There is so much that we love about Morien Resources (TSXV: MOX) that we haven't had time to even discuss yet. For example, the Chairman of MOX is also on the Board of Directors of Sandstorm Gold Royalties (SAND) a US$1.185 billion NYSE listed gold royalty company. See for yourself by clicking here and then clicking on John P. A. Budreski.
When the Federal Reserve begins to hike the Fed Funds Rate, the price of gold will explode to new all-time highs and far outperform coal, oil, natural gas, and other energy commodities. Until then, energy commodities will continue to outperform gold. Coal has the most short-term upside potential because for at least the next 12 months there will be no possible way to increase global coal production in a meaningful way. This is especially true for coking coal the tightest commodity market of all.
The TSXV has hundreds of publicly traded gold companies and a large percentage of them are actively exploring for gold. Although it is becoming much more difficult to find gold with average gold grades continuing to decline each year... there are always new discoveries of gold being made on a continuous basis. Even the largest and most bullish gold investors like Eric Sprott will openly tell you this.
The TSXV has zero publicly traded coal companies actively exploring for coal. Of course, after MOX breaks $1 per share it will encourage investment bankers in Vancouver to take many new coal companies public in 2022, but until then there are literally zero high quality small-cap investment opportunities in the coal industry that are publicly listed on North American exchanges besides MOX.
If NIA's President was the CEO of a publicly traded royalty company he would make it his #1 priority to acquire MOX. Even if a company were to pay a 100% premium for MOX it would still be extremely accretive to the earnings of any acquirer.
SAND for example has a current enterprise value of 10.34X revenue. Donkin is expected to average annual coking coal production of 2.75 million tonnes, which based on the U.S. Hampton Roads Coking Coal price of US$300 per tonne and an estimated average royalty for MOX of 2.54545% would equal annual royalty revenue for MOX of US$21 million! We have no reason to believe that SAND will acquire MOX but let's say that it did... if SAND were to acquire MOX it could potentially add US$221.14 million to SAND's market cap after the Donkin Coking Coal Mine restarts production in 2022 (using SAND's EV/revenue ratio of 10.34 and including US$4 million in value for MOX's cash position and Vulcan Materials royalty).
Even if SAND paid a 100% premium and acquired MOX for $1.04 per share it would still only cost them US$42.52 million. SAND could acquire MOX at a 100% premium and it would likely still add 5.20X more than that to SAND's market cap!
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