Is Mercator Minerals Ltd. (TSX:ML) another copper-moly play?
GK: Depending on the price of those two commodities, you can call it a copper operation or a moly operation. Their project in Arizona, which I’ve visited, was designed as a molybdenum project with significant copper by-product credit, a perfect formula for our investment philosophy. Per guidance, they should produce around 5 million pounds of molybdenum this year, and that will grow to about 10.5 million pounds when they wrap up phase two next year. The company recently announced a $70 million bought deal financing that’s going to take place at $2.50 a share. In a grossly undervalued situation similar to Quadra’s, Mercator had an operation worth approximately $500 million in replacement capex and a market cap that was 5% of that when it traded at 0.30 9 months ago. That suggested “undervalued” and pointed toward a very nice cash flow positive business if metals prices returned, and sure enough it is up around 1,000% yet still below replacement cap-ex and they are cash flow positive. TG
