CAP-EX Targets MONSTER 4Bt Iron Ore
Resource in the Labrador
Trough!!!
Cap-Ex Ventures CEV-V $0.57
Shares Out… 43.7
Fully Diluted… 58M
Market Cap… $25M
Initial exploration on Block 103 has been highly successful this summer for Cap-Ex Ventures.
Drilling the very large magnetic anomaly on Block 103 has outlined a huge magnetite deposit 12km in strike length that covers an area of 16 square kilometers and averages 75 meters in thickness. These early results from Block 103 suggest that CEV is in the early stages of defining one of the largest grassroots iron ore discoveries in the Labrador Trough in 40 years. Block 103 is a potential 4Bt monster at 30% Fe and has the potential to be bigger than New Millenium’s NML KeMag iron ore deposit, a 3.4Bt resource at 31% Fe set to produce 22Mt per year once in production by 2017.
So far the potential on Block 103 is HUGE with Cap-Ex defining a mineralized area over 16km.
(16,000m * 1000m) *( 75m) = 1.2B metric tonnes times a density of 3.3 makes Block 103 into a potential 3.96Bt monster with an average grade of all intersections of 30.37%.
This puts CEV on par with some of the biggest deposits planned for production in the Labrador Trough over the next decade, including New Millenium’s huge deposits to the south and north just west of Block 103. KeMag has a net present value of $5.4B with after tax cash flows attributable to NML (36%) estimated to between $250M - $300M per year.
CEV’s Block 103 is turning into a world class iron ore project. 17 holes have tested the magnetite formation with results of 8 holes announced and the assays of the 9 balance of the holes due out over the next couple of months. Initial metallurgical tests show a concentrate between 68% -70% Fe and a low silica content of about 4%.
Results from 8 holes on Block 103…
1. #103-7…. 158.86m @ 31.2%
Fe
2. #103-8…. 118.26m @ 28.6% Fe
3. #103-9…. 74.32m @ 29.5% Fe
4. #103-32… 84.05m @ 31.9% Fe
5. #103-23… 159.9m @ 31.3% Fe
6. #103-25… 87.37m @ 29.9% Fe
7. #103-27… 127.11m @ 29.6% Fe
8. #103-28… 125.13m @ 30.4% Fe
2. #103-8…. 118.26m @ 28.6% Fe
3. #103-9…. 74.32m @ 29.5% Fe
4. #103-32… 84.05m @ 31.9% Fe
5. #103-23… 159.9m @ 31.3% Fe
6. #103-25… 87.37m @ 29.9% Fe
7. #103-27… 127.11m @ 29.6% Fe
8. #103-28… 125.13m @ 30.4% Fe
Results so far point to an average grade of 30.4% Fe over an average interval of 117 meters!!!
Intersections of 9 holes pending…
- 175.87m
- 25.56m
- 128.78m
- 122.51m
- 57.87m
- 179.62m
- 79.88m
- 100.28m
- 192.03m
A 140 meter average over the last 9 holes and intersections of up to 250 meters suggest that the deposit has the potential to be much wider than 75 meters in some places and the potential for increased tonnage as the width of the orebody is better defined. Most of the deposits in the area average widths well in excess of 100 meters and from most of the recent intervals from Block 103, it looks like the majority of the deposit is closer to 100 meter thickness than 75 meters.
CEV is a must own iron ore stock
Cap-Ex Ventures is the must own iron ore stock on the market. At a $25M market cap, the valuation on this company is peanuts considering they are defining a MONSTER near Schefferville. Early indications are that Block 103 compares favorably with the biggest and best iron ore projects anywhere in the Labrador Trough including Lac Otelnuk, LabMag, and KeMag.
