MD in the JV Spirit

Big Picture Speculator (11/11/2009)
"In the JV spirit of Canadian Spirit, we like Midland Exploration for its exposure to base metal, gold and rare earth properties. Once again, use of the JV model limits capital outlay while still providing upside exposure if any one of their projects is successful. Midland generates projects in Quebec, the best mining jurisdiction on the planet. They have access to excellent public databases compiled by government geological surveys that allow for efficient prospect generation.

We were first attracted to Midland Exploration when we met with Gino Roger in Toronto to look over the data for their Ytterby Project that surrounds Quest Uranium's Strange Lake deposit.

While anyone can stake land adjacent to a discovery, it was immediately apparent that Gino's team had done their homework on the Ytterby Project. They had compiled geochemical and radiometric data that makes a compelling case for more exploration. Quest Uranium is currently valued at ~$100 million (using a fully diluted share count). We believe that a property with that kind of potential upside should have no trouble attracting partners.

We like their tight share structure and the fact that they have cash and investments on hand of $3.1 million. Their treasury will be bolstered by an oversubscribed financing that was bumped up to $2.8 million.

Midland likes to generate prospects and farm them out to partners. We can get a sense of the quality of their prospects by the quality of their partners, which include:
  • Agnico-Eagle - Dunn James Bay Area gold and Maritime Cadillac gold
  • North American Palladium Limited - Laflamme gold project
  • Osisko Mining Corporation - Dunn gold project
These A-list partners are committed to spend $8 million on Midland properties. In 2009–2010, Midland has exposure to $3 million in exploration and 10,000m of drilling."

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