I think it’s also where it currently is, not just has been. The company posted a big loss and is almost out of cash but has nearly 1.5 billion shares out. Another financing looks inevitable even if the necessary corrective steps have been taken.

I don’t know if you recall but when my “wonderful” IPT hit 11 cents a few years ago, I said that it deserved it at that time because that was all it was worth. Its assets in the ground were “out of the money” for the most part. Of course I was a buyer and thought it would move up significantly but that was a gamble. Then it did move up significantly but the reality at the time of its low was that it was priced right.

WAY too many individual investors are too quick to think that their shares are ridiculously undervalued and that everyone else is out to lunch but I have found that to be rarely the case. When optimistic speculators bid things up ahead of schedule, smart and deep pocketed speculators are always ready to pull them back based on the current reality. Hugely slashed prices do not always represent a good value or worthwhile opportunity. Likewise, hugely increased pricing does not always represent a poor value or a bad opportunity (KL in recent years, for example; or Claude in ’15-’16).

Yeah, Matthew I completely agree with that thesis overall, and concure that it doesn’t always mean because a company is oversold and smashed down that it isn’t well deserved doesn’t always mean that the company is at a great value. Likewise, if a company is overbought and plumbing new highs every week, it doesn’t necessarily mean that a company is still good value or deserves it (like the Cantex at $6+ earlier this year).

With Mexus (MXSG) , they have a current loss because they haven’t got production revenues on the books in any meaningful way yet (just trial mining) and they invested all their money into the Merrill Crowe, Leach pad improvements, drilling and blasting. So their present financial don’t refelct their production and gold sales yet, but that is what they are currently doing, and it will bring in the revenues.

That was the point I was making above about chiding a farmer for all the money and debt they accured planting corn right before harvest.

MXSG haven’t done any raises, aren’t part of the Canadian PP racket, and used debt to build the company, but have paid down most of their debt. Yes, it is possible they may actually need to raise in the future, but they’ll also have incoming revenues in the next few months.

Most of the funds were put into the company by Paul the owner, and/or those costs were fronted by their old JV partner Mar Mar that they fired last year.

Mexus has had billions of shares out for years now, even when the stock was at $.20 (it is currently at $.004) with roughly the same amount of shares out. That is quite a contrast in valuations, but comical because they are actually producing gold now, where back at $.20 it was just the plan to go into production, so they are more derisked now, and have new geos involved that they didn’t have back then assisting with exploration.

It just seems like a majore valuation mismatch to me (because the gold production is going on at present, but the revenues haven’t been realized yet), but hey I could be wrong. My opinion is that once they “prove it” to the market, it will be rerated higher as a producer (not like a starving explorer).

I rode Mexus from $.0035 up to $.20 in 2016 when it was just on the narrative to moving into production, and I’ve been buying today from the high $.003’s to the low $.004s to make a similar un in 2020 now that they are finally producing Gold (3 years later).

concure = concur

majore = major

un = run

damn smart phone typing….

The company must be selling new shares directly into the market because it raised $246,000 in 2018 and 425,145 in 2019. That’s significant dilution considering the share price and I wonder what the numbers were for 2017, 2016, etc. Both basic and diluted shares outstanding grew by about 50% in 2019. The billion mark was surpassed this year.
So it looks like they’re running a racket of their own and with that many shares out and a $5M market cap, there’s a problem in my book.

It might turn out just fine but I doubt very much that it will see the same percentage move that you enjoyed in 2016, or anything close to it.

I just reread you post and should add I agree that hugely increased pricing doesn’t always represent poor value (like the Claude or KL examples… same with Great Bear or Silvercrest the last 2 years).

However, those are exceptional companies and the exceptions. Most miners that make a parabolic move higher, round the parabola back down to the other side and there are dozens and dozens of those examples every year in the mining sector. With most miners overbought is overbought and the deep pockets will pull those back as well.

Often in miners, oversold could mean major issues, and not a deal, so I agree the main point. However, there are times where investors get too pessimistic and say the music is over, when it is not …. like in 2015 for Scorpio Mining before it combined with US Silver and Gold to form Americas Silver, or when everyone thought the water issues at Excellon were game over and it rose like a champ, or when everyone thought Silvercorp was going to close for the story the 2 wacko Canadians pumped in documentaries, only for those to be debunked and Silvercorp has risen steadily from early 2016 to present as of the premier producers in the Silver/Zinc/Lead space. When I was positioning in Klondex for their turnaround, I got a lot of flak over at ceo.ca, but then they spiked higher and then got bought out because the potential for a rerating was seen by a larger company.

