Stockwire Presents: Mexoro Minerals Ltd. (MXOM.OB), an exploration and production company focused on mining precious metals.
Stockwire says, “To start with, we like the way the stock is setting up for a nice swing trade. As you can see by the chart to the right, we have a nicely formed support area around the $1.16 level and a good entry point anywhere between the $1.20-$1.30 area.
Stockwire spoke with the financiers of Mexoro last night, the same financiers behind MNAP, and found out an interesting tid bit. There will be a lot of money supporting the stock in this area, because they feel it is undervalued at these levels.
So that tells me that we have a pretty good support level here and this would represent a good entry point. This doesn’t guarantee that the stock will not move lower, it is just a good sign when the financiers are ok with accumulating at these levels.
Regardless of what happens, you can easily put your stops right at the $1.16 level and if it breaks below that, you are out. If it moves up from here, we could see it quickly test the $1.50 area and then from there we could see a run for $2.
Glamis Gold, a company that has a connection with Mexoro, had a story book ending last year when it was purchased by Goldcorp (CG) for $8.6 billion dollars or roughly $46.75 per share. This was an incredible windfall for the company and its shareholders, some of whom received 31 times their money in about five years. As recently as February 2001, shares of Glamis traded for $1.50 when the company had innumerable problems, with the biggest being the price of gold.
During this dreary period, Glamis had to abandon many of its projects which did not have million ounce potential. Back when the price of gold was around $300 with the cost of production about the same, only properties with the highest ROI were kept.
Cieneguita, one of the properties that Glamis gave up on, is now the most exciting catalyst for Mexoro.
According to Glamis’ records, Glamis mined and processed ore on the property in 1995. Glamis stopped production in the mid-1990s due to the price of gold collapsing. At that time, Corporative Minero, the operator of the mine for Glamis, acquired the property and basically sat on it while waiting for the price of gold to rebound.
In January of 2004, MRT, owned and operated by Mario Ayub, the COO of Mexoro, entered into an agreement with Corporative Minero, whereby MRT acquired all of the mineral rights from Corporative Minero to explore and exploit the Cieneguita concessions.
Mario Ayub, has taken 7 mines into production and has stated that Cieneguita will be the easiest mine in his career to take back into production.
Not really as this mine that was owned by Glamis Gold, produced 18,000 ounces there in one year in the 90’s when gold was $200 an ounce.
At today’s gold prices, Mexoro should net approximately $5 million dollars per year on similar type production.
It is a perfect situation for a junior company like Mexoro to have positive cash flow to fund their exploration without diluting the company any further by raising more capital.
By the way, the cost to get an ounce out of the ground from Cieneguita is approx $250 per ounce – leaving $400 ounce profit. 18,000 ounces at $400 = $7.2 million free cash flow.
The three other properties, as stated on the website, have 1,000,000 + ounce deposit potential. All the other properties are surrounded by major discoveries, but this is not an area play. All the properties through initial workings have shown mineralization at great widths and depths, this just shows that the belt has significant mineralization that has proven up 8 major discoveries.
Let us hear your thoughts below: