Saturday 24th June 2017

Resource Clips

The Sum of its Parts

Bullion Monarch boasts Royalties, Exploration and Oil Shale Technology

By Kevin Michael Grace

Would it be correct to describe Bullion Monarch Mining Inc as an undervalued company that will soon be fairly valued? After pondering this question, Chairman James Morris responds, “I think we’re definitely undervalued, and we’re trying to get our story out, so that more people will see our value.”

The precise value of Bullion Monarch has been on investors’ minds since the breakdown last month of negotiations with Eurasian Minerals Inc. Eurasian submitted an unsolicited takeover bid of 80 cents a share to Bullion Monarch‘s management in August. This was rejected, and Eurasian then upped their offer to $1.11 a share, $43 million in total. According to Morris, Eurasian wasn’t willing to go higher, so Bullion Monarch broke off talks and make the offer public, which under the terms of the tender, formally scotched the deal. “They’re a good company,” Morris says of Eurasian, “but we didn’t feel we were getting valued for all the parts of our company.”

When Morris speaks of “all the parts,” he gets to the heart of the matter, because Bullion Monarch is unusually diversified for a junior miner. It has three parts in all: royalties, exploration and oil shale technology.

Bullion Monarch collects a 1% gross smelter royalty from Newmont on the Leeville, East Ore and North Lantern Mines in Nevada’s Carlin Trend. This GSR has resulted in over $10 million in revenues over the last three fiscal years. BM may receive future royalties from the Turf and Four Corners Mines and the Maggie Creek property. In addition, the company is engaged in litigation with Newmont and Barrick regarding royalties from the Lynn Mining District located in Nevada’s Eureka County.

The company is exploring properties in Mexico and Brazil. The Mexico property, La Reyna, is in the Sierra Madre gold belt, about 10 kilometres north of Goldcorp’s El Sauzal Mine, which has produced 1.4 million ounces. “It looks like a fabulous property,” Morris enthuses. “We’ve had great surface showings, and we’re getting geologists in next week to identify drill targets.” BM holds 36% of the Bom Jardim and Bom Jesus properties in Brazil. Bom Jesus has yielded channel samples as high as 315.04 g/t over 0.60 metres, while Bom Jardim has non-43-101 proven and probable reserves of 442,000 ounces. Morris says of them, “The surface miners have found quite a bit of gold, so now we’re targeting the gold underneath.”

The third part of Bullion Monarch is its subsidiary EnShale Energy, which looks to extract oil from the massive Green River Formation in western Utah. The company believes Green River will be to oil shale what the Carlin Trend was to gold in Nevada. Morris reports, “We have a patent-pending technology, and we’ve built a test plant in Utah. We believe that we can produce oil at $30 a barrel. We’re doing a feasibility study, and after we’ve proved up the results, we’ll proceed to commercial production.”

The standalone value of EnShale would be equal to or greater than Bullion Monarch — James Morris

Morris believes the standalone value of EnShale “would be equal to or greater than Bullion Monarch.” So is a spinoff in the cards? “We’re thinking about it,” Morris confirms. He is frustrated that BM has been unable to “monetize the asset” of EnShale, but concludes that his company is “at the point where we are ready to jump to the next level. We’re working on a big-board TSX listing in the near future.”

Morris declares that Bullion Monarch would be amenable to future takeover bids, but he is adamant that any bid must reflect the company’s worth—all of the company. He concludes, “Last week, we were in Toronto, and we met with a lot of brokers. One of them said, ‘Yeah, $1.11 isn’t fair value for just your royalty stream alone.’ It has to be significantly higher than that.”

3 Responses to “The Sum of its Parts”

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