures.
High-risk exploration ventures don’t have cash-flow, and rely on the equity markets and support from larger companies to finance their efforts.
The key for these junior miners is to keep their cost of capital low enough— keep the public believing for long enough — to find a mine and defy the odds.
Economic geologist Joe Mazumdar is one of the world’s most experienced analysts capable of evaluating early stage mining investments. After gaining serious academic credentials, Joe worked with a series of junior and major companies, eventually settling in business development at Newmont, the major gold producer.
At Newmont, Mazumdar was responsible for new investments and helping the company decide what to buy next.
After Newmont, Mazumdar joined investment firms Haywood Securities and later Canaccord Genuity as a research analyst, covering small mining companies.
Mazumdar recently teamed up with famed independent analyst Brent Cook of Exploration Insights, and the two travel the world in search of mining investments and write about them every Sunday for subscribers.
Mineral exploration is extremely complicated — part art and part science— and very few people can distinguish the wheat from the chaff in exploration.
That’s why a recommendation from Cook and Mazumdar often precedes higher share prices, easier financing terms, and even corporate takeovers for the small companies they recommend.
They are two of the best analysts in an industry desperately lacking of credibility.
It was Mark Twain who said a gold mine is a hole in the ground with a liar on top.
Callinex Mines (TSX:CNX)
You need to be brave to be a junior mining CEO.
Everybody thinks you’re full of it, and the odds are extremely against you.
I first met Callinex Mines CEO Max Porterfield five years ago while he was apprenticing for Uranium Energy CEO Amir Adnani, one of the better respected young mining CEOs.
Porterfield, a fellow millennial, had worked in mutual fund sales for famed gold investor Frank Holmes of US Global Investors in Texas before making the move up to Vancouver to build his own dream.
Under Adnani, Porterfield honed his skills as a marketer and money raiser.
He couldn’t resist the urge a few years later to take the reigns of fledgling Callinex, which had a significant portfolio of exploration properties in Canada but was struggling to find financing in the depths of one of the worst bear markets in mining history.
When Max first told me about his new position I didn’t fully share his enthusiasm. At the time I was pretty beat up by the market and had a negative view of exploration.
When you’re a junior mining CEO, you get used to hearing “no” often and Max went about building Callinex in spite of what I told him.
He’s worked tirelessly over the past few years to build a team and assemble a portfolio of zinc projects in two of Canada’s leading zinc provinces, Manitoba and New Brunswick.
At the Pine Bay project in Manitoba, Callinex recently intersected a promising lens of high grade zinc, copper and gold mineralization nearby to Canada’s largest zinc camp.
The first hit was far from conclusive that Callinex had a major score on its hands, but was promising enough to attract a $10 million investment from Sprott Inc., and a temporary surge in Callinex’s share price.
The find also attracted the attention of Cook and Mazumdar, who recommended the stock in their weekly publication.
Callinex is currently valued at roughly $22.5 million and has about $8 million in cash. That’s a small fraction of what it could be worth if the Pine Bay discovery turns into Manitoba’s next zinc mine.
However, the zinc-rich mineralization Callinex is searching for is extremely difficult and costly to find.
The first set of follow up drill holes to the Pine Bay discovery were not home-runs and cut the CNX share price in half.
Callinex badly needs its investors to be patient. That’s why CEO Max Porterfield invited Exploration Insights’ Joe Mazumdar for a site visit to learn more about the Pine Bay project in Manitoba last week.
The pressure was on for Porterfield. Could Callinex convince Mazumdar to stick with the company? A sell-rating from Mazumdar could be devastating for Callinex’s share price and hopes of finding finance to find a major mine.
The two left Vancouver for Flin Flon, Manitoba early last week for a tour of the local infrastructure, a corporate presentation, and a visit to the Pine Bay property and coreshack, where drill core (“the truth” as Joe calls it) was analyzed and interpreted by the geologist.
Joining them was Carter Smith, one of the most talent video producers CEO.CA has worked with. He’s been producing mining content for nearly a decade, and even works as a producer on Discovery Channel’s Goldrush, one of TV’s most popular programs, every summer.
Carter was keen to produce a site visit story, and when I learned about the Callinex tour I suggested to Max and Mazumdar that Carter tag along.
The end result is an entertaining and informative look at zinc mining in Manitoba and the Callinex story through the lens of one of the industry’s best respected analysts, Joe Mazumdar.
Watch to find out whether Callinex is still in the Exploration Insights portfolio.
Get future buy/sell recommendations from Exploration Insights for $140 USD monthly. It’s the best investment you can make in junior mining.
Learn more about Callinex Mines at www.callinex.ca and on SEDAR.
Nothing in this article or video is intended to be investment or professional advice of any kind.