As China’s economy strengthens and global electric vehicle demand throttles into overdrive demand for zinc has remained buoyant. However, it is really the supply side of the equation which has support the zinc price; zinc mine output from outside of China fell 10% during 2016, primarily due to the closing of the MMG Century and Vedanta Resources’ Lisheen mines.
This combination of tighter supply and robust demand resulted in the price of zinc doubling between the end of 2015 and the beginning of 2017. Since peaking at $1.35/lb in February zinc has spent the last few months consolidating near the $1.20/lb level:
Zinc is currently supply constrained globally and there are strong indications this environment will last through the end of 2018. Without a higher zinc price to bring on additional new mine supply, there is the potential for a growing supply shortfall over the next decade:
Given that most large scale projects can take a decade or more to come into fruition, investors should be looking for companies that have zinc projects which have a rapid path to production and cash flow. One such company is British Columbia based Margaux Resources.
Margaux Resources (TSX-V:MRL, OTCQB:MARFF) is a regional consolidator of mineral rich deposits with historical production in proximity to potential customers. In Margaux CEO Tyler Rice’s own words “we are doing what the majors cannot do and that is to go in and negotiate reasonable terms with regional landowners and consolidate this historic mining district (the Kootenay Arc of British Columbia) while moving historic NI 43-101s into updated, compliant NI 43-101s.” Margaux has five projects, all of which are in British Columbia, with a total land position encompassing 19,715 hectares of mineral claims and 1,765 hectares of crown granted claims, in the Nelson Mining Division.
MRL has strong insider ownership, CEO Tyler Rice owns ~1.7 million shares, approximately 4% of shares outstanding. The insiders plus less than 20 institutional and individual shareholders hold more than 50% of the shares outstanding.
MRL.V (1-Year)
Management and Advisers
Margaux CEO Tyler Rice has substantial experience with both public and private companies as a consultant, investor and/or an employee (as a member of the Executive Team) in a wide spectrum of industries, including healthcare, oil & gas production and shipping, oilfield communications, real estate and mining. As a Chartered Professional Accountant, he has provided consultancy services to several public and private companies in numerous capacities.
Mr. Rice moved to the Kootenay district a year ago in order to take a hands on approach with Margaux’s projects and build relationships with the local community. It’s fair to say that he is fully committed to Margaux’s success and his impressive track record demonstrates that Margaux is in good hands with a strong and adept leader at the helm.
On the technical side, Margaux boosted its expertise in early 2017 with the appointment of Linda Caron as VP Exploration and Todd Keast as a consulting geologist.
Linda Caron brings to the team her extensive experience in the southern B.C. and northern Washington regions, and her widely recognized knowledge of the geology and deposits in the area. Ms. Caron has over 30 years of national and international experience in the mining industry. Most recently, she has acted as Project Manager for several large mineral exploration projects in southern B.C., with a primary focus on gold, including Kinross Gold Corp.’s Grizzly Greenwood project and Ximen Mining Corp.’s Brett Gold project.
The management team at Margaux also benefits from the depth of mining knowledge and industry-focused strategic thinking of its Advisory Committee. The well known and highly experienced Advisory Committee members include.
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Mr. Steve Letwin, President and Chief Executive Officer of IAMGOLD;
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Mr. Chris Stewart, President and Chief Executive Officer of Treasury Metals;
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Dr. Victor Zhao, P.Geo, President of Continental Geology & Mining Consulting; and
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Dr. Rogerio Monteiro, P.Geo, President & Chief Structural Economic Geologist of Vektore Exploration Consulting.
Jersey Emerald
Margaux’s flagship Jersey-Emerald project is a past-producing lead-zinc, and tungsten mine. At one point not too long ago Jersey-Emerald was the 2nd largest producing zinc mine in British Columbia. In addition, Jersey-Emerald happens to be located about 35 minutes away from Teck’s (NYSE:TECK) Trail smelter which focuses primarily on lead and zinc. Jersey-Emerald is also located near great roads with strong power infrastructure nearby (5 power dams within spitting distance of the mine).
Jersey-Emerald boasts a 2010 NI 43-101 resource estimate showing an indicated resource of 1.9 million tonnes @ 1.96% lead and 4.1% zinc with an inferred resource of nearly 5 million tonnes grading 1.95% lead and 3.37% zinc:
The zinc portion of the Jersey-Emerald resource (indicated & inferred) alone is worth nearly US$500 million at today’s zinc prices. The lead, tungsten, and now gold (including an intercept grading 24.98 g/t over 10.2 meters) are the icing on a very tasty cake at Jersey-Emerald for this C$17 million market cap company.
With a fully integrated smelter 45km from the Jersey-Emerald Mine it has been contemplated that Margaux could ship feeder ore across the border to Teck’s Pend Oreille mill in the state of Washington, USA. According to Mr. Rice, Margaux has a lead on a trucking company that has the regulatory experience with cross-border ore shipping and can take ore from Jersey-Emerald across the border to Pend Oreille.
The scenario in which Margaux ships feeder ore to an existing mill facility is likely to be much more attractive to the company given that the permitting process to construct a mill facility on site is a two-year process at a minimum.
Additional Properties
While 2017 is set to be a busy year for Margaux at Jersey-Emerald the company has four other promising projects, all within the Kootenay Arc belt in southeastern BC:
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The Bayonne property is located approximately 42 kilometres east of Salmo, and historically produced 81,782 tonnes, grading 16.0 g/t gold (42,174 ounces) and 45.9 g/t silver (120,665 ounces). The property has a historic resource of 29,730 tonnes grading 12.8 g/t gold and 95,000 tonnes grading 14.9 g/t gold.
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The Jackpot property is located approximately 2 kilometres north of Margaux’s Jersey-Emerald property. The property consists of mineral claims and crown grants, covering 1,579 hectares, and is prospective for zinc, lead and silver.
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The Sheep Creek property is located approximately 12 kilometres east of Salmo, BC. The Property consists of mineral and crown grants, covering 1,589 hectares, and is prospective for gold and silver. The property has a historic resource of more than 68,000 tonnes grading more than 15 g/t gold.
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The Ore Hill property is located approximately 12 kilometres southeast of Salmo and adjacent to Margaux’s Jersey-Emerald and Sheep Creek properties. The property consists of mineral claims covering 338 hectares, and is prospective for gold, silver, zinc and lead.
Margaux Resources Project Map
Margaux has assembled a highly prospective package of properties within one of the most productive mining regions of British Columbia. The market is not giving Margaux much credit for its flagship Jersey-Emerald Project, let alone its full property package. Achieving a zinc concentrate which Teck’s mill at Pend Oreille or Kinross’s mill at Kettle River-Buckhorn (this mine has reached the end of its mine life) can take, in addition to moving closer to shipping feeder ore cross border could go a long way towards bridging the valuation gap with zinc junior peers such as Canada Zinc Metals (TSX-V:CZX) and Canadian Zinc (TSX-V: CZN) who both currently sport market caps near C$50 million compared to Margaux’s current market cap of C$16 million.
Disclaimer
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Margaux Resources is a high-risk venture stock and not suitable for most investors. Consult Margaux Resources’ SEDAR profile for important risk disclosures.
EnergyandGold has been compensated to cover Margaux Resources and so some information may be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
This article contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). Certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “believes”, “aims to”, “plans to” or “intends to” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed by such forward-looking statements or forward-looking information, standard transaction risks; impact of the transaction on the parties; and risks relating to financings; regulatory approvals; foreign country operations and volatile share prices. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. Accordingly, readers should not place undue reliance on forward-looking statements and forward looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.