Receipt of $3 Million Dollar Cash Highlights Globex Partner Update
The last two years have been extremely productive for Globex Mining Enterprises Inc. (CA: GMX – $1.03 & US: GLBXF – $0.81 & GER: G1MN – €0.76). During that time, several multi-million dollar transactions were achieved that generated significant shareholder value. As a result, the Company is now positioned with the strongest balance sheet in its history. Globex is debt-free and holds approximately $20 million in cash and shares of partner companies. This abundance of working capital will enable the Company to move forward aggressively with the next round of acquisition deals that may become available in the months ahead.
This week, Globex reported that another payment was received from a previously arranged property deal. An installment of $3 million was paid to Globex by Yamana Gold Inc. The payment was due under the terms for the sale of the Francoeur/Arntfield/Lac Fortune gold properties to Yamana in 2021. This represents the second payment in this structured property sale to Yamana.
Globex has received $7 million in cash so far related to the transaction, with a total of $8 million still pending in 3 remaining installments. While the additional cash influx is welcomed by shareholders, Globex still retains leverage to that property package through a 2% GMR. Yamana remains active to advance the project.
Positive Exploration Results Reported at the Eagle Mine Property by Maple Gold Mines
The Eagle Mine property transaction represents another ongoing value proposition for Globex shareholders. Aggressive exploration activity commenced shortly after Maple Gold Mines [MGM] acquired the project from Globex. Last week, Maple presented a batch of encouraging assay results from the Phase 1 drill program. This work was planned to investigate the potential extensions of gold mineralization beyond the previously defined resource zones of the past-producing Eagle-Telbel mine. Eight drill holes were completed in this program for a total of 4,462m of drilling.
Maple reported that most of the drill holes successfully encountered at least one significant gold-bearing interval above 1 g/t gold per hole. The results were highlighted by an interval of 7.5m with an average grade of 4 g/t gold in Hole EM-22-005. Visible gold was observed in quartz veinlets from Hole EM-22-001 within a section of 0.9m bearing an average of 4.4 g/t gold. Multiple gold intervals were encountered in EM-22-002 including a section of microgabbro spanning 1.8m of core bearing 2.1 g/t gold.
The many gold zones identified in drill core from Phase I included at least four distinct types of gold alteration differing from what had been historically mined in the Eagle-Telbel trend. This is encouraging as it supports the concept that previously undiscovered gold systems may extend beyond the known resource zones. The successful program immediately validates the optioning of the project from Globex.
Work is already underway for Phase II drilling which is planned to follow up by deeper targets below the first round of drill holes. The objective is to complete 12 holes by the end of the quarter, with roughly 8,200m of drilling planned. Maple has committed to funding a very active year of exploration to outline additional resource zones within its property holdings along the Eagle-Telbel mine trend. Globex retains a 2.5% GMR on the Eagle Mine project.
Updates Reported for Other Property Transaction Partners
Last week Globex also reported that an existing Joint Venture arrangement involving Agnico-Eagle [AEM] has been terminated. The Wood-Pandora JV was formed in 2004 by Globex and Queenston Mining ( whose asset is now held by Agnico Eagle) as a 50-50 partnership. Adjoining property assets individually held by each company were assembled, forming a consolidated land package spanning roughly 4km of the Cadillac Break structural corridor. However, in recent years the pace of exploration activity had slowed to a crawl. The partners therefore mutually decided to dissolve the JV and each company regained 100% ownership of the original property assets that had been pledged into the partnership.
Globex has opted to pursue exploration ambitions independently for the Central Cadillac and Wood Gold Mine properties. This land package includes a compliant inferred resource of 136,000 ounces of gold for the Ironwood gold deposit. As a first step, the Company purchased a 48.33% interest in the 2% NSR retained by several of the original stakeholders for the Wood/Ironwood claims. This arrangement was paid through the issuance of 177,419 Globex shares, valued at $220,000 (priced at $1.24 per share). The reduction in the royalty liability will build value for the land package as the property will become more attractive for a subsequent transaction. Management has not yet decided if these properties will become core exploration holdings. A new option deal may be considered for this strategic land package.
Globex also reported that a cash payment of $50,000 was received from Electro Metals [private] under the terms of the Magusi project transaction. Another partner, Manganese X Energy [MN], paid $20,000 to Globex as an advance royalty payment for the Battery Hill Manganese project in New Brunswick. As we publish this, an additional $50,000 was received from Starr Peak as regards the Normetal/Normetmar (NewMetal) property.
The cautious sentiment prevailing in the resource sector has taken some of the steam out of the demand for exploration properties. Globex was fortunate to participate in some extremely rewarding transactions in recent years as a vendor. The Company has established an enviable working capital position. The recent cash payments received from four separate transaction partners, including a $3 million dollar installment from Yamana, illustrates the effectiveness of the transaction strategy. It should be noted that Globex currently controls a portfolio of more than 200 property and royalty assets.
The ongoing exploration progress by Maple at the Eagle Mine is yet another iron in the fire to build shareholder value. The promise of exploring in proximity to a past-producing mine is that previously unknown resource zones may be encountered. Maple has reported at least 4 distinct types of mineralization from its first round of drilling work. Perhaps a much larger gold endowment will be outlined for the project. If so, the 2% NSR retained by Globex may become more attractive as the Eagle Mine exploration advances.
Highly prospective property assets may soon become available again in a value price range. Globex may await an opportunity to put some of its cash to work with new acquisitions during this cycle. Regaining 100% ownership of the projects formerly held in a JV with Agnico-Eagle also opens the potential for additional value creation going forward. Regardless of the swings in market sentiment that may evolve in the future, Globex is ideally positioned to continue delivering positive results for its shareholders. Smallcaps Recommendation: BUY.
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