|Yes, squander is the right word if all that McEwen Mining acquires this year is LEX. In other words, it would have been a wasted opportunity. The key is to buy when things are cheap whether it is just a equity stake or an all out acquisition. He has LEX all to himself already considering his role in management and large personal equity stake. It is not going anywhere and he can pick it up at nearly any time. What he can not pick up for cheap at any time is some of the other opportunities that are out there. Those are the one I would like him to get. As I see it, here are the categories that he can choose from and their pros and cons:|
- Acquire more favorable JV agreements with other juniors.
- An Early Stage Development Junior(mineral deposit that is in the early stages of being defined) that is dirt cheap can be picked-up at times like these for a price that provides a comfortable margin of safety for whatever "donkeys" (as you put it) are behind the door. The risk in all of these is the geology and much less so at the corporate level. These are not like a massive corporation but rather tiny companies with a handful of employees. The upside of buying an inexpensive Early Stage Development Junior is its contribution to the exploration-new-flow of MUX, add to resource ounces, and all the while having relatively low capital needs (compared to a production build-out where major Cap-Ex is needed).
- A Late Stage Development Juniors (a well defined mineral deposit that awaits a production decision) would be useful for future cash-flow but would have to fall in-line behind the build-out of El Gallo since it will be consuming all excess cash that exploration and G&A do not. In other words, bringing it to full-production would probably not happen until after 2015. However, if the production can be staged it may be possible start it sooner. In the mean time though the resources of the deposit can be grown and more ounces can be added to MUX.
- A Small Producing Junior would be helpful for cash-flow but has the potential to be more expensive to us MUX shareholders and has a much higher chance for 'donkeys in the closet' as there are many more moving-parts. I full confidence that he can handle this risk although I would rather MUX buy from options 1,2 or 3 above.
As we have heard before, the way you make money in this business is through exploration discoveries. Lets buy up a few quality, dirt-cheap, early-stage development juniors and build some value.
Previously I had mentioned Esperanza Resources, which would fall into the category of Late Stage Development Junior, yet would have the same price as Lexam VG which is an Early Stage Development Junior. I really do not care if Esperanza is chosen or not but my point was that MUX would get more value out of an EPZ like acquisition rather than LEX at this time.