Jay Currie’s Motherlode: Cartier Resources, Ventripoint Diagnostics & First Mining Gold
In principle, all junior companies can be bought out by larger companies. Whether that is a share deal or an asset deal depends on the company; but for the investor, any takeover is usually a money-making event.
Cartier Resources Inc.
Cartier Resources Inc. (TSXV: ECR) just put out a new resource estimate for its Chimo Mine project near Val d”Or Quebec. I spoke to Philippe Cloutier, Cartier’s CEO this week and, while he sounded talked out, he was very pleased to have been able to report 684,000 indicated and 1,358,000 inferred ounces of gold at the project. The press release makes it clear that there is significant potential for additional ounces at depth and along strike.
Two million plus ounces put Cartier and the Chimo project on the radar of the many majors and mid-tier mining companies working along the Cadillac Break. Companies which have substantial investment in mills and companies whose own gold reserves have been falling.
The key feature of the Chimo project is that it was a mine up until the late 1990s when it was closed in the face of very low gold prices. It has a 900 meter shaft and workings on multiple levels. To sink such a shaft today would cost tens of millions of dollars. The shaft and workings are flooded but “dewatering” on a brownfields property is a well understood process.
From an investment perspective, 2 million ounces at the current industry standard of $100 an ounce would fix Chimo’s value at around $200 million. As I write Cartier’s market cap is a little over $70 million. The company is progressing on another Quebec property. Cloutier knows that with the 2 million ounce target met, Cartier is certainly on every major’s potential shopping list. Now it is just a matter of patience.
Ventripoint Diagnostics Ltd.
No, not a junior explorer or even a resource company: Ventripoint Diagnostics Ltd. (TSXV: VPT) is a medical device maker. The medical device attaches to the ultrasonic probes used for 2D heart scan. This device takes measurements which allows the Ventripoint software to create a 3D representation of the heart being scanned. This creates an accurate AI tool for measuring whole heart function using conventional ultrasound.
Normally, where a cardiologist wants a 3D image of the heart the patient has to have an MRI done. Basic cardiac MRIs cost upwards of $1200, are intrusive and for many patients, unpleasant. The Ventripoint assisted ultrasound gives images nearly as good as an MRI at a cost of around $200-250 a scan.
The technology and software exist, are being manufactured and have been used or prepared for use in hospitals in Canada, the UK and China.
Sadly, one of the effects of COVID has been a significant rise in the number of people experiencing cardiac difficulties and this is already adding to the caseload and expense of taking care of cardiac illness. Ventripoint’s technology is arriving just as hospitals all over the world need less expensive cardiac imaging solutions.
All of which attracted my attention but what made this look like a smart investment is the track record of the CEO, Dr. George Adams. Dr. Adams has an enviable track record as a serial entrepreneur in the medical field. He has taken several companies through development, testing, regulatory approval and onto deployment. And then he’s sold them for millions of dollars.
Ventripoint is very clear about what it refers to in its Corporate Presentation as “Exit Opportunities”. When the technology has been deployed to a few dozen sites the company will almost certainly be sold to one of the majors in the medical imaging field such as Philips, Siemens, GE or Samsung. Its current market cap is around $57 million. With greater deployment, the value of this medical innovation will become clearer. As it does, Ventripoint becomes a target.
First Mining Gold Corp.
Several years ago, Keith Neumeyer of First Majestic fame, looked at the wreckage of the junior mining world and came up with the idea of acquiring companies with good assets but little ability to raise funds in a hostile market. He put together a company which bought out several other companies one of which owned the Springpole project in North Western Ontario. First Mining Gold Corp. (TSX: FF | OTCQX: FFMGF) took a look at those projects and concluded that it should focus its attention on Springpole.
Springpole was carefully explored and drilled and now has a probable reserve of 3.8 million ounces of gold (and 20 million ounces of silver) making it one of the largest undeveloped gold projects in Canada.
This would be an open pit mine with a mill with an estimated CAPEX of US$718 million. First Mining has had a Pre-Feasibility Study done projecting a 36.4% pre-tax IRR; 29.4% after-tax IRR at US$1600/oz gold. Permitting is underway and is expected over the next three years.
There is no question that First Mining has the access to capital and the strong management required to take Springpole right through to construction, but will it? That’s impossible to say but the fact that First Mining’s CEO, Dan Wilton is a seasoned mining M&A pro suggests that there may be other plans for Springpole.
First Mining has several other projects at various stages of development. Selling Springpole for the $380 million a $100/ounce in situ price would bring would look very attractive compared to the value of the all share transaction through which First Mining acquired Gold Canyon for $56.2 million. Put another way, First mining paid roughly $11 an ounce back in 2015 and should be able to get $100 an ounce now.
Here the target is not the shares of First Mining but rather the Springpole asset. The current market cap is $261 million which substantially undervalues the Springpole opportunity. For a major, or even an ambitious mid-tier gold producer the scale of the Springpole deposit might make an excellent target.
Jay Currie began working in the junior mining business in 2005 when he took on a role as a communications consultant for Evolving Gold. He ... <Read more about Jay Currie>