Globex Mining Enterprises Inc. (TSX:GMX)
Globex was one of the companies featured in our 70-page Project Generator Industry Report. You can download the full, 70-page Project Generator Industry Report by clicking on the following link:
eR-IR-ProjectGenerators_2019-09-27_FINAL
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Key Valuation Driver
Globex has over 170 exploration projects and a selective resource calculation values the properties at more than the current Market Cap of the company. From a sample of Globex’s properties with NI 43-101 or Historical Resources, we estimated approximately US$30.2 million ($40.3 million) of in-situ mineral value for the Precious and Base Metals projects. This property valuation assigned no value ($0.00) to the other 160 properties, which either did not have a resource or were not Precious or Base Metal projects. Currently, Globex has a Market Cap of less than $20 million, therefore our value of this small sample of Globex’s projects is more than the current Market Cap.
Company Overview
Globex is based in Rouyn-Noranda, Quebec, has over 170 exploration, development, and royalty properties containing a well-diversified portfolio of commodities including: precious metals (gold, silver, platinum, palladium), base metals (copper, zinc, lead, nickel), specialty metals and minerals (manganese, titanium oxide, iron, molybdenum, uranium, lithium, rare earths), and industrial minerals and compounds (mica, silica, apatite, talc, magnesite).
Globex is primarily focused in North America with exploration projects in Quebec, Ontario, New Brunswick, Nova Scotia, Nevada, Tennessee, and Washington. In 2017, the company purchased the rights to the Bräunsdorf silver property in Saxony, Germany and recently optioned it out to Excellon Resources.
Other Key Value Drivers
- Large Portfolio of Projects: Globex’s current mineral portfolio consists of over 170 exploration, development, and royalty properties.
- Wide Variety of Commodities:
- Globex has a diversified portfolio of projects with different commodities allowing Globex to circumvent any downturns in any one commodity.
- Precious Metals (84 properties): Projects that include gold, silver, platinum, and palladium.
- Base Metals (56 properties): Projects that include copper, nickel, zinc, and lead.
- Specialty Metals and Industrial Minerals (32 properties): Projects include manganese, vanadium, titanium oxide, iron, molybdenum, lithium, rare earths, and associated elements.
- Operates in Politically Safe Jurisdictions: Globex’s properties are located in low-risk mining jurisdictions – Quebec, Ontario and eastern Canada, as well as the U.S., and one project in Germany.
Figure 1: Diversified Projects with Different Commodities
- Self-funded and Partner Funded Exploration & Development:
- Globex funded $1.6 million and $1.4 million of exploration in 2017 and 2018, respectively, to move projects ahead, in addition to the exploration costs funded by Globex’s Partners.
- Large Portfolio of Royalties:
- Globex has royalty agreements attached to more than 50 early to advanced stage properties in its portfolio.
- Globex has an active royalty on Nyrstar’s Mid Tennessee Zinc mines (Gordonsville, Elmwood, and Cumberland) in Tennessee. The mine was restarted in May 2017 and Globex earned royalties of $0.94 million in 2017 and $1.82 million in 2018. For 2019, Globex projects annual revenue from the royalty at $2 million.
Figure 2: Globex Property Location Map
- “High” Quality of Projects:
- Globex prefers to acquire properties with previous mineral resources or past-producing mines (referred to as “brownfield” sites) and rarely acquires exploration properties with minimal or no previous exploration work on the property (referred to as “greenfield” sites).
- Properties are often located in historic mining camps such as Cadillac Break, Porcupine-Destor Break, Val-d’Or, Malartic, Chibougamau and Timmins Mining Camps, and will often have mineralized outcropping or previous drill results with intersections of economic interest.
- The properties often have corroborating information from existing or subsequent geophysical, geochemical, or geological work completed on the properties.
- As an indication of this viewpoint, the properties in its current portfolio include over 40 former mines and over 50 properties that have an NI 43-101 resource (current standard of disclosure for Mineral Projects by Canadian-listed public companies) and/or a historic resource.
Figure 3: Globex – Summary of Quarterly Revenue
Revenue is an important indicator of the Project Generator’s success in striking Joint Venture deals, selling projects, and generating royalty revenue. For Project Generator companies, revenue can be quite “lumpy” as it can come from one-time payments, a series of fixed-term payments or royalties. In Globex’s case, the revenue in Q3/2019 was the lowest it has been in the seven quarters but still positive.
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