1515 South Federal Highway Suite 207
33432 Boca Raton FL, ae
Kevin Mc Knight
+1 (800) 404-8982
MXOM is already producing Gold & Silver at record levels !
OTCBB: MXOM / Price $0.20
With a PEA only weeks away and its neighbors on the acquisition trail - it looks increasingly likely.
Especially since its neighbour Grayd Resources rose by as much when Agnico Eagle Mines (TSX:AEM $50) bought it for $2.80 per share. Not only are they both from the same neighbourhood, but critically, they have similar sized gold deposits. When Grayd was bought, it had just completed a preliminary economic assessment (PEA) - but, it was not an actual gold producer. Pan American is already producing gold and silver at record levels (see news release here) and it expects to announce the PEA for its Cieneguita Mine in the coming weeks. Like Grayd prior to its PEA, Pan American trades at $0.20per share or about $9 for every ounce of gold equivalent in the ground. This does not include a further 700,000 ounces inferred or it would be even lower. This compares to the $218 per ounce or $2.80 per share that Agnico Eagle was willing to pay after Grayd's PEA was completed.
Economic, high return gold deposits have become a rarity, which is why many gold stocks have not performed. The preliminary numbers for Pan American's Cieneguita mine are so incredible that they would be quite frankly, unbelievable, if not for the stature and track records of the company's board members (see column below). Fully developed, management now expects revenues, net to the company (using current gold and silver prices and a $600 cash cost), from the commercial operation to reach $140,000,000 per year. That's about $1.48 per undiluted share.
My bet is that Pan American Goldfields never gets a chance to fully develop its mine but instead will be quickly snapped up by one of its neighbours at a Grayd price of over $200 per ounce. Including the inferred that would total more than $400 million or abut $4.25 per share. If Agnico Eagle does not move first then there is also Coeur d'Alene Mines (NYSE:CDE $24) or Alamos Gold (TSX :AGI $15) which operates the Mulatos, one of the area's lowest cost mines. Also a great candidate to buy Pan American is the Mexican mining company, Minera Frisco (MX:MFR $54). It just bought the Ocampo deposit from AuRico for $750 million last October. I think all of these companies are looking to replace their depleting deposits and grow their reserves with an asset like Pan American's Cieneguita.
Assets: Cieneguita Mine is a 1.26 million oz gold equivalent resource - or 37.5 million ounces of silver and 509,000 ounces of gold. Inferred there is 352,000 ounces of gold and 21 million ounces of silver for a gold equivalent of a further 772,000 ounces of gold. Both amounts are expected to increase significantly for as recent work has outlined a series of high grade zones within the deposit which were not included in the original resource.
Cash flow 2013: Expected cash flow from the pilot operation net to Pan American this quarter $2 million. The company exited 2012 with $1.1 million cash and receivables. Total revenues for 2013 at current production rate expected to exceed $7 million.
Mining operations: Pilot operation currently processing 700 tons per day. Full commercial production of 15,000 tons per day is targeted. Production for the month of November, 2012 reached a record 75,330 ounces of silver and 757 ounces of gold.
Growth potential: Total gold eq. Production of the commercial operation is expected to reach 150,000 ounces per year by 2015. Using $1500 oz/Au, $35 oz/Ag and a $600 cash cost the fully developed mine's cash flow, net to the company is expected to exceed $135 million for undiluted earnings of $1.43 per share.
Mine Development: Current PEA being managed by M3 Engineering of Tucson, AZ. M3 is a major engineering group that has managed more than half of the new mine developments in Mexico over the past 20 years. PEA completion estimated Q1 2013. Bankable feasibility study for the fully developed mine to commence immediately following the PEA's completion.
Management and Executives currently own +22.50% of the outstanding shares, including warrants/options. Institutional ownership is 29% of the issued shares including Blackrock Global Funds board member Emilio Novela, who is also the Vice Chairman of Banco Banif Private Banking. He currently owns 17 million shares of Pan American. In addition, the company's partner at the mine (20% of the commercial operation and 65% of the pilot operation), Mexico-based Minera Rio Tinto, owns approximately 10%.
Why I think Pan American is among the great opportunities of this decade:
It is exceptionally rare to find a micro-cap with all this:
- Positive operating cash flow (excluding development and exploration);
- A major silver & gold asset;
- Production growth and cash flow set to rise 1,000% in only the next three years;
- Bargain priced at $11 per oz gold valuation - this most certainly cannot last;
- Executive includes some of the industry's most accomplished veterans - greatly increasing the likelihood of success;
- The probability that the company's share price rise will be fast-tracked by a bidding war, as companies like Minera Frisco or Coeur d'Alene Mines attempt to add it to their stable of low-cost high-return, producing mines.
I am confident that the more you learn about Pan American Goldfields, the more impressed you will be. For complete details click on the link below.
Canadian resource stock experts Fundamental Research just named Pan American as one of their top picks for 2013. For a copy of the Fundamental report and for a free subscription to Undiscovered Equities contact us at 1-800-404-8982. You can also go to our site at www.undiscoveredequities.com to get a copy of the report and to take advantage of our free subscription offer. To learn about Pan American Goldfields directly, visit http://panamgoldfields.com/.
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