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By Dennis Boyko
Created on: March 23, 2010
Current version 0.61: June 2, 2010 -- changed comment regarding Orenada.
Metrics have been updated with closing prices available on 2012-Feb-07.
Projected fair market stock price for Alexandria Minerals Corporation, based on the current NI 43-101 resource disclosures for the Orenada deposit only, is C$0.23. The Sleepy deposit contained gold was fully discounted in the valuation to avoid allocating future capital expendures towards Sleepy in this valuation model -- Sleepy is a separate site that needs further exploration and NI 43-101 resource upgrades before valuation can be applied. Drill results and properties that still do not have a NI 43-101 resource definition are not assigned a value. The actual closing stock price was C$0.105.
Alexandria is a junior gold exploration company, with a current focus on under-explored, high-potential mineral exploration properties in the world-class gold mining camps of Quebec and Ontario, Canada.
The following image is from the company's Building 3 Gold Deposits in Quebec's Greatest Mining District presentation (viewed March 2010):
Note the proximity of Agnico-Eagle, IAMGold and Century Mines.
Alexandria owns a 35 km Long Cadillac Break Property Group, 3 Main Projects in Target-Rick Environment at Val d'Or
Orenada, completing Peliminary Economic Assessment Jan-Mar 2010
Akasaba, recent drill results (drilled 100 m below historic drilling) showed 4.22 g/t Au over 10.35m including 24.5 g/t Au over 1.3m. Drill program to better define resource started March 2010.
Sleepy, continued potential: 300m deep and 300m wide, remains wide open at depth and along strike
Alexandria also holds other properties including a joint venture with Niogold Mining.
At the close of trading on and based on NI 43-101 reports available in March 2010, the current and projected Market Capitalization per ounce of Gold Equivalent for Alexandria Minerals Corporation, were:
current market valuation: US$20.11 per ounce of Au Eq.
projected fair market valuation as a gold producer: US$124.93 per ounce of Au Eq.
Alexandria Minerals Corporation in situ metal value is 100% from gold. Therefore Alexandria Minerals Corporation should be valued on the Gold Producer Valuation Line or even at a small premium.
The average ore value per tonne was US$81.58.
Projected fair market stock price for Alexandria Minerals Corporation is derived using the projected fair market valuation at start of production of US$124.93 per ounce of Au Eq (as derived above) and the following assumptions:
Capital Expenditure for mine development: US$30M -- a very rough estimate for Orenada open pit development assuming maximum resuse of the regions extensive milling infrastructure and well equipped mining subcontractors in the region. This estimate will be updated once the pending pre-feasibility study is available.
Risk Premium: 10% applied to the capital expenditure,
Discount Factor: 50% -- a relatively high figure set to fully discount the contained gold in the Sleepy deposit and the potential for gold lose at Orenada due to recovery factors, pit design factors and like factors as the current resource is moved into the Proven + Probable category. This is extremely conservative since Orenada resource counts can be reasonably expected to expand with future drilling.
Discounting the Sleepy deposit is consistent with the fact that capital expenditures used in this valuation are exclusively for the Orenada deposit.
The discounting of the future gold metal prices after the start of production is already fully accounted for in the Gold Producer Valuation Line which is derived from current day market prices and company fundamentals from a number of established gold producers.
The supporting model and the calculations used to produce the projected fair market stock price are detailed in Fair Market Price Calculations.
This blog does not assign any value to potential for organic growth on current Alexandria Minerals Corporation properties or future acquisitions by the company. This is clearly a very conservative approach since the Akasaba deposit has interesting historical resource counts as well as excellent recent drill results.
Perhaps the biggest single positive factor comes from the March 23, 2010 news release: Alexandria Announces $1,820,000 Equity Investment by Agnico-Eagle Mines Limited. Given the closing price on March 22, 2010 was C$0.14, Agnico-Eagle clearly believes Alexandria Minerals is under valued at that price. Quoting from the news release:
Toronto, Ontario - March 23, 2010 - Alexandria Minerals Corporation (TSX-V: AZX; Frankfurt: A9D) is pleased to announce that it has closed a 9,100,000 unit ("Unit") investment (the "Investment") by Agnico-Eagle Mines Limited ("Agnico-Eagle"), at a price of $0.20 per Unit, for an Investment of $1,820,000, amounting to an approximate 9.9% basic equity stake in Alexandria Minerals.
"We are excited to have Agnico-Eagle as our largest shareholder," said Eric Owens, President and CEO of Alexandria Minerals. "Agnico-Eagle is a successful gold miner and the heart of its operations is close to us in the Val d'Or area. Its investment at a premium is a powerful endorsement of the potential of our projects, and we look forward to initiating our relationship with Agnico-Eagle and benefiting from its expertise."
Alexandria Minerals' Cadillac Break property group in Val d'Or is located just 8 km east of Agnico-Eagle's underground, bulk tonnage Goldex Mine, where it operates a concentrating facility. Elsewhere in the region, Agnico-Eagle also operates the Lapa Mine, as well as the large La Ronde gold-zinc-copper mine.
The matching Agnico-Eagle press release was Agnico-Eagle Mines Limited reports investment in Alexandria Minerals Corporation. Quoting from the Agnico-Eagle press release:
The Common Shares and Warrants were acquired for investment purposes. Agnico may acquire additional common shares or warrants of Alexandria or dispose of some or all of the common shares or warrants of Alexandria currently held.
