Morien Resources (TSXV: MOX) since the end of January 2020 remains down by 18.42%.
The #1 largest publicly traded U.S. coking coal producer Alpha Metallurgical Resources (AMR) since the end of January 2020 is currently up by 681.34%.
The #2 largest publicly traded U.S. coking coal producer Ramaco Resources (METC) since the end of January 2020 is currently up by 263.81%.
The #1 largest publicly traded Canadian coking coal explorer Colonial Coal (TSXV: CAD) since the end of January 2020 is currently up by 220.63%.
The #1 largest publicly traded Australian coking coal explorer Bowen Coking Coal (ASX: BCB) since the end of January 2020 is currently up by 160.15%.
MOX is the only publicly traded coking coal royalty play and we believe it deserves to catch up to recent gains achieved by AMR, METC, CAD, BCB, and many others!
On Friday, MOX brokeout of its medium-term downtrend by surpassing its medium-term resistance level of $0.45 per share and closing up to $0.465 per share. MOX is about to surpass its short-term key breakout point of $0.47 per share and is likely to explode this week possibly to new all-time highs of above $0.77 per share. When MOX closed at $0.47 per share on September 13th, it had a 14-day relative strength index (RSI) of 82.78 indicating that it was technically overbought and needed to dip before rallying to new all-time highs. After a healthy profit taking dip down to a low of $0.345 per share, MOX has bounced back strongly to last week's close of $0.465 per share! MOX's current RSI is a very healthy 66.57!
All three of NIA's previous royalty stock suggestions were acquired at huge premiums above NIA's suggestion prices: NIA's Ely Gold Royalties was acquired one month ago by Gold Royalty Corp (GROY), NIA's Coral Gold was acquired in November by Nomad Royalty (TSX: NSR), and NIA's Bullion Monarch was acquired in 2012 by EMX Royalty (EMX).
U.S. coking coal after finishing 2020 at $119 per tonne has gained by 139.5% year-to-date in 2021 to finish last week at a new all-time high of $285 per tonne!
The Donkin Coking Coal Mine has a probable reserve of 58 million tonnes with an in-ground value of US$16.53 billion (CAD$20.92 billion). Donkin is fully permitted/developed with the capacity to produce 3 million tonnes of saleable coking coal per year! A total of $600 million in inflation adjusted dollars have been spent developing Donkin including $300 million since 2015 from its owner Kameron Coal.
Donkin is extremely important to the Nova Scotia economy as its last remaining coal mine. Nova Scotia's development corporation spent $88 million in 1980s dollars driving the two twin 3.5km tunnels down to Donkin's massive coking coal resource located 200m below the Atlantic Ocean. When the tunnels were finally completed in 1987, coking coal prices had crashed and the project was abandoned with the tunnels allowed to flood. Only in 2017 did Kameron Coal bring Donkin into production for the first time in history!
MOX's gross production royalty is worth 2% of the first 500,000 tonnes produced per quarter and 4% of the next 250,000 tonnes produced per quarter. At full production capacity of 750,000 tonnes per quarter, MOX's gross production royalty is worth an average of 2.667%.
At full production capacity of 3 million tonnes per year, MOX's annual royalty revenue based on current record high coking coal prices will be an estimated CAD$28.87 million!
Royalty companies typically trade with an enterprise value of at least 10X revenue.
MOX is extremely tightly held with its most recent private placement having closed back on December 19, 2014. At the time, MOX sold 3.45 million shares at a 58% premium to an entity controlled by a billion dollar company. Click here to see for yourself!
Those shares are still owned by the same entity today, which has become MOX's largest shareholder with a total stake of 5.95 million shares equal to 11.69% of the company.
MOX hasn't spent one penny on marketing its stock, preferring to maximize share buybacks.
Since the end of 2014, MOX has bought back 9.03 million shares to reduce its shares outstanding from 59.94 million down to 50.91 million for a total reduction of 15.065%!
MOX's current market cap at $0.465 per share is only CAD$23.67 million! MOX has approximately $2.5 million in cash and no debt. MOX also owns a royalty in the Vulcan Materials (VMC) Black Point aggregate project, which they could probably sell today for at least $2.5 million. MOX is currently receiving only CAD$18.67 million in value for its Donkin Coking Coal Mine royalty!
Kameron Coal's business partner for exporting Donkin's coking coal to the international market is Provincial Energy Ventures (PEV), which is owned by Ernie Thrasher who recently retired from the Board of Directors of the world's largest gold miner Barrick Gold (GOLD) where he was the longest serving independent Board Member.
PEV's Atlantic Canada Bulk Terminal in Sydney, Nova Scotia is a short 30km haul from the Donkin Coking Coal Mine.
One year ago, PEV finally completed $75 million in upgrades to the Atlantic Canada Bulk Terminal including the dredging of the sea floor to a depth of 16.5m to accommodate the largest Capesize vessels for the purpose of allowing Donkin to ramp up to full production capacity of 3 million tonnes of coking coal per year! Click here to see for yourself!
The Canadian Coast Guard announced two months ago at the request of PEV that they are moving forward with a $4.5 million upgrade to the navigational aid lights in the Port of Sydney, which is the last remaining step for allowing Donkin's coking coal to be exported on the largest Capesize vessels! Click here to see for yourself!
Donkin was temporarily idled in March 2020 due to Canada closing its border over COVID-19, which disallowed U.S. MSHA consultants from traveling to Nova Scotia to make recommendations regarding material that fell from Donkin's ceiling in February 2020, which is a common occurrence in all coal mines. The NS LAE has been relying on the expertise of U.S. MSHA officials to help it regulate Donkin to keep its workers safe.
Canada reopened its border on August 9th. It typically takes about two months for the U.S. MSHA consultants to travel to Nova Scotia and visit Donkin. We expect the U.S. MSHA officials to visit Donkin in early October, which is the most important step for Kameron to restart Donkin's operations.
Kameron announced three weeks ago that it is ordering and will install by year-end a new $300,000 noise reduction muffler for the benefit of local residents. Click here to see for yourself!
The Nova Scotia government recently completed approximately $2 million in upgrades to the intersection at the Donkin Mine so that Kameron can begin using its own haul road that goes directly to the port while avoiding local traffic. Click here to see for yourself!
Once we get public confirmation in the upcoming weeks that Donkin will soon be restarting operations we expect MOX to begin pricing in a multiple of 10X future royalty revenue.
Prior to March 2020, Kameron was operating Donkin at only a small fraction of its production capacity. Even at previous low production rates Kameron was unable to export all of the coking coal it produced due to only small vessels fitting into the port prior to last year's completion of dredging.
Kameron was forced to sell 25% of Donkin's production to the local power plant at much lower thermal coal prices. Even then it left large stockpiles of coking coal both at the port and the mine site.
A few months ago, Kameron sold a small portion of its stockpile to cover the cost of its team of employees who have been working at Donkin over the last 18 months keeping the mine dewatered and its fan operating to allow for a rapid restart of underground mining after the MSHA consultants visit the mine. This resulted in MOX receiving $104,000 in royalties even with the mine still on care and maintenance.
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. This message is meant for informational and educational purposes only and does not provide investment advice.
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