King of Prospect Generators – Eurasian Minerals

King of Prospect Generators – Eurasian Minerals (TSE: EMX, AMEX:EMXX)

Did you know that statistically, only 1/3000 to 1/5000 exploration projects become economically viable? 

Using the prospect generator business model, the generator typically owns 100% of properties and options a portion of the property (in the 51-70% range) to a partner who will typically spend multiples of the acquisition and early exploration costs (incurred by the prospect generator).  While some argue that this model dilutes the generator’s ownership interest in the property, the model works because it mitigates the risks inherent in exploration by using Other People’s Money (or OPM).  This business model also minimizes dilution over time, the common result of a company’s need for successive equity offerings in order to solely fund its own exploration.  Further, the model allows the generator to acquire more opportunities over time to statistically increase its chances to make an economically viable discovery.  Ultimately, the shareholder is not diluted, but rather, it is the risks that are diluted.

EMX boasts the strongest exploration and geologic team (230+ years of proven experience) per market cap (just $130M with almost $45M in liquid assets).  As a testament to its cost efficiency, 83% of all money that EMX has raised since its IPO is still in the bank!

However, it’s not just the business model that makes EMX a success, it’s the intellectual capital.  Just look at the Dream Team roster behind EMX:

• David M. Cole – President, CEO and Director:  Over 18 years with Newmont Mining, the second largest public gold mining company in the world.  Mr. Cole held a number of senior management and senior geologic positions with Newmont.
• Dr. M. Stephen Enders – Executive Chairman and Director:  Over 32 years of executive and leadership experience in mining, exploration and operations.  He has previously held the position of Senior VP of Worldwide Explorations for Newmont Mining and the President of Phelps Dodge Exploration Co (now Freeport-McMoRan).
• Dr. Mesut Soylu – Exploration Manager, Turkey:  Over 18 years of exploration in southeastern Europe and Turkey.  Exploration and Technical Manager for Rio Tinto from 1990 through 1996, specialty consultant in porphyry and epithermal deposits for BHP and joined BHP in 2000 to manage the company’s porphyry copper exploration programs in Turkey before joining EMX.
• Dr. Pavel Reichl – Exploration Manager, Eastern Europe:  Over 15 years of exploration and production experience with focus on precious, base and PGM metals.  Served Newmont Mining for over a decade and was Newmont’s exploration manager in Kyrgyzstan and Uzbekistan between 1997 and 2002.
• David Royle – Exploration Manager, Austral-East Asia:  Over 34 years of experience in exploration for precious metals, base metals and diamonds for companies including Newmont, Newcrest, AMAX and MIM.  He is credited with several discoveries in Australia, South America and in the South Pacific.
• Dr. Duncan Large – Lead Technical Advisor, Europe & Asia:  Over 30 years of experience in exploration and mining.  Served 6 years with Rio Tinto.
• Dr. Peter Mitchell – Koonenberry Project Manager:  Over 35 years experience.  Previously served as senior geologist for Exxon Minerals Co and Coeur d’Alene Mines as well as a number of senior geological and managerial positions with Newmont Mining, QGX and Antares Minerals.
• Jesper A.C. Kofoed – Exploration Manager, Scandinavia:  Over 20 years of exploration and mining experience.  Credited with the discovery of the Nalunaq gold deposit in Greenland.  Prior to joining EMX, was Chief Geologist of Quadra Mining until its merger with FNX in 2010.

If their collective resume isn’t enough to convince you that EMX is the real deal, check out the 3rd party validations by way of investment:

INSIDERS

• International Finance Corp, the investment arm of the World Bank          
• Newmont Mining, which bought in on multiple occasions at a premium as high as 20%
• Sprott Asset Management/Rule Family Trust

MINORITY SHAREHOLDERS

• Barrick Gold Corp
• Freeport McMoRan
• Antofagasta
• Lukas Lundin

JOINT VENTURES

• Haiti Projects - Newmont nominates entire Haiti portfolio for project designation.  Exploration is 100% funded by Newmont.  Newmont must spend $30M over 6 years to earn-in to the La Miel project, Haiti.
• Turkey Projects - Akarca Gold-Silver project JV with Centerra Gold, Sisorta Gold-Copper project JV with Chesser Resources.
• Sweden Projects – Several projects under partnership with Antofagasta
• US Projects -  Several properties under agreement with Freeport-McMoRan, Vale, Imet, GeoMinerals, Entrée Gold and Golden Predator.

“JUNIOR COMPANY WITH MAJOR’S PORTFOLIO”

• Global portfolio of over 150 properties, over half in partnership
• Several district scale prospects
  • Haiti’s Massif du Nord mineral belt – 130km strike, solely funded and managed by NEM
  • Koonenberry, Australia – 100km strike with angular alluvial gold nuggets up to 300 ozs, indicating the motherlode is close and near surface!  Partnerships being discussed.
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  • Turkey -  potential district scale gold-copper porphyries

I want to make this absolutely clear - this is a very speculative company and there simply isn’t a very good way to place a fundamental value on the stock.  What I do know is that management and the business model reduces the risks of exploration and provides blue sky exposure to some of the worlds most prospective frontier exploration properties. 

The Massif du Nord belt extends into the Dominican Republic where Barrick has proven up 20Moz Au, 117M oz Ag, and 420M lbs of Cu.  The rocks do not know where the boundaries are!  While other juniors cower at the prospect of exploring in jurisdictions such as Haiti, EMX is positioned to excel.  Remember, 100% of EMX’s Haitian portfolio is funded and managed by NEM and EMX will also look to leverage their International Finance Corp/World Bank backing to make headway in Haiti.