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It’s been a terrible year for junior mining stocks. Hell, it’s been a terrible year for bonds, cryptocurrencies & industry-leading tech stocks. Who would have guessed that META, Snap Inc., Tesla, NVIDIA, PayPal, Alibaba & Netflix would be down an average of 60% from 52-week highs?
Growth stocks have been killed, and with elevated interest rates there’s no telling when it might be safe to buy Tesla again. In a world of high inflation & busted growth stocks, value investing is taking hold.
In the past month we’ve seen a possible bottoming in gold Majors like Barrick & Agnico-Eagle. Teck Resources has outperformed most bluechip industrials this year. Metals & Mining stocks typically outperform in inflationary times.
If one believes that natural resource stocks will be strong investments in 2023-24 as China and the world enact massive stimulus packages, then one should allocate a portion of one’s wealth to high-risk / high-return junior miners.
Pre-revenue companies exploring for and/or developing precious & base metals + battery/green-tech materials could rebound harder & sooner than tech/growth stocks.
With this in mind I revisit Marvel Discovery Corp. (TSX-v: MARV) / (OTCQB: MARVF), a company run by CEO Karim Rayani. Despite widespread doom & gloom, Marvel has amassed an impressive portfolio of properties/projects in Canada spanning Gold, Uranium, Copper, Nickel, PGEs, REEs & (possibly) Lithium.
Marvel recently signed a JV agreement in which Carmanah Minerals can earn a 50% interest (over 3 years) in Marvel’s Walker uranium claims in the world famous Athabasca basin by funding $1.5M in exploration, paying Marvel $400k in cash & issuing 3.5M million shares + 3.5M warrants.
Walker is situated along the Key Lake fault, host of bonanza-grade uranium assets, including Cameco’s Cigar Lake & McArthur River mines. The Project hosts 10 uranium showings + multiple EM targets.
Marvel & Carmanah will share a compelling opportunity to build off of the successes of other basement-hosted uranium plays like NexGen’s world-class Arrow.
Importantly, Marvel still controls 100% of the Highway North [“HN“] claims. Drill success at Walker would make HN meaningfully more valuable. Looking at the map below, Fission 3.0 [C$25M mcap] & Baselode Energy [$54M mcap] should be interested in HN.
Why didn’t those companies scoop up this promising property before Marvel? Simple. Mr. Rayani locked it up 3-4 years ago and vended it into Marvel last year.
Twenty-one drill holes (3,527 m) were done at HN from 1980-2008. Surface exploration & drilling verified the presence of uranium grading up to 2.31% U3O8 over 0.29 m. That’s a very high grade, but a narrow width. Still, most Athabasca juniors have not found 2%+ U3O8 from drilling.
HN has power, water & road accessibility and is 70 km southwest of the past-producing Key Lake Mine that had an average grade of 2.1% U3O8.
If management joint ventures HN it could benefit from two high impact uranium drill programs running — at no cost to Marvel. Additional assets in Athabasca are being evaluated. It’s a buyer’s market, and Mr. Rayani is an expert dealmaker.
Uranium bulls are as excited about uranium at $50.5/lb. as they’ve ever been. Clearly a global renaissance in nuclear power is underway. Adjusted for inflation, uranium traded at ~$195/lb. in May 2007. Even a third of that level, $65lb., would be huge.
Ten of the smallest uranium juniors focused on Athabasca have an average market cap of ~C$10M. Marvel’s Enterprise Value [“EV”] {market cap + debt – cash} is the same at C$10M (C$0.10/shr. 11/15/22). If one’s bullish on uranium, Marvel has leverage to that bet.
Switching to gold, the Majors appear to have bottomed. Barrick & Agnico are up an average of +27% from their 52-wk lows. Marvel holds a prominent portfolio of gold properties/projects in Newfoundland, incl. a 115k hectare land package held in a 50/50 JV with sister company Falcon Gold.
Management initiated a new round of surface reconnaissance at its 6,850 hectare Gander East property adjacent to New Found Gold’s Queensway project and along strike from both Exploits Discovery’s Middle Ridge and Gander Gold’s Gander North projects.
