QMX Gold (QMX) - High-Grade Focus, Mill and Resource Estimate Coming

QMX Gold: a Quebec-based junior explorer that focussed on exploring its extensive Val d’Or Mining Camp, first discovered in 1920, in the Abitibi District of Quebec. The main driving force behind this camp is historical data, but QMX is also applying new geological models and is systematically exploring new anomalies and finding new targets. This is one of the most expansive land packages in the region, and this value proposition is sweetened by QMX's 100% ownership of the fully-permitted Aurbel milling facility.

Matthew Gordon talks to Brad Humphrey, August 2020

The Val d'Or Mining Camp is located on the Abitibi Greenstone Belt, which is a mining region many will know well for its prolific ounces in the ground. It has an exciting history of precious and base metals discoveries, and Val d'Or itself has produced meaningful quantities of gold, silver, copper and zinc.

The infrastructure in the region is impressive with specialised services on offer, including a 'skilled' labour force, mining equipment, corporate sponsorships, supplies and contractors and general mining infrastructure. Water isn't an issue for QMX Gold; it is easily accessible and supplied on a local basis. moreover, electricity is provided to the company by Hydro-Quebec. Provincial highway 117 allows year-round accessibility, with the nearby Canadian National Railway network providing the company with a solid distribution channel. This looks like a substantially de-risked investment opportunity when one weighs QMX Gold up against some of its more exotically-located gold junior peers.

However, with gold hovering around US$2,000/oz, there is no shortage of exciting gold mining stories for investors to investigate right now. So, what exactly sets QMX Gold apart?

The company has been knocking around since 1988 and was previously called Alexis Minerals. Humphrey came onboard in 2016. In 2003, it acquired assets formerly owned by Aur Resources Inc. Between 2006 and 2008, QMX acquired full ownership of the Aurbel Mill, achieving bulk sampling and underground exploration programmes at the Lac Herbin north-westerly segments of the project. Eventually, QMX achieved commercial production at Lac Herbin in late 2008. However, the gold bear market of the 2010s soon put a spanner in the works, and after producing over 1.2Mt gold at an average grade of 4.6g/t, (172,650oz of gold between 2008-2016), underground mining was suspended. However, the Aurbel Mill continued to be maintained for custom milling contracts and stockpiled ore.

Humphrey only came to the party in 2016. He oversaw a significant restructuring process, making QMX an exploration-focussed company ahead of the next gold cycle. There was an awful lot of excitement surrounding the stock in 2017 and early 2018, and the market was starting to drive the value of the company up, but the following 2 years were lacklustre to put it mildly. With a robust, explorational approach now in place, Humphrey and his team have managed to get the company moving along the comeback trail. The share price has slowly but surely stated to rise since the turn of the year, but how much of this is down to rising gold prices remains to be seen. It is worth noting that Humphrey believes the company has put in the hard yards over the last few years so that it can benefit today.

With c. US$10M in the treasury right now, and a burn rate of c. US$135,000 per month (plus any drill programmes), QMX Gold is planning to leverage Val d'Or's status as "one of the cheapest places on the planet to drill" to creative accretive value for patient shareholders. With a cost of just over US$100/m, 80,000m of drilling is on the cards: a really significant figure.

35,000m is coming first by the end of 2020. The aim is to get through the targets as quickly as possible, but QMX Gold insists that it will maintain an intelligent, measured approach, as evidenced by its high drilling success ratio to date.

Humphrey has never sold a QMX Gold share: a promising sign. He states there are very few windows that actually enable him to buy stock due to the 11-month drilling season in Val d'Or. He did buy some stock towards the end of last year, and he owns around 3.5M shares of 381M outstanding. The remainder of the management team is sitting on c. 2%. They don't appear to be significantly aligned with shareholders, which can sometimes be a red flag. However, the board is relatively new, and Humphrey expects this to rise.

Some smaller institutional investors form part of this story with some HNWIs getting close to 10%. The main shareholders are the ABR Strategics: El Dorado, O3 Mining, Eric Sprott, Osisko and Probe Metals. It is a nice mix and it doesn't appear liquidity will be an issue in the near-term.

There are "all kinds of different royalties" on Val d'Or, totalling around 2.5% across the property. There are c. 480 claims in total, and some of those claims are individually unique. Nothing looks too prohibitive.

Investors will be hoping this drill programme produces some exciting numbers for QMX Gold. Will value be delivered through the drill bit, or are investors a little tired of this stale story?

Company Website: https://www.qmxgold.ca/