Wednesday, January 23, 2013

Orex Minerals (ORXIF) Has a Two-Country Strategy

Orex Minerals (ORXIF / REX.V) is exploring for precious metals in Sweden and Mexico.  The CEO has a background in financing and selling mining properties, but his current bio doesn't provide details on whether he's actually been a geologist who has successfully explored a project for ore.  I really like junior explorers when they have an experienced geologist in charge.

Their Barsele project in Sweden has a 43-101 report with indicated and inferred Au grades that are far below the 2.0 g/t I prefer to see in a viable project.  I know how difficult it can be to find grades like that today but someone has to try.  Their Coneto project in Mexico has no 43-101 reports and their preliminary technical reports were published in 2010.  My loyal readers know by now that I take final reports of 2P reserves more seriously than earlier reports of technical information.

Orex has several years' worth of financial reports available.  The latest quarterly report from October 31, 2012 showed C$1.5M in cash on hand and an annual burn rate somewhere north of C$2.5M.  It's hard to pin that rate down precisely because their cash burn has slowed dramatically in recent months.  They will need to raise more cash no later than the end of April 2013 if they want to survive at even that decelerated rate.

This company isn't right for my portfolio because their projects aren't mature.  I believe they need to show significant progress toward discovering high-grade ores at either of their current projects.

Full disclosure:  No position in Orex Minerals at this time.