International Minerals (IMZ.TO) has mining projects in Peru and elsewhere, hunting gold and silver. The CEO is a geologist and lifelong miner, hanging with this company since inception. That's a feather in their cap because I like seeing geologists in charge of junior mining companies. The rest of their management team also have mining sector backgrounds.
The best thing about this company is that it has 2P reserves at several properties. The geology and logistics of each project are different so operating costs won't be uniform across the company, but the Au and Ag grades at each are attractive enough to justify production. The maturity of this company's business model requires evaluation on fundamental metrics rather than exploratory ones such as burn rate. Their five-year ROE lags the mining sector as a whole and is under my Buffett-inspired threshold of 15%. Their financial reports reveal net income of US$4.8M in 2012 after earning a profit of $60M in 2011. This was followed by a a profit of $9.6M in Q1 FY 2013 (ending Sept. 30, 2012) and a stunning Q2 loss of -$10M as of Dec. 31, 2012.
International Minerals has been around for a while and it's come a long way from it's penny-stock doldrums in the late 1990s. They seem to know how to convert the MII resources of their properties into desirable 2P reserves, but I wonder whether they will be able to continue such engineering feats if the price of gold declines and their free cash flow drops below their need for continued capex spending. The decent management team needs to correct the company's erratic recent performance.
Full disclosure: No position in International Minerals at this time.
