Miners like to use the word “anomaly” when talking about the rock that they’re exploring. Geologists get excited when discovering anomalies in the ground that suggest the metals they’re hunting are tucked in there amongst tons of other useless material. Investors are exactly the same when they, after spending hours and hours culling the thousands of public companies out there, stumble across “the anomaly” of an upstart with a tiny market cap and sound fundamentals.
In a way, Stratabound Minerals Corp. (TSX-Venture:SB) (OTCQB:SBMIF) is emblematic of both. The Canadian miner isn’t even based out of Vancouver (where most Canadian junior explorers call home); it is headquartered in Toronto. Plus, it has cash in the bank to advance its portfolio of projects and zero debt, a true anomaly amongst young mining companies.
As of April 20, Stratabound had three projects in its portfolio. Golden Culvert is a gold play in the Yukon that has surface assay results up to 320 grams per tonne (g/t) gold (Au), or 9.3 ounces per tonne of ore. Recent drill results at Golden Culvert line up with the surface results, including a cut of 34.8 g/t gold over 1.8 metres as part of a bigger intercept of 10.51 g/t gold over 6.8 metres.
The company also has the Captain project in New Brunswick that has a National Instrument 43-101 report showing 448,000 tonnes grading 2.2% copper equivalent (CuEq) in the Measured and Indicated categories, as well as 162,000 tonnes at 1.87% CuEq in the Inferred category. Drilling early this year proved high-grade mineralization starts at surface. This drilling is particularly important because Stratabound is now investigating jumping right into small scale production at the Captain to generate working capital as it keeps developing its projects.
Stratabound’s McIntyre Brook project is also in New Brunswick, where 40 significant surface sample results showed between 0.20 and 41.56 g/t gold over 300 metres of strike that remains open in all directions.
The portfolio got bigger on April 21, when Stratabound agreed to buy California Gold Mining (CSE:CGM) in an all-stock deal valuing CGM at about $15 million. The markets often overlook small mergers, but looking past this one is a mistake. As it happens, Stratabound didn’t get a boost from the acquisition news and it remains at a valuation around $15 million.
The buyout instantly added value to Stratabound’s already strong portfolio. The main asset coming to Stratabound is the advanced stage Fremont gold project in Mariposa, California. The project hosts two historical underground gold mines across approximately one kilometre out of a total four kilometres of strike along the regional Mother Lode Shear Zone extending across and beyond the property. A National Instrument 43-101 mineral resource on Fremont shows 515,00 ounces of gold grading 1.71 g/t gold in the Indicated category and another 364,000 ounces Inferred at 1.44 g/t gold. The estimate only considers one area (the Pine Tree-Josephine zone) at the 3,351-acre Fremont property.
At current prices, the gold from that single section is worth about $1.6 billion.
“Fremont provides a tremendous opportunity to expand well beyond its current gold resources, is complementary to our existing early-stage assets and a powerful catalyst of growth,” said R. Kim Tyler, Stratabound’s President and CEO in a statement. He added, “Our strong cash position, concentrated long-term investor base, and team in place will allow us to immediately unlock value on this mutually beneficial transaction.”
Tyler was referring to the fact that in December the company closed a private placement that raised $2.06 million by selling 6.6 million units (stock + warrant to buy another share in the future at $0.45) at 31 cents. All told, the company raised $8.7 million at the end of last year, giving it a strong cash position to advance its projects.
Talk about an anomaly. Nearly $9 million in cash, four compelling properties – including two with NI 43-101 reports – and no debt for a company that has a market cap of approximately $15 million.