Success Achieved by Partner Companies Builds Value Proposition for Globex Shareholders
One of the benefits of the project generator business model is that multiple properties are actively advanced at the same time through partnerships with other companies. Globex Mining Enterprises Inc. (CA: GMX – $1.15 & US: GLBXF – $0.92 & GER: G1MN – €0.74) has arranged numerous property deals in recent quarters under this strategy. Transaction terms commit partner companies to complete aggressive exploration activity. This creates the opportunity for Globex to participate in new discoveries at these projects, entirely funded by its partners.
Starr Peak Exploration [STE] for example, acquired the NewMétal property from Globex under one such transaction. Located in the Abitibi Greenstone Belt of Quebec, this consolidated package of land holdings included historic mining operations and attractive exploration potential. The deal secured cash payments to Globex along with receipt of Starr Peak shares. Currently, Globex still holds 1.1 million STE shares, which are worth almost $3.5 million at yesterday’s closing price. Globex, furthermore retained a 2.5% GMR on the property.
As exploration work advances, Starr Peak has been generating positive results at the NewMétal property. This week the company reported another batch of drill holes where high grade massive sulphide mineralization was encountered. Work focused on the Upper Zone (from surface down to 400m) and the Deep Zone (below 400m depth). The results were highlighted by a section of 20.55m bearing an average of 7.04%ZnEq from the Upper Zone. Narrower intervals up to 24.44%ZnEq were also reported.
This good news on the discovery front has prompted Starr Peak to expand on what was already an enormous drilling effort. The company reported this week that it has doubled the drill program now underway at the NewMétal project. The previously planned 20,000 meters of total drilling will now be expanded to encompass 40,000 meters in the revised schedule. Work continues with two drill rigs currently active at the property.
Manganese X Energy Corp Presents Mineral Resource for Battery Hill Manganese Deposit
Another partner company of Globex, Manganese X Energy Corp [MN] announced that a compliant resource report has been prepared for its Battery Hill project. Located in the Province of New Brunswick, Battery Hill hosts a promising near-surface manganese deposit. The project is considered a candidate for a low cost open-pit mine development. This potential is of interest to Globex shareholders as the Company retains a 1% GMR on the project. If indeed Battery Hill is advanced through to a producing manganese mine, Globex stands to earn a recurring income stream for all production sourced from the project.
Manganese X Energy successfully completed drilling work earlier this year to confirm and expand on the historic resources of the deposit. This contributed to the completion of a resource report documenting nearly 35 million tonnes (Measured &Indicated) grading 6.42%Mn, plus nearly 26 million tonnes (Inferred) with an average grade of 6.66%Mn.
Globex retains a 1% GMR on the Battery Hill property. In addition, Globex controls a significant minority interest in Electric Royalties Inc [ELEC], which also retains a 2% GMR on the project.
Finally, Globex also continues to hold manganese property interests in the vicinity of Battery Hill that may also become more attractive as work by other companies continues in the region. Therefore the success to advance Battery Hill reported by Manganese X Energy could amount to a potential windfall for Globex shareholder value on several levels.
Normal Course Issuer Bid Announced
Globex also reported this week that the TSX has approved an application for a Normal Course Issuer Bid (NCIB). The program will enable the Company to purchase up to 1 million of its common shares in the market. This represents approximately 1.82% of the total 55,089,817 common shares of the Company issued and outstanding.
The terms of this arrangement provide Globex the right to purchase on any single trading day up to 25% of the six-month average trading volume. Given that the Company has achieved a daily average trading volume of 91,628 on the TSX, this equates to 22,907 common shares that may be repurchased under the program during any trading session. Globex has entered into an automatic share purchase plan with a registered securities dealer to manage this program. Orders executed at market price. All shares purchased through the NCIB will be subsequently cancelled. The NCIB will remain in effect until July 11, 2022.
The overall effect of this arrangement is to support the share price. It also represents a definitive statement that management considers the current share price for the stock to be undervalued.
Globex has assembled a remarkable portfolio of resource properties and royalty interests. The steady deal flow reported by the Company over the last several years is now delivering windfall gains that contribute to shareholder value. Working capital has massively increased through cash payments generated by transactions and royalty income. The share ownership held in several partner companies is also increasing in value. In addition, partner companies continue funding exploration work at several properties where Globex holds royalties.
The exceptional working capital position established by Globex also provides the funding to complete the NCIB. This too will support higher share values in the future. The capital structure for the Company will become even more attractive as this program continues. Globex is achieving success on all fronts with its strategy in the midst of a resource bull market. Smallcaps Recommendation: BUY.
|Smallcaps.us Advice: Buy||Price Target: $2.10||Latest Company Report (pdf)|
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