Smart investors in the junior resource sector know you need Money, Management and Minerals to have the best chance at large capital gains. James West, editor and publisher of The Midas Letter, tells us that he thinks the re-born Mega Silver (MSR: TSX-V) has all three ingredients now. With Mega Silver’s $11 million cash, management in the award winning Ewan Downie and a new land package in the prolific Red Lake gold, West outlines his version of the 3 Ms.
By James West
MidasLetter.com
Thursday, February 19, 2009
Mega Silver (TSX.V:MSR) is doing a deal with Skybridge Development Corp.(TSX.V:SBD) to combine the two companies in a friendly all-share offer that will see Skybridge shareholders receive one share of Mega for each 2 and a half shares of Skybridge.
The deal isn’t complicated and there’s no reason to assume it won’t be approved by regulators.
What smart cats are starting to realize though, is that this combination would appear far more valuable than the some of its various parts.
Consider that Skybridge Development is a major shareholding of Ewan Downie’s, who has acquired the mantle of fame within the resource industry for his successes with Wolfden Resources and Premier Gold Mines, of which he is president, and Abraham Drost, whose Sabina Silver is a major success story in the silver industry.
Then look at the caliber of properties and management that has been assembled under the Mega Silver corporate umbrella. What has been forged out of the two companies is what appears to be a precious metals winner on both the silver and gold fronts, with excellent exploration targets and premium management. Not to mention access to capital well above the norm.
Yesterday Skybridge announced the acquisition of the East My-Ritt property in the Red Lake mining camp that is suspected to be connected geologically to historic gold occurrences on Skybridge’s recently acquired and proximal Laverty project.
The Laverty property is 1.5km west of the townsite of Red Lake, Ontario and consists of six patented mining claims totaling approximately 240 acres. The property is contiguous with the historic Hasaga and Howey gold mine properties which produced approximately 640,000 ounces of gold within similar host rock to those located on the Laverty property.
The prolific Red Lake camp has produced more than 22 million ounces of gold and has current production of about 700,000 ounces of gold per year from the district’s primary producer, Red Lake Gold Mines, a Goldcorp subsidiary.
Of particular interest is the fact that on the two press releases outlining the acquisition of both the Laverty property and the East-My-Ritt, the Qualified Person is Jim Rogers, former Chief Mine Geologist of the Red Lake Mine when it was called the Dickenson Mine. Most recently, he was Regional Exploration Manager for Goldcorp in Red Lake. He is listed as a consulting geologist in Skybridge presentation materials. If anyone knows anything about regional Red Lake geology, it would certainly be Jim Rogers.
Besides the Red Lake properties, Skybridge also brings with it the Blue Cariboo project, a high grade copper and molybdenum property with byproduct gold and silver values.
Mega Silver, not to be outdone in the promising prospects department, is exploring the Eagle Vein in the historic Keno Hill silver district, Canada’s second biggest primary silver camp after Colbalt, Ontario. The Keno Hill area is located roughly 38 kilometres northeast of Mayo and 350 kilometres due north of the capital of Whitehorse, Yukon.
The Eagle Project is comprised of the SpiderMan property, the Fisher property and the recently acquired Eagle property in the historic Keno Hill silver district. Mega Silver has identified several under-explored vein structures on its claims which form a continuous block immediately south of the historic Hector Calumet mine. Hector Calumet, the largest single producer in the Keno Hill camp, produced 96 million ounces of silver at a grade of 34 ounces per tonne. Mega’s total land position now covers 1,595.8 hectares in two adjacent claim blocks of 74 claims and 10 claims each on the southeast slope of Galena Hill.
With Mega’s $11 million in the treasury and Skybridge’s Red Lake gold property, the combined company, if approved, will provide investors with exposure to world class gold and silver prospects in mining friendly and politically stable jurisdictions. The combined company will be in a position to conduct extensive exploration programs without the need to raise additional capital in the near term.
Mega's President, Mr. Ken Carter, stated that, "This proposed transaction is a strategic one for both companies and brings to Mega Skybridge's strong management team and Chairman, Mr. Ewan Downie. We also acquire a significant project in the Blue Caribou Project, in addition to an excellent entry into the Red Lake gold camp in Ontario.
Mr. Ewan Downie, Chairman of Skybridge added that, "the combined company will have the cash and expertise to take advantage of the many opportunities that exist in these difficult markets. We are optimistic that this transaction will build value for shareholders of both companies over the coming years and we are excited about this new company and the open mandate the new management team will have."
Its not clear what the resulting management team will look like at this point, but between Abraham Drost and Ewan Downie on the Skybridge side and Ken Carter from Mega Silver, talent will not be an issue.
Visit the company’s web sites at http://www.megasilver.ca and http://www.skybridgedevelopment.com.
SOURCE: http://www.midasletter.com/news/09021907_Mega-silver-lining-in-Skybridge-deal.php
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