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Minnova Corp (TSXV:MCI / OTC:AGRDF) represents an intriguing Canadian gold mining proposition for both seasoned mining investors and indeed companies that are looking for a ready made gold mining asset. It is unusual in that it is not a new ground mining exploration play but sits instead on a mature mining operation which, while not currently working, still has plenty of infrastructure in place.

Minnova essentially owns an existing mine which could be switched on again and rapidly become profitable, plus it has scope for further explorations and development in the immediate vicinity.

The company is focused on re-starting the PL Gold Mine in Manitoba. It has completed a feasibility study which forecast that a re-start of the PL Mine could yield an average annual production of 46,493 oz of gold over a minimum five year mine life. It has also secured a valid underground mining permit.

Valuable mining infrastructure already on site

The infrastructure Minnova already has in place includes a crusher, a fine ore bin, floatation tanks, leach tanks, a laboratory and a gold furnace. Much of this represents expensive infrastructure which would otherwise need to be built on site if the mine were to become operational.

Part of the attraction also comes from the fact that there is scope for further exploration at the site. Back in the early summer the company reported bonanza gold grades of 101.6 g/t over a 0.5m interval. Weighted average grades were 51.95 g/t over a one metre mineralised structure. This was produced using one of the biggest step out holes in the history of exploration at the project. The company has always argued that historic on site surveys have not been thorough enough.

One of the key arguments for Minnova has always been the potential for further discoveries within the immediate vicinity of the working plant. This would provide scope for the mine to get up and running and producing very quickly indeed. It has over 7000m of developed underground ramp down to 135m depth. It is fully road accessible and close to the existing mining infrastructure at Flin Flon Greenstone Belt.

Exploration activity is resuming

Minnova Corp reported that activity at the site is resuming now and that further investment from strategic investors will be needed to bring further power onto the site. It has been granted a permit to take the mine back into production.

The project looks highly undervalued for what it is at the moment. “We are looking very robust at this market cap,” Gorden Glenn, CEO of Minnova Corp said. “We have had debt teed up, we just needed equity. Many gold mines are being incorrectly valued at the moment: we’re always going to be a target, but at these price levels we are a much more interesting target.”

Glenn told The Armchair Trader that he was very confident that the project would be generating gold, and soon. He said the company has a “reasonably modest debt structure” and that it can quickly deploy de-risked technology to the site to achieve quasi production. “We have scope to generate revenue very quickly,” he explained. “Most of the building blocks are in place already.”

Glenn said that M&A activity would help to maximise value for existing shareholders. This looks like it could be an interesting one to keep an eye on this winter.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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