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Cap-Ex Ventures CEV-V
Fast-Tracking Iron Ore Production in the Labrador Trough
Share Price… $0.52
Shares Out… 41M
Fully Diluted… 58M
Market Cap… $21.3 million
Cash… $14 million
Fully diluted cash position... $27 million
“Cap-Ex Ventures is a rare investment opportunity that does not come around very often, it is an opportunity to invest on the ground floor of a company that is focused on fast-tracking DSO iron exploration and production in the Labrador Trough.
All the stars are aligned perfect as the timing to invest couldn’t be better for this $20 million market cap company exploring one of the dominant iron ore land packages in Schefferville. Cap-Ex is aggressively developing their properties this summer in hopes of proving up the next big DSO iron ore deposit in the Labrador Trough.
There is no better“second chance” on the market than Cap-Ex Ventures currently trading at prices which are less than when initially acquiring the original Schefferville DSO properties in January. With Cap-Ex trading at 50% of the recent private placement, this is truly a rare opportunity to make a material investment in a premium DSO iron ore development company with a management team that is second to none.
Long Term Iron Ore Fundamentals Have Not Changed
The long term fundamental drivers in the iron ore industry have not changed nor will they change as long as the developing world continues on its path of modernization. With global iron ore demand set to double in the next 15 years, there are significant opportunities for iron ore development projects to meet the upcoming surge in demand that is expected to continue in China and also gain steam in countries like India over the next couple of decades. Iron ore is the backbone of everything we build and the developing world requires the infrastructure to continue its path of western style modernization.
Iron ore investment highlights…
- Spot price still trading at a lofty $169 price.
- Asian steel companies investing in long term multi billion dollar partnerships with Canadian iron ore companies.
- Double dip fears overblown
- Iron ore demand expected to double over the next 15 years.
- Developing world drivers not set to abate for at least another 15 years with Indian demand seen as another big demand driver putting pressures on the market
Canada’s Labrador Trough… The Last Frontier for Iron Ore
Canada’s Labrador Trough is a mineral rich area in northern Quebec that has the potential to be significantly scaled up for iron ore production. Over the next few decades, the largest iron ore producing nations are either facing declining resources at a faster than predicted pace (Australia) or are restricting exports for their own purposes (India). Only Brazil plans to significantly increase iron ore production doubling total output by 2015 to almost 800Mt. In Australia, their once limitless iron ore reserves discovered in the 1970’s now have estimates lasting only until the 2050’s or 60’s. With close to a billion tonnes of iron ore extra supply needed over the next 15 years including Brazil’s planned increase, there is a serious impending shortfall. Most of the supply will come from the Big 3, but the Labrador Trough is a major solution to this supply problem and could be a potential buyout area once fully developed. It is one of the last frontiers for iron ore production and exploration which was ignored largely in the past due to remoteness and harsh conditions of the north. Currently Canada produces around 50Mt – 60 Mt of iron ore per year where compared to almost 400Mt per year for the top producing nations of Brazil and Australia. Canada has a significant opportunity to become a major player in the industry containing a large portion of the world’s undeveloped iron ore resources in the Labrador Trough.
Direct Shipping Ore DSO… The Holy Grail of Iron Ore Exploration
The Holy Grail in iron ore exploration is Direct Shipping Ore (DSO) material. This is usually found as high grade hematite mineralization grading 55% or better. DSO can be mined and shipped with little or no beneficiation process which greatly reduces the costs of mining operations, enhances profitability, and speeds up the time to production. The capital required to start DSO operations is much less when compared to mining and processing lower grade magnetite deposits which requires large and capital intensive processing plants. DSO hematite is much rarer than magnetite and occurs in smaller concentrations than their larger magnetite cousins.
Finding DSO greatly increases the odds of having a project that can be fast–tracked to production and significantly increases a company’s value when discovered. A company with only 50Mt of DSO can be worth more than a company with a 5Bt resource of magnetite because DSO projects can be easily put in production, are cash cows for the operators, and financing is much less a fundamental risk for a company developing DSO.
The DSO advantage…
- Much less capital intensive
- Faster timeline to production is faster (fast –track nature)
- Higher operating margins
- Little financing risk
Cap-Ex Properties Are Favorably Located By Major DSO Projects
Cap-Ex’s flagship Block 103 is situated between NML’s combined 100Mt @ 59% DSO projects north of Schefferville. Block 103 has some of the best magnetic responses in the trough and recent interpretations indicate not only DSO potential but potential for large volume high grade magnetite deposits which are on strike with NML’s LabMag and KeMag deposits to the north and west of Block 103. The Holy Grail is DSO which is CEV’s first priority which Block 103 is highly regarded and strategically situated just a few kilometers downt he road from NML’s future processing plant.