Queensway is the subject of a 400k meter drill campaign targeting 20 km of strike. Importantly, Gander East also lies south and along strike to a new regional gold trend defined by Gander Gold. Structure is integral to the numerous gold occurrences within the Exploits subzone.
Marvel completed an earlier exploration phase in March that included a high-resolution magnetic survey and a geophysical review & structural interpretation that identified prominent shear & deformation zones warranting follow-up.
Parallel structures to those hosting gold at the Queensway & Middle Ridge areas intersect Marvel’s Gander East, including a segment of the Gander River Ultrabasic (GRUB) line.
Prospecting over priority areas with till sampling is being done to further define targets for a Phase 1 drill program in Jan/Feb.
Readers are reminded that Marvel is partnered with Falcon in a 50/50 Alliance of their Golden Brook projects contiguous to Benton’s-Sokoman’s JV and a promising First Mining project that has been optioned to Big Ridge Exploration.
The Marvel/Falcon Alliance (“MFA“) conducted a geophysical review & interpretation that identified “km-scale” shear zone corridors & a major fold closure. These structures will be the focus of prospecting and till sampling to determine their potential.
The map above shows Marvel’s robust position in Newfoundland. The black/red striped areas represent the MFA properties, and red- shaded areas are 100% Marvel.
An exciting development to watch is that Marvel might have lithium (“Li”) showings through its MFA with property that’s in the same lithological trend and contiguous with, the Benton/Sokoman JV that has booked meaningful Li values (incl. 5.5 m of 1.2% Li2O) at its Kraken Pegmatite Field.
NOTE: {Li is the hottest commodity on the planet, up nearly +1,400% from COVID-19 lows. The following chart tracks the battery-qual. Li carbonate price in China. 592,500 yuan = ~US$84,800/tonne}.
CEO Rayani notes that this Li-rich pegmatite field is < 10 km from the footprint held by the MFA and appears to be in the same structural corridor. Importantly, Benton-Sokoman could release additional drill results at any time.
Another junior, Origen Resources, has amassed a sizable Li-prospective land position (and is farming it out) immediately east of the MFA.
Benton/Sokoman & Origen have a working theory that Newfoundland is geologically similar to the prolific Li pegmatite belts found in Ireland, Nova Scotia & N. Carolina (USA). If true will we see a Li staking / M&A frenzy?
Newfoundland could turn out to be like Western Australia where dozens of gold/copper juniors are refocusing exploration efforts on newly identified, outcropping “white gold” targets. Many early-stage (never drilled for Li) Australian-listed hopefuls have valuations north of C$15M.
In the past month the gold price is up +10% from ~$1,615 to $1,781/oz. If it retakes $1,850/oz., I believe investors will bet taking a closer look at junior miners again. Note, $1,850/oz. is within just 4% of the current price.
As year-end tax-loss selling subsides in the coming weeks, we could be off to the races with juniors like Marvel Discovery Corp. (TSX-v: MARV) / (OTCQB: MARVF). This is a company poised to benefit from higher gold prices, but also a higher copper price (up +22% from its recent low.
Copper at $3.80/lb., is within 5% of retaking $4.00/lb., a key level for investor sentiment. And, don’t forget uranium, which is US$50.5/lb. The uranium price can move quickly both UP and down… given the world’s precarious energy situation, many believe uranium is headed much higher.
Finally, if companies surrounding Marvel in Newfoundland find more Li-bearing pegmatites, and Marvel can find some as well at its MFA JV, that could be a game-changer. As mentioned, Li is the best performing green-tech/battery metal, up nearly 1,400% from its Covid-19 low.
Disclosures/disclaimers: The content of this article is for information/education only. Readers should understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Marvel Discovery, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor, broker/dealer, investment advisor, stockbroker, professional trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Marvel Discovery are highly speculative, not suitable for all investors. Readers should understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It’s assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.
At the time this article was posted, Peter Epstein owned stock in Marvel Discovery and the Company was an advertiser on [ER].
While the author believes he’s diligent in screening out companies that, for any reason are unattractive investment opportunities, he cannot guarantee that his efforts will be (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover any specific events or news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.
