Analysts at Red Cloud Securities Inc initiated coverage on Mountain Boy Minerals Ltd (TSX-V:MTB, OTCQB:MBYMF), which has seven active projects spanning 650 square kilometres (64,960 hectares) in the prolific Golden Triangle of northern British Columbia, with a “Buy” rating and no target price.
The Vancouver-based company’s latest acquisition is its flagship Telegraph copper-gold project, which is the consolidation of several historic mineral occurrences and projects. After a systematic exploration and compilation program, MTB is planning a maiden drill program at Telegraph.
“We believe Mountain Boy may be on the cusp of a major discovery at Telegraph, and with a low EV, we anticipate a rapid re-rating should drilling hit the mark,” said Red Cloud analysts in a note to clients.
“A dominant foothold in the Golden Triangle. MTB’s projects span >65,000 ha, making it amongst the largest landholders in one of the most mineral-endowed regions globally. Its projects are surrounded by world-class deposits including Schaft Creek, Saddle, Galore Creek, Snip, and Eskay Creek, amongst others.”
Porphyry hunting at Telegraph
The analysts pointed out that Telegraph is “central” to four porphyry deposits being advanced by majors.
“MTB has focused most of its efforts on the Dok area – a 6 km-long trend where geophysical signatures and alteration are characteristic of a porphyry setting, and sampling has returned up to 19.7% copper (Cu). Other targets show similar potential,” said the analysts.
Red Cloud observed that Telegraph was "a missed opportunity" by prior operators.
“The land package was once explored by 50+ companies, each focused on smaller individual targets. Some of the most prospective areas, including the Dok area, were historically unexplored as they previously straddled the border between two separate properties,” noted the analysts.
“MTB is the first to consolidate the region, and systematically explore it to develop fresh interpretations,” they added.
The analysts said that “quality targets” lead to a heightened chance of exploration success. MTB has spent over two years exploring Telegraph and defining new untested targets.
“With this work behind it, MTB is aiming to maximize its probability of drilling success the first time around in its inaugural Telegraph drill campaign in 2023,” said the analysts.
Compelling takeout candidate
Red Cloud pointed out that M&A in the Golden Triangle is "well-heated, with majors plucking up juniors as of late.”
“Should MTB make a significant discovery at Telegraph, we expect majors to seek involvement. Even if it does not make a major discovery, MTB’s low EV and large strategic land package could still make it an appealing takeout candidate for those seeking easy entry into the Golden Triangle,” the analysts noted.
Red Cloud hailed the firm’s “strong team and backers.” Exploration is guided by a team of renowned geoscientists and porphyry experts. Management owns a healthy 25% stake in MTB, while mining legends Eric Sprott and Ross Beaty hold around 5% and roughly 12% stakes, respectively.
“We are initiating coverage with a Buy rating. With a large portfolio of quality assets in a tier-one mining jurisdiction, we believe MTB’s EV of C$8.9M does not do it justice. MTB trades at a discount to peers on an EV/ha basis (~C$135 vs. peers at ~C$1,581),” concluded the analysts.
Upcoming catalysts for MTB include Telegraph drilling in mid-2023, exploration updates, and potential JVs and spinouts.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive