GMV Minerals Inc (TSXV:GMV) is a Vancouver-based junior gold exploration company that is developing its flagship Mexican Hat Project in Arizona into a potential mine. Located in Cochise county in southeastern Arizona, GMV, through a 100% owned subsidiary, controls a 100% interest in the project.
What makes GMV a compelling story is that the project was previously explored by gold mining giant Placer Dome during the 1980’s with encouraging results for the property’s potential. GMV has picked up where Placer Dome left off, continuing with its own exploration work, and on November 20, 2020, GMV released a Preliminary Economic Assessment (PEA) for the project that shows an inferred mineral resource of 688,000 ounces of gold, justifying further development to advance the property.
The PEA, officially titled NI 43-101 Technical Report Updated Preliminary Economic Assessment, Mexican Hat Project, outlines a base case mine life of 10 years averaging 52,000 ounces of gold production per year through an open pit operation using low-cost heap leaching. The estimated cost of production is $951 per ounce; an all-in-sustaining cost of $1,136 per ounce if factoring in the cost of capital and other overhead support.
The PEA used a conservative $1,600 per ounce gold price in generating its Internal Rate of Return (IRR) projections which shows a Capex of $67.8 million, 39.35% pre-tax Internal Rate of Return, pre-tax Net Present Value at a 5% discounted rate of $150.6 million, resulting in a 2.85 year payback. At higher gold prices, such as current price levels, these numbers become even more attractive.
GMV is continuing to actively advance the project with a goal of generating a feasibility study and entering into the permitting process. The company plans to continue its exploration work to expand the size of the deposit by drilling beyond the known mineralization zones, as well as conduct in-fill drilling to further enhance the known geological data of the property and increase the size of the resource estimate. Geotechnical, metallurgical, and engineering work will be done concurrently to analyze and prepare the property for future production.
With 58.5 million shares outstanding and a modest market capitalization of $14.4 million, GMV appears to offer a reasonably moderate risk play on a potential producing mine located in a very mining friendly jurisdiction. It is rare that a junior exploration company starts with what amounts to an advanced-stage project. GMV has a very experienced management team and team of advisors, and therefore they have been able to focus on efficiently developing the Mexican Hat project to a point where it could be a potentially attractive acquisition target for an established gold producer.
FULL DISCLOSURE: GMV Minerals is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover GMV Minerals on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