The markets can be very inefficient as they are made up of human herd-thinkers, and just because a company has been smashed down doesn’t mean the market got its valuation correct in the short-term; especially when there is a sea change in that comany (ie a discovery, a permit, picking up a mill at a fraction of the cost, or in the case of Mexus mentioned above… going into production).

BTW – Matthew I appreciate the feedback and your perspectives, and agree it may not have quite as much leverage as last time, but then again, last time is wasn’t producing gold into such a high gold price.

Their AISC is around $500 at $1500 Gold so that is a huge margin and one of the lower costs I’ve seen in any Gold producer, so I’m factoring that in with my turnaround thesis.

I haven’t seen any press releases about doing capital raises, but didn’t realize the shares had grown that much from 2018 into 2019.

Back in 2016 (MXSG) had a market cap over $90 Million and they were just a developer then. While they do have more shares out now, their market cap of $6 Million when they are now finally in production seems mismatched as well. Hell there are explorers with no defined resources with 3-5 times that market cap, and they don’t have blasting permits, leach pads being filled with ore, or a mill that is producing gold.

I’m not suggesting Mexus is worth $90 Million at this point, but far more than $6 M.

There are plenty of Australian companies with over a billion shares out with market caps many many multiples higher. While I don’t like such a bloated share count, I just believe this has the potential to be an easy multibagger from today’s prices at 1/3 of a penny.

Even it if gets to $.02 instead of $.20, that is still a huge win from these levels.

Again, maybe I’ll get spanked hard, but I just don’t see much downside from here, unless they fail, and it goes to $.0. That is a big risk, but one I’m willing to take.

However, this discussion today does have me more reserved than the enthusiasm I felt earlier today. Again, good thoughts.

The key to the permanence of a parabolic move is found in the driver of the move. One has be good at determining the real value added that caused the move. The entire move is rarely safe from a pullback but much of it can be if the shares jump from no value to substantial value based on fundamentals and not hope and promises. That can come from a real discovery or even a move up in the metal being mined. Remember all the “experts” who were calling the initial move off of the 2016 low a parabola? Those guys thought the gold/silver miners would come right back down that February(!). Instead, the miners went vastly higher (and I explained then why it was a legit repricing before they went higher). The metals had gone up and were going to continue to go up and you can’t get a better fundamental driver than that. Now, the miners did come down significantly later but that was because the metals came down significantly. Despite that, however, the miners never came close to retracing the entire move which proved once and for all that the “parabola” concern was bogus.

Shaky reasons for big moves are, of course, very different. No matter how convincing the price action, if hype is the driver, one should force themselves to sell the rise aggressively no matter how uncomfortable it might be at the time. Obviously, he latter part of a legitimate spike always contains froth as hype always finds its way into a good move so it’s never easy to get your selling just right.

Yes the market can be very inefficient but I’ve found that it is much more efficient than most people realize most of the time. Again, most, not all of the time.

Agreed. I’d settle for 5-6 bagger from here, instead of shooting for 9-10 bagger.

Also at one point (once the shares are in a rising price environment) a share rollback will help attract larger funds to the story. Most won’t touch stocks under $3-$4.

The wild card is the gold price. Jag is highly levered to gold so a 10 or even 20 bagger wouldn’t surprise me if gold performs decently. Net income was $1.1M on 19,000+ ounces at $1320 per ounce so a $1620 per ounce average would send net income up a theoretical 5-fold+ to $5.7M per quarter. If Jag delivers on the 100,000/year goal, net income would rise to $7.5M/quarter. The actual number will probably be very different and possibly better (if AISC come down).
P/Es of 30 or 40 or even more are not uncommon in this sector so $30M/year could translate to a market cap of $1B+ pretty easily (current MCAP is about $100M cdn). That’s by no means a “take it to the bank” projection but IS quite possible and that’s with gold at just $1620, average.
Mining is always risky business so plenty could go wrong, as almost everyone here knows.

That was a good walk through where things could potentially go if gold prices rise into the mid $1600s, and their costs come down, and their hedges are removed, and they hit the 100,000 ounce per year guidance. I’d love see them move up to a $1 Billion market cap over the next 2 years.

Until then… cheers!

Cheers senor (not senior 😉)

Ole’ !

The upside opportunity seemed more robust at 1/3 of a penny than the downside. Heck we’re already up to a 1/2 a penny per share now. 🙂