While Agnico-Eagle may be interested in Orenada because of its close proximity to Goldex and other operations in the area, I also believe that Agnico-Eagle is also watching Alexandria's progress land holdings in the Cadillac Break area in general and the Akasaba project specifically. Quoting from Alexandria Releases Further Drill Results and Expands Gold Mineralization at Akasaba, a February 10, 2010 press release:
Eric Owens, President and CEO of Alexandria Minerals, said, "We are excited by the similarities we are encountering between Akasaba and
other gold-rich VMS-style deposits in the region, notably the 9 million ounce
La Ronde deposit, as well as the Horne Mine in Noranda,
a copper mine that produced some 14 million ounces of gold. These similarities are further apparent because we are seeing
strongly anomalous copper, silver, zinc and molybdenum values."
Emphasis and link added. La Ronde is Agnico-Eagle's #1 mine in terms of in situ metal value.
Gold Key:
AEM
| AND
| AUQ
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| RIO
| TVI
| YRI
Place mouse over each key symbol to read graph values.
If the key symbol is shown in bold, click to view the GoldMinerPulse valuation blog
for that company.
For the chart above, Alexandria Minerals Corporation has an average ore value per tonne (y axis) of US$81.58 and a Market Capitalization per ounce of Gold Equivalent of US$20.11.
The Gold Explorer-Producer Valuation Hypothesis is based on the data driven observation that a company's market capitalization per ounce of gold equivalent tends to rise based on the current valuation of the metals contained in an average tonne of ore. For developer/explorers, it is also assumed that the true Explorer-Producer Gap should be large enough (but no larger) to cover the expected future capital expenditures, risk premiums and time discounts.
The original motivation for the Gold Explorer-Producer Valuation Chart was developed in Junior Gold Explorer Valuation Observations. Application steps and the generic factors that need to be considered in applying this valuation method are further described in Gold Explorer-Producer Valuation Exceptions.
This blog is based on the stock fundamentals and current metal prices as documented in the Alexandria Minerals Metal Valuation Report.
The Gold Explorer-Producer Valuation chart is updated after the close of trading using closing stock prices, closing spot market metal prices, fully diluted share counts, and NI 43-101 resource and reserve disclosures.
Last update was for the market close on 2012-Feb-07.
This GoldMinerPulse blog is presented for the sole purpose of illustrating how GoldMinerPulse per company metrics may be useful in judging valuation of individual gold and silver mining stocks. This blog should not be considered as investment advise. Anyone using this blog should become familar with the GoldMinerPulse metrics and the underlying assumptions to access their usefulness.
Alexandria Minerals web site.
Agnico-Eagle web site.
Alexandria Minerals NI 43-101 Metal Valuation Report for the company metrics derived using the last close of trading data.
Agnico-Eagle NI 43-101 Metal Valuation Report for the company metrics derived using the last close of trading data.
Canadian Insiders for insider trades on the TSX
Alexandria Minerals discussion forum: Smart Investment and StockHouse
StockCharts.com for price charts.
Sedar for all TSX regulator filings. Sorry but you'll have to navigate the Sedar site as they do not allow direct links to company specific lists of document filings.
I have listed the best of links for anyone interested in researching Alexandria Minerals Corporation further. If you have a blog or site withAlexandria Minerals Corporation specific pages, please send me the link for review and I will include your work in the link section as appropriate.
Got comments? Questions? Please Talk Back.
The following map of mines in the region of Lamaque are shown in the following image, taken from Century Mining Corporation - "An Emerging Mid-Tier Gold Producer"
Alexandria Expands High Grade Gold Zone at Akasaba, Val d Or, Quebec press release on February 17, 2010 highlights included:
Alexandria Minerals Corporation (TSX-V: AZX; Frankfurt: A9D) reports today additional drill results from its ongoing program at the Akasaba Mine area on its Akasaba property in Val d'Or, Quebec. Highlights of the results include hole IAX-10-64 that has intersected 20.48 g/t Au over 3.30 m (Core Length), including a visible gold-bearing interval of 45.60 g/t Au over 1.00 m.
Hole IAX-09-64 (Figure 1 and Table 1) extends high grade subsurface gold mineralization 100 m east of previously known mineralization in Lens D, the northernmost of the four principal lenses identified during the mine's operating period in the early 1960's. Nearest historic results from the zone include 39.62 g/t Au over 4.5 m and 13.64 g/t Au over 4.3 m.
Assay results are pending for the five remaining holes on the property, 3 along the Mine horizon, and 2 off-horizon holes which tested geophysical anomalies. The Company's next round of drilling is scheduled to begin in late February or early March start-up.
Quoting from the May 6th News Release:
Alexandria Minerals Corporation (TSX-V: AZX; Frankfurt: A9D) reports today that it has intersected two
separate high grade intervals, an upper zone assaying 36.4 g/t Au over 0.5 m, and a lower zone assaying, 8.47 g/t Au over 1.00 m,
on its Akasaba project near Val d'Or, Quebec, extending near-surface high grade gold mineralization a further 200 m to the east of
previously known mineralization. Assay results are still pending for four holes completed in March.
...
The Company is scheduled to begin its next round of drilling at Akasaba, a 5,000 m programme, in middle of May. Currently,
assay results are still pending for four holes, two of which fill in gaps in previous drilling and two of which tested the
eastern high grade target a further 200 meters east of known gold mineralization.
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