Block 103 has all the qualities for a World Class iron ore operation
- It’s got tonnage
- It’s got the grade @ 30%
- Location, Location, Location
Block 103 will have much cheaper infrastructure costs tying into existing railway and power lines being laid for production for NML's deposits which is further away from NML's DSO operation which sandwiches Block 103 to the east. This suggests that capital costs for rail, power, and mine infrastructure will be on par or even less than KeMag and LabMag if a similar type operation were built. Capital costs when compared to a remote project like Lac Otelnuk are way less. Adrianna’s remote Lac Otelnuk requires $13B in capital to get up and running and is why ADI is targeting 50Mt production. The project is not worth the capital it requires unless 50Mt is produce annually. The project requires $2.7B for a railway alone. Block 103 has the potential to be a 20 million tonne per year iron ore producer for $4 - $4.5B capital cost giving Block 103 the edge over Lac Otelnuk and potentially even NML’s KeMag and LabMag where it is still located a bit closer to tying into existing infrastructure and will liekly come after LabMag and KeMag are in production.
CEV’s Block 103 iron ore project could potentially be worth at least $4B - $5B discounted at 8% once brought to feasibility stage.
| Project | Tonnage | Grade Fe | Production | NPV | Cost | IRR | Market Cap | |
| New Millenium NML | LabMag (36%) | 5.74Bt | 29.5% | - | - | - | - | |
| KeMag (36%) | 3.46Bt | 31.2% | 22Mt | $5.4B @ $90 | $4.5B | 21% | $300M | |
| Adrianna ADI | Lac Otelnuk (40%) | 6.26Bt | 29.1% | ~50Mt | $30B @ $100 | $13B | 20% | $150M |
| Cap-Ex CEV | Block 103 (100%) | 3.95Bt | 30.4% | 20Mt* | ~ $5B* | $4B* | >20%* | $25M |
| Alderon ADV | Kami (100%) | 1.1Bt | 30.2% | 8Mt | $3B @ $115 | ~$1B | 40% | $231M |
Block 103: A KeMag Carbon Copy?
CEV’s Block 103 has all the qualities an investor looks for in a potential large iron ore project and should be valued similarly to other iron ore projects such as NML’s KeMag once developed to a similar stage. The Labrador Trough is an area where production will grow from 50Mt per year to 250Mt per year in 15 years with capacity close to 400Mt per year once in full production. Lac Otelnuk, Lab Mag, and KeMag represent the cream of the crop in the Labrador Trough as far as mega iron ore projects go and Cap-Ex Ventures is defining an iron ore deposit that has similar parameters to these world class iron ore deposits.
Block 103 and KeMag are almost identical in size, grade, and location. These two projects will have similar feasibility numbers considering the grade, location and tonnage could be identical. CEV will command a similar valuation once CEV upgrades the resource and produces a feasibility study on Block 103. Generally a company trades a minimum of 5% its feasibility npv if nothing is in place regarding financing and other variables. This would infer a $200M to $250M market cap for CEV at a minimum pre financing based on a 4Bt iron ore discovery on Block 103.
NML’s prefeasibility was done in 2009 on KeMag at $90 iron ore price and puts a NPV on KeMag at $5.4B with an IRR of 21% at 8% discount producing 22MT of iron ore per year. At current iron ore prices of $150-$175 per tonne, the NPV dramatically increases to well over $10B and the IRR soars to above 40% for KeMag.
Considering the early nature, but so far highly encouraging results, CEV is extremely undervalued for the MONSTER deposit they have discovered on Block 103 this summer. CEV is fully financed and at $0.60 and a $25M market cap is ridiculously cheap considering that this company is cashed up in excess of $10M. Cap-Ex should be a $100M company on news like this and growing into a $200M - $300M market cap by the time the project is fully developed and looking for financing. This is a project that may be financed in Canada and packaged as a buyout for a one of the big miners like Vale or Rio Tinto who want to get a toe hold in this up and coming area for iron ore production.
Read original feature article on Cap-Ex Ventures below...
http://www.beatthemarketstockpicks.com/2011/06/cap-ex-ventures-cev-v.html
Christopher Skidmore
Beat the Market Stock Picks
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