Saturday, December 21, 2013

Montero Mining and Exploration . . . Isn't Producing

I found out about Montero Mining and Exploration (MON.V / MXTRF) two years ago at the height of the rare earths investing craze, and I promptly forgot about it.  Let's see if they're worth remembering.  They've got projects all over the place.

The CEO is a geologist.  That's cool, and I respect experience at Placer Dome.  They've only listed one project manager, on the team for their Tanzania rare earths project.  What about the South Africa phosphate project and the Quebec uranium project?  Well, the September 2011 43-101 report for the South Africa project describes a mineral resource and they published a PEA last year with a decent NPV.  I didn't see any 43-101 report for the Quebec project.  I have no idea what it will cost to bring to production.

Let me get back to that Tanzania project.  The 43-101 report from August 2011 recommends more drilling before issuing a PEA, at a cost of at least US$3.1M or as much as as $5.3M.  This is on top of the $2.6M Montero should have spent on its Phase 1 preliminary work.  That means this thing isn't even close to production.  We can determine whether they can afford to complete this work by reading their most recent financial statement dated November 29, 2013.  They were down to C$63K in cash and their burn rate is over $100K/month.  That means they're barely hanging on.  Their latest announced capital raise from December 3, 2013 is intended to pay off accounts payable rather than continue funding the estimated exploration budget.

Take a look at this stock's historical prices.  It has never traded for more than a few cents since inception and it's now under two pennies.  I am not going to pay the two cents per share to play in this company.

Full disclosure:  No position in Montero, ever.