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TORONTO
(ResourceInvestor.com) --
Bonaventure Enterprises Inc. [TSX-V:
BVT] which closed today at 74 cents,
announced Monday the acquisition of a 1,240,00 acre uranium property package
on the southeast side of Saskatchewan's Athabasca Basin.
The move makes the company one of
the largest landholders in the basin, and positions Bonaventure as a leading
candidate for the potential discovery of an elephant-sized basement-hosted
uranium deposit.
Further, if one looks at other
companies operating in this part of the basin with comparably large land
positions, their market capitalizations are without exception - a multiple
of BVT's.
Athabasca
Bonaventure's Athabasca
acquisition is significant geographically and from a data perspective. The
total land package consists of four separate projects - three in the
Athabasca Basin, one in the adjacent Wollaston Belt - along with and a
combined 127 mineral claim blocks.
The largest of the four projects
(1.175 million acres) is the Foster Lake concession which borders AREVA's
[Paris:CEI]
past-producing Key Lake Mine and has Cameco's [TSX:CCO;
NYSE:CCJ]
Cigar Lake mine located northeast of the western flank of the project. The
Foster Lake project also surrounds most of JNR Resources' [TSX-V:JNN]
Way Lake project which hosts some of the highest uranium grades (48%!) seen
in grab samples this cycle.
Excitingly for shareholders,
Foster Lake boasts some 70 historical boulder train samples with grades
ranging from 5.79% to 7.17% U3O8 and a historical drill indicated resource
of 65,000 tonnes grading 0.19% U3O8 for about 250,000 pounds of uranium, to
a shallow depth of just 65 metres.
The flagship Foster Lake will be
the first site of exploration, and confirmation work is slated to begin
immediately. Under the guidance of company director and experienced
geologist Jean Lafleur, Bonaventure's management is presently constructing
an aggressive, broad-based work program for Foster Lake, the details of
which are expected to be released soon.
The other three projects acquired
in this deal are similarly well located, neighbouring and surrounding some
of the major senior players in the uranium business. All are high-impact and
have the potential for elephant-sized discoveries. Preliminary work will be
conducted this fall at these properties as well.
An added bonus for shareholders
that we feel will come into play over the next few months is the diamond
potential at Foster Lake. This value will be unlocked as management decides
on a suitable partner for those (diamond) rights.
Included on the Foster Lake
property package are 14 of the 23 large potential kimberlite anomalies
identified by a Saskatchewan government fly-over of the Wollaston belt area.
The other 9 anomalies were staked by groups including a major international
diamond company.
More Properties Coming
Importantly, Bonaventure�s
latest
press release stated "Bonaventure
continues to work to add district scale exploration packages to the
Company's portfolio, as we build a Canadian uranium exploration company."
This is a critical distinction.
Bonaventure is focusing on acquiring sizeable property groupings with the
potential to host world-class deposits - in other words, they are targeting
only elephant-sized potential opportunities.
This creates an exploration
company centred on and leveraged by projects with known anomalies large
enough to suggest world-class potential - and the upshot of that is a blue
sky premium built into the valuation because one hint of an elephant tends
to multiply an explorer's share price.
We anticipate that more property
news will be coming this summer.
Valuation and Comparables
Bonaventure has a market
capitalization of C$35 million at today's close price of 74 cents. We are
going to break down the valuation, and then explore BVT's present prime
comparable, and the instant multi-bagger that comes from getting a whiff of
high-grade uranium in Athabasca.
BVT has:
1.
A critical-mass land package in the Athabasca
Basin;
2.
A Nevada gold property partnered
with US Gold presently hosting 300,000 ounces of gold and with the
potential to expand quickly and cheaply through shallow drilling to 1
million ounces of gold this year; other Nevada exploration properties
surrounding large known deposits;
3.
More properties coming.
We believe that Nevada could be
worth up to C$20 million in market capitalization by the end of the year
between the growing resource at New Pass (BVT has 60% interest, drills are
turning) and J/Ving some of the excellent targets on the exploration
properties - Cottonwood, Goldfield West, Jet, Squaw Creek and Northern
Lights.
The Athabasca package relative to
comparables arguably justify today's valuation of C$35 million alone and
perhaps more like C$50 million. Added value could be extracted from
developments on the diamond side, which look to have the possibility of
being quite prolific in terms of the size of the targets and the interest
that that could attract.
Finally, one has to attribute some
value to the coming addition of new properties and management's ability to
be aggressive, making accretive acquisitions of district scale property
packages. Depending on what we see in the weeks ahead, this could add
C$10-C$20 million to the potential valuation, or more if Lafleur and the
rest of the BVT team really pull one out.
In total, we see a situation where
because of the nature of Bonaventure's model of focusing on district scale,
high-impact, world-class potential land packages, the company could achieve
a valuation of C$80-C$100 million as the drills start to turn and the
excitement over the company's leverage and blue sky premium come into play.
An example of this "optionality"
is JNR, presently with a market capitalization of C$265 million. We believe
that JNR is Bonaventure's best comparable. BVT's flagship Foster Lake
property surrounds JNR's Way Lake project where the company hit a 48%
uranium sample.
What did that one sample do to the
company's market capitalization? Within 3 months of the date of release of
that news, with no other especially significant news delivered aside from
the excitement generated by drills turning, JNR's market capitalization
increased from C$88 million (C$1.04/share) to C$380 million (C$4.50/share)!
Needless to say, if BVT could pull
anything even remotely similar ... just a sample ... from its land package
which wholly surrounds JNR's Way Lake, the stock would go higher in a hurry.
That is the remarkable optionality of a critical mass, high-impact
exploration package ... and that is why one owns an explorer like BVT.
Following/Market Awareness
Bonaventure has the right eyes on
the deal to create awareness. If one talks to management and looks at some
of the placees in the financing just completed by the company, plus looks at
the volume that BVT trades daily, one can see that the right people are in
this deal; shareholders with the ability to spread the story and create
buying.
Furthermore, Bonaventure is listed
in Germany [Frankfurt:YQG],
which is a market that has been known to flock lemming-style into some of
the deals presented by the right people in that part of the world. We think
that BVT is not listed over there for no reason, and has the relationships
to tell the story in a concerted fashion in Europe, generating the
concomitant enthusiasm and buying that could drive the share price higher.
Finally, Bonaventure announced
just today the hiring of two IR firms - First Canadian Capital and Paradox.
This underscores the fact that the company is conscious of the need to tell
the story, and both of these are excellent names in this space.
Conclusion
Bonaventure looks strong because
the right people are in the deal, and because the company is pursuing what
in our minds is the best and really only model for explorers - look for
elephants, offer high-impact optionality and garner a blue-sky premium.
As the company acquires more
sizeable property packages, continues to be underpinned by a growing gold
resource in Nevada, and attracts more retail attention with the return in
the autumn of what most people believe will be a robust uranium market yet
again, we see BVT shares trading higher.
JNR as a comparable, and the
example of the way the company's shares skyrocketed on its 48% uranium
sample, is exactly why one wants to own a situation like this, and is a
demonstration of the immediate and dramatic upward re-valuation which can
take place.
Given that BVT has a critical mass
land package surrounding JNR's find, it looks to us like a cheap call option
on the grades being found in the area. Either BVT's valuation will go up
because it is a cheap and aggressive comparable, JNR will hit something
again and BVT will reap the reward as the more leveraged play or BVT will
make a discovery this fall at Foster Lake, and then the hundred-million
valuation (C$2 per share) we postulate in our valuation above could look
very cheap. |
