Winemaker with golden touch returns to mining
|John Skinner of Painted Rock Estate and Meridian Mining (TSXV:MNO)|
In Spring 2008, mining magnate Frank Giustra’s cell phone rang.
John Skinner was on the line, looking to sell a large block in Giustra’s company New Gold to fund a 'side venture’. Skinner had worked two decades funding mining deals with Yorkton Securities and Canaccord Genuity. After a string of wins in the mid 2000’s mining boom he wanted to retire from finance and pursue his dream to build a winery.
Skinner’s ‘side venture’ was already staked. He’d found an idyllic property on the north shore of BC’s Skaha Lake in 2003, bought the land, and begun it’s transformation.
Giustra instructed Skinner to offer the New Gold stock at a set time, and with a few keystrokes and a blip on the screen, it was gone. As fast as Giustra bought his stock that day in 2008 Skinner left the investment industry. The timing turned out to be good. As the stock market reeled from the global financial crisis Skinner built Painted Rock Estate from raw land to a leading Canadian winery.
Promising copper-gold developer trades at fraction of historical investment
But the ex mining speculator continued to keep an eye on the markets from his beautiful lakefront home near Painted Rock. In 2020 he spotted a turnaround in Brazil and started buying. By early this year his family held more than 5% of the Company’s stock and Skinner decided to join its board. “I expect the mining market to grow in the next few years, and this is a special situation,” he explains.
Meridian Mining (TSXV:MNO) spent US $62 million developing a manganese operation in Brazil called Espigão before being restructured by its current management. Executive Chairman Gilbert Clark then asked Meridian’s team to look for other assets to complement Espigão. They never expected to acquire one of the most significant finds in Western Brazil which had been hidden from the public markets for a generation.
|Cabaçal mine area - Meridian Mining|
In August 2020 Meridian signed an option agreement to acquire the Cabaçal copper gold VMS project in Mato Grosso, Brazil for US $8.75 million in cash and shares payable upon certain milestones and over an extended period. If Cabaçal is anywhere near as rich as management believes, that price could end up being one of the all-time great mining deals.
Cabaçal was discovered by BP Minerals in 1983 and mined briefly from 1987 to 1991. Clark estimates over $80 million (today’s dollars) was invested to build Cabaçal including over 600 diamond drill holes – 400 alone in the mine’s area, several of which intersected wide zones of 6% copper and 3 grams per tonne gold. After Rio Tinto acquired BP in 1989, Cabaçal lay dormant and was sold to a private Brazilian company in 2005. Incredibly, much of the historical work at Cabaçal was never digitized. “It is the mine that time forgot, and the internet couldn’t find,” according to Clark.
Gilbert Clark is a second generation geologist from Sydney, Australia who moved to Southern France to raise three children. For the past dozen years Clark has advised private equity investors on mining investments, including as a partner at Sentient Equity Partners.
|MNO Executive Chairman Gilbert "Gilbo" Clark enjoys cycling, hunting and chopping wood in his spare time|
Meridian followed a rigorous due diligence process at Cabaçal on the ground and through gathering and interpreting historical data. Clark also contacted former managers and mine employees with BP and Rio associated with Cabaçal who urged him to do the deal.
Cabaçal could be a company maker for Meridian Mining (TSXV:MNO) or any mid-tier that acquires it
Clark believes Cabaçal has the geology to host a multi-decade production asset suitable to any mid-tier miner. The deposit is near-surface, located in a gently sloping pasture in a mining friendly region with good access and infrastructure. More than 30km of open strike length exists to extend Cabaçal and find new deposits. Standard metallurgical processes used during the mining phase have demonstrated good recoveries and clean concentrates.
|Clark says the topography at Cabaçal is ideal for mining|
Meridian’s human resources complement its projects. They are an experienced Brazil-based team and understand the nuance of operating in the country. Brazil is an active mining jurisdiction, with the likes of Vale, Anglo American, Lundin, and Ero Copper expanding there.
“We are setting the course now to build the next mid-tier Copper-Gold developer in Brazil,” Clark says. “We are starting from a very small market cap of roughly $20 million but our asset has been extensively de-risked. The high-risk greenfield exploration and delineation phase, that’s been paid for by oil and mining majors. We don't have this risk but we have the pre-defined upside of a discovery scenario. My challenge is to build this towards a future billion dollar valuation, and to replicate the multi-decade production history of Flin Flon or Snow Lake and the other VMS camps.”
Meridian is planning a 10,000 meter drill program early this year that should really get the market’s attention. Clark is optimistic the company can show a statistical correlation with historical drilling for use in a future resource statement when the deposit’s boundaries are known.
In a recent interview, mining investor Pierre Lassonde said the best mining assets are copper-gold or copper-gold-silver deposits. Meridian has two such assets and is now in a race to develop Cabaçal. The company will return its focus to Espigão later.
“At least six times our market cap has been invested in our projects,” Skinner says. “The opportunity now is to de-risk and monetize Cabaçal and we are excited to show the world what we have.”
Since joining Meridian’s board Jan 26, Skinner has acquired more than $125,000 in MNO shares in the open market at current prices according to SEDI. If his past success is any indication, this may be a very good bet.
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Author owns securities in Meridian Mining and has a conflict of interest in writing about the company. This communication contains forward looking statements that may not come to fruition. See Meridian Mining’s SEDAR.com profile for important risk disclosures. Meridian Mining has purchased 2.5M advertising units on CEO.CA at a rate of C $10/CPM). Nothing in this communication is intended to be investment advice. Do your own due diligence and talk to a licensed investment advisor before making investment decisions.