Calibre Mining Corp.’s (TSX:CXB) team has a successful M&A history and the Company’s stock trades at a significant discount to peers
SmallCapPower | December 12, 2019: Calibre Mining Corp. (TSX:CXB) (OTCQX:CXBMF) is a newly-transformed, TSX-listed, gold-focused producer in Nicaragua with two operating mines and several exploration projects. Calibre’s production and cost guidance for 2020 is 140,000-150,000 oz gold and AISC of US$1,020-US$1,060/oz.
Calibre Mining announced the acquisition of El Limon and La Libertad, the two Nicaraguan operating assets from B2Gold in July 2019 for US$100M. These assets have produced more than 1.4M oz Au since 2010. There has been significant investor interest surrounding the acquisition. The Company closed $105M in an over-subscribed equity financing on October 1, 2019. The acquisition made sense for both companies as these two mines were fairly high-cost and were relatively immaterial for B2Gold, which is now ~$5B in market cap. Calibre Mining, on the other hand, has the focus to optimize these mines and turn them around.
Before the acquisition of B2Gold’s Nicaraguan assets in October 2019, the Company was previously focused on the Borosi concessions, located in the so-called Mining Triangle of northeastern Nicaragua. The district is credited with having produced nearly 8Moz historically. To date, CXB has outlined more than 2.5Moz in five separate deposits (excluding the new assets). So far, the market has favoured the acquisition. Since the Company’s stock came off halt on October 21, 2019, CXB shares have surged ~50%.
One of the most important points with investing in a mining company is management. Calibre’s core management team is the same one that has already brought two highly-successful take outs during the past five years, which made shareholders significant returns.
The first, and most notable, was Newmarket Gold, which was bought by Kirkland Lake Gold Ltd. (TSX:KL) in November 2016 for ~$1B. Newmarket gold’s flagship asset at the time was the Fosterville mine location in Australia. Today, Kirkland Lake’s cornerstone asset is the same mine. It is one of the highest-grade mines at the world. Last quarter (Q3/19), the mine produced 158,327 oz gold at an average grade of 41.8 g/t Au with staggering AISC of US$289/oz.
The second was Northern Empire Resources, which was bought by Coeur Mining in August 2018 for US$90M. Northern Empire’s premier asset was the Sterling gold project located in Nevada.
While Calibre Mining does not have any analyst coverage yet, it trades at EV/guided oz of ~$1,590, a discount compared to peers, which trade at ~$5,070/oz.
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