Miranda Gold: Home Run Potential
By Matt Badiali
Recently, I met Ken Cunningham in the lobby of the Fairmont Hotel Vancouver. Even in a suit and tie, Mr. Cunningham's passion for geology in general and Nevada in particular are clear. He's more geologist than corporate CEO… and that's good.
Cunningham made two major discoveries in Nevada as the exploration manager for Uranerz U.S.A. He has 31 years of experience in mineral exploration, 18 of which he spent in Nevada.
Cunningham is currently the CEO of Miranda Gold Corp. (TSX V: MAD). His colleagues at Miranda are equally impressive. Joe Hebert, Miranda's vice president of exploration, also has 22 years of experience in mineral exploration and 16 years in Nevada. And the third member of the team, senior geologist Steve Koehler, has 22 years of experience in Nevada.
At dinner that evening in Vancouver, the four of us had a lively discussion about the source of the gold in the Carlin Trend. That may not sound like much fun, but I like the idea of a company that takes its work that seriously. A couple of bottles of wine only fueled the fire.
Miranda's exploration team found more than 20 million ounces of gold in the Carlin and Cortez Trends in Nevada. I visited some of those deposits, like Leeville (5 million ounces) and Cortez Hills (8.5 million ounces).
Miranda, which spends $1.7 million per year and has $7.3 million in the bank, follows the standard prospect generator model. Prospect generators do grassroots mineral exploration and sell their discoveries to large mining companies. No huge open-pit mines for these guys, they just do the homework and fieldwork required to find large ore bodies.
I believe this business model is the best way for investors to make huge gains in the mining sector. Here's why:
These small companies collect the best exploration geologists in the industry, at a time when the world's mining companies are screaming for new projects. Larger mining companies pay prospect generators a couple million dollars for the privilege of developing their projects. The PG also keeps a portion of the project (anywhere from 20% to 50%) and doesn't have to spend another cent.
A typical junior mining company needs to raise money (and dilute your shares) to fund a new drilling project. On the other hand, prospect generators use other people's money and protect your value.
Miranda's partners earn 60% interest in Miranda's projects by funding $2 million to $3 million of drilling. The partner can then earn 70% of the project by completing a feasibility study. In addition, the partner pays stock and cash to Miranda for the right to participate in the project.
Miranda has eight active joint ventures. Its current partners include Barrick Gold, Newcrest Resources, Cortez Joint Venture, Buckhorn Joint Venture, Romarco Minerals, Piedmont Mining Co., and White Bear Resources.
The company also has three potential new joint ventures at Lookout Mountain, Coal Canyon, and Horse Mountain.
Miranda Gold is a company with home-run potential. It has all the traits we are looking for in a prospect generator – good location, experienced management, and plenty of money in the bank.
Editor, S&A Gold Report
P.S. The smartest, safest way to make money in prospect generators is to take a small position in several of these companies to spread your risk. In fact, I've issued to readers of my S&A Gold Report a list of my top 10 favorite prospect generators. I think of it as the ultimate "gold stock mutual fund."
To learn more about the S&A Gold Report, click here. And to read more about the secrets to investing in gold, click here.