Friday, December 02, 2011 Moneta Porcupine (TSX:ME) - Research Note December 2, 2011
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Moneta Porcupine Mines Inc. (ME-TSX)1,2
Michael G. Fowler, M.Sc, MBA / Leonie Soltay, M.Sc.,CFA |
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Speculative Buy - Target: $0.95 December 1/11 closing price: $0.205 416-964-4440/416-964-4462 | Moneta Reports Three Million Ounces at Golden Highway Project - Catalyst for Share Price Rerating - Positive:
Moneta reported the much anticipated NI 43-101 resource for its 100% owned Golden Highway Project. The resource covers an in-pit and out-of pit resource for three zones within 3 km of each other along the Destor Porcupine Fault zone; the Windjammer Zone, Southwest Zone and 55 Zone. The results include:
- Total in-pit resource of 2.3 million ounces. This includes an indicated resource of 32.9 million tonnes, grading 0.95 grams per tonne (g/t) gold for 1.0 million ounces and an inferred resource of 40.6 million tonnes grading 0.98 g/t for 1.3 million ounces (0.35 g/t cut-off grade).
- Total out-of-pit resource of 859,100 ounces gold. This includes an indicated resource of 648,600 tonnes grading 3.33 g/t gold for 69,400 ounces and an inferred resource of 7.2 million tonnes grading 3.41 g/t gold for 789,700 ounces (2.0 g/t cut-off grade).
While the company has provided both an in-pit and out-of-pit resource, we view the in-pit resource to be the most significant to drive potential economics for the project. Furthermore, applying a more conservative in-pit cut-off grade of 0.5 g/t (versus 0.35 g/t) results in a total resource of 2.0 million ounces, grading about 1.20 g/t, which is still a significant resource and in-line with our expectations.
This milestone event for the company should provide a catalyst for share price rerating. A 2.3 million ounce in-pit resource and 859,100 ounce out-of pit resource at the company's Golden Highway project validates the project and makes it comparable to other large low-grade bulk tonnage deposits in Ontario, which trade at an average of about $50 per ounce of gold. Lakeshore Gold's (LSG-TSX, Not Covered) Fenn Gibb project, located about 10 km north-west of Moneta's Golden Highway project, was recently acquired for $60 million or $30 per ounce of gold based on Lakeshore's recently reported resource of 2.05 million ounces. In comparison Moneta trades at an Enterprise Value of $9 per ounce of gold, has a market capitalization of $26 million, and is drastically undervalued given its resource base and large property position in the Timmins camp. Moneta's NI-43-101 resource should bring recognition to the project and provide for a share price rerating. We maintain our Speculative Buy recommendation for Moneta Porcupine shares and $0.95 target price.
- Loewen, Ondaatje, McCutcheon Limited (LOM)'s analyst has visited the material operations of the company to the extent of viewing the corporate headquarters and/or major production facilities along with meeting certain key management.
- LOM has acted in an underwriting and/or financial advisory capacity within the last 24 months.
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The information contained in this report is drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does LOM assume any responsibility of liability. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any securities. The inventories of LOM, its affiliated companies and the holdings of their respective directors, officers and companies with which they are associated, may from time to time include the securities mentioned in this report.
Copyright (c) 2011, Loewen, Ondaatje, McCutcheon Limited. Member CIPF and IIROC.
To U.S. Residents - Loewen, Ondaatje, McCutcheon USA Limited, an affiliate of Loewen, Ondaatje, McCutcheon Limited, accepts responsibility for the contents hereof, subject to the terms as set out above. Any U.S. person effecting transactions in any securities discussed herein should do so through Loewen, Ondaatje, McCutcheon USA Limited.
Loewen, Ondaatje, McCutcheon Limited and the Research Analyst(s) stated on this note were the only parties contributing to this note. The Research Analyst is not an associated person of Loewen, Ondaatje, McCutcheon USA Limited and is not a registered/qualified Research Analyst with FINRA and therefore may not be subject to FINRA rule 2711 restrictions on communication with this subject company, any public appearances and trading securities held by the Research Analyst account.
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