We announced Morien Resources (TSXV: MOX) on Friday as our #1 favorite mid-year 2021 stock suggestion.
Coal is up to a new 30-month high but historically coal mining stocks have been high risk and we almost always avoid them. MOX is a unique situation and the only coal stock that NIA has suggested in history because it owns a huge royalty covering Canada's highest quality coal mine the Donkin Coal Mine. MOX's royalty is worth 2% of the Donkin Coal Mine's first 500,000 tonnes of quarterly production and 4% of all quarterly production after 500,000 tonnes. The Donkin Coal Mine is permitted to produce 3,000,000 tonnes of saleable coal per year and has a mine life of 25 years! The mine opened in 2017 after The Cline Group spent $250 million developing it. MOX was trading for approximately $0.50-$0.60 per share prior to coal crashing in March 2020 and the mine being placed on care and maintenance. We believe MOX is artificially low due to false media reports that the mine has been permanently shut down. In reality, a small staff remains employed at the site to ventilate and keep the facility dewatered. Coal at Donkin is regarded as high-quality metallurgical coal. It has a probable saleable reserve of 48 million tonnes plus an indicated resource of 174 million tonnes.
Coal is exploding so high that The Cline Group is likely to make a move regarding the Donkin Coal Mine very soon by either bringing it back into production or selling it to another company who will. If we are right, MOX's royalty will likely generate $5-$10 million in annual royalty revenue for MOX. Royalty companies typically trade for 10-20X revenue.
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