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Mirasol Resources (MRZ)

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Mirasol Resources (MRZ)
Stock Price: $1.04
Diluted Shares: 44.16MM (there’s also 6MM options and warrants with strikes of $2.97 – $4.30)
Market Cap: $46MM
Working Capital Surplus: $22MM
CDE shares: $14MM
Debt: $0
EV: $8MM

I love finding situations where the outcomes are: Heads I win; tails I don’t lose much. Hat tip: Pabrai.

I believe Mirasol Resouces is one of those situations.

MRZ is a prospect generator, which means it recons new mining projects with its technical team, acquires the land rights, then goes out and JVs with a well-capitalized miner who pays MRZ for its work and commits to funding the further drilling and (if it gets there) development of the project. The prospect generator model is interesting because it requires very little capital compared to traditional mining companies (little cost = lower risk of dilution and high probability of avoiding the mining death spiral). You get exposure to early-stage value creation (see the shaded area in the image below) but with long term sustainability that a typical “all or nothing” explorer lacks.

 Mining Lifecycle

The costs in the prospect generator business are primarily exploration, field and management salaries and logistics.

The key to investing in any prospect generator is finding a very savvy geotechnical team. Even better is finding a savvy team with a portfolio of high caliber projects already on the books and paying close to nothing for it (free call options).

Enter Mirasol.