Having DSO deposits on either side of your border on strike with your own DSO showings within the major iron ore trend in Schefferville bodes well for CEV delineating a significant high grade hematite and high grade magnetite. Magnetics and location make Cap-Ex’s Block 103 one of the most prospective properties in the trough for significant DSO quality mineralization. Cap-Ex has identified 16 DSO targets and 7 magnetite targets on Block 103.
In a report by PGW, a highly respected firm out of Toronto concluded…
“Block 103 covers some of the most intense positive magnetic responses in the iron ore belt. This is good indication that the volume (and possibly concentration) of magnetite is higher than in most parts of this belt.”
Redmond and Block 44
Redmond and Block 44 surround the southern half of Labrador Iron Mines 150Mt @ 57% DSO claims to the south of Schefferville. The DSO mineralization from LIM continues onto the Redmond Property confirmed with multiple DSO showings on strike to LIM’s deposits. Fifteen DSO targets have been identified on the Redmond Property. The Redmond Property boasts the added advantage of excellent infrastructure with a rail line running through part of the property connecting to LIM’s DSO plants further north. A DSO discovery next to LIM’s operations will have the added advantage of extremely low capex costs with a rail line already running through the property.
Cap-Ex has two high priority DSO properties in the Trough. Between them they have as much potential for as much DSO iron ore mineralization as NML and LIM have defined on the properties at the heart of a re-vitalized district in Shefferville.
Lac Connelly is located 250km north of Schefferville, is somewhat remote but boasts two historical targets including a 3,200 x 200 x 60 meter hematite formation grading between 46% to 61% Fe. Lac Connelly historical reports also mention a 10,000 meter long magnetite formation with widths up to 1,000 meters. A recent survey of Lac Connelly has yielded 17 high priority targets. Lac Connelly is in a less priority area than the Schefferville Properties, but a proposed northern railway line will connect Schefferville with the Ungaava Bay which will make these properties much more feasible at a later date. This rail line will provide the much needed infrastructure for several projects along this mineralized corridor in northern Quebec.
The Australian Factor
Cap-Ex has the best in the business when it comes to management with Brett Matich at the helm. He was the person that brokered the Schefferville Properties to Cap-Ex in the first place which was essentially a reverse takeover of Cap-Ex with Brett owning a controlling interest. Brett Matich brings the Aussie factor to Cap-Ex, Australians are the top iron ore miners in the business and are the experts when it comes to building iron ore mines. Having Australians sniffing around the tough looking for the next iron project speaks volumes for the potential in the area.
Mr. Matich has built a mine not once, but twice. He identified a dormant iron mine and returned it to production and is a 3Mt per year producer. He also identified a dormant nickel mine in 2002 and returned it to production by 2004. Brett Matich has a track record of success in bringing mines into production and has brought his Australian iron ore expertise to Canada. Brett has raised a $100M in financings and has put Cap-Ex in a position of being well financed with $14 million in the treasury and another $13 million worth of warrants and options to keep the treasury full. Brett is a man that has shown he can do it and has created a company that is positioned perfectly for success developing their iron properties around Schefferville.
Cap-Ex is extremely undervalued
Cap-Ex is selling at an extremely discounted price considering they have a land position in Scheffervile that rivals LIM or NML and borders on both major DSO projects planned to come on line over the next couple years. This makes Cap-Ex’s properties the next logical choice for development of DSO production in the trough and properties that will be fast-tracked for production once significant DSO is delineated on the property. CEV’s share price is trading at more than 50% its cash value with $14 million in the bank or $0.34 per share. CEV is well financed to develop their DSO resources and will not take a large DSO discovery to put a significant premium on Cap-Ex. A 50Mt DSO resource near Schefferville would give CEV an implied value of almost a $200 million market cap and more once the iron market heats up again. CEV is aggressively exploring all 3 of their high priority DSO properties this summer with initial drilling to start mid-summer. A $0.50 buy is a screaming deal and won’t last long as this aggressive iron ore company ramps up their exploration programs this summer. An early summer buy here could yield some of the best returns of any company on the market today. Certainly the in the iron market there is no better opportunity.
CEV has all the intangibles in place. It comes down to the three P’s.
- The people – Brett Matich
- The place – Schefferville Properties
- The product – DSO hematite
Cap-Ex at $0.50 is an extreme value proposition with an incredible growth profile if they execute on their plan and is a chance for the retail investor to get in at discounted prices that the institutions didn’t even get with well over $11M be bought at over a $1 in the last financing. The current prices are a BLOWOUT SALE which won’t last long trading at 50% the fair value of the company. Nothing material as changed. Cap-Ex Ventures is hands down the best grassroots iron ore company in the trough with the best chance at creating millions in shareholder value fast-tracking DSO potential in the trough. It is also hands down one of the best priced stocks on the market on the verge of making a material discovery. CEV is a great opportunity to get in on the ground floor of an aggressive iron ore exploration and development company that is on track to becoming the next LIM in the Labrador Trough.
CEV @ $0.52 is rated as a ‘panic buy’
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