|Shares Out. (in M):||53||P/E||0.0x||0.0x|
|Market Cap (in $M):||12||P/FCF||0.0x||0.0x|
|Net Debt (in $M):||0||EBIT||0||0|
A gold exploration and development company with property (Atlanta Gold & Silver Project) located in mining friendly jurisdiction of Nevada, U.S. Nevada is prolific in gold and offers excellent infrastructure and facilities for mining companies. The property has established significant NI-compliant gold and silver resources and is gearing up for further exploration aimed at delineating the existing resource and expanding it. The property has a long history of production and thus has necessary infrastructure in place. It has excellent upside potential and the royalty rate is low. The company raised over $1 million in May 2013 for the next phase of exploration at a time when it is very difficult for junior miners to raise funds. This is a macro speculative play for those who think that gold prices have bottomed out and junior gold companies are at the lowest end of their valuation cycle with more upside than downside risk from here on. For those who hold this above mentioned macro view about gold prices and juniors, finding quality juniors in attractive jurisdiction is a good investment thesis to look at this time. While no one knows when this cycle will turn and it is always hard to predict the bottom, times like these are more closer to the bottom in our view and MAY is likely to be a survivor given the quality of project, management and jurisdiction and if it can continue its exploration success a potential acquisition target.
Meadow Bay Gold Corp. (TSX: MAY) (OTCQX: MAYGF) is a gold exploration and development company focused on Atlanta Gold Mine Project, located in Lincoln County, Nevada. The Atlanta project has established significant NI-compliant resources and has a long history of production. The company completed a drill program in 2011, discovered Porphyry-hosted Gold deposit and reported NI-compliant resources estimate in January 2013.
Competitive Advantage of Meadow
The Next Step
Going forward, the company’s next steps are:
I believe sophisticated investors know all the reasons for bullishness and bearishness as it is tirelessly debated. So not repeating it here. This idea is for those who view gold favourably and believe at this point in valuation cycle juniors represents good risk-reward tradeoff. ie., upside leverage is higher in juniors than producers for any turn in valuation cycle.
Capital Structure and Shareholding
As of March 31, 2013, MAY had approximately 47.7 million ordinary shares outstanding. The company also had 4.3 million options outstanding at an average exercise price of approximately $0.46 and approximately 3.6 million warrants at an average price of $0.55. After the financing it should have ~52 milllion shares.
As per Bloomberg, some of the insiders that own company’s shares are: Dinning Robert G (1.22%), Reed Charles Willia (0.26%) and Margetson Keith R (0.21%); Badgley Phelps & Bell Inc., an Institutional investor, own 0.04%.
Cash & Cash equivalent
The company has over $0.3 million in cash and cash-equivalents as of March 31, 2013. The company raised $1Million at $0.20 cents in May 2013.
Why the recent decline in share price?
The major reason for the recent decline in share price is the fall in the gold price as can be seen in Chart 1. Between June 03, 2013 and August 13, 2013, the share price fell from $0.325 to $0.18. Gold price fell from $1,400 level to $1300 level between June and July. Since then price has climbed to $0.23 cents on Aug 16, 2013.
Like most of the junior mining companies the company is exposed to commodity price, environmental, capital raising, regulatory and personnel risks. But the biggest risk for MAY is that the company does not have any proven-probable reserves. Though the company has established significant amount of resources, there is no guarantee that it will establish reserves in future.