SMD.V Strategic Metals

[netnet]

Strategic Metals (SMD.V) is a Canadian prospect generator, with mining properties principally in the Yukon Territories in Canada.

 

Strategic Metals is trading near its working capital, has a history of success, has a potential catalyst, and has a skilled management group.

 

Like Altius in the early days, Strategic Metals is prospect generator.  They principally explore in the Yukon and they have access to the best data base of the Yukon.  They have been doing this for years.  Once they have assembled a land package, they then sell to an actual operator. They currently have staked 1000’s of claims and assembled about 120 land packages. They have done this for years.

 

Valuation:

 

Strategic is trading at less than its book value, they have working capital plus unconsolidated investments in public companies of about 37 million. Their current market cap is 53 million.  So for 16 million you get 120 properties that you probably could not replace with 100 million in today's market, plus an upcoming spinout.  In the last boom their market cap was 7.5x higher. I expect them to slowly realize their value by farming out and optioning their land holdings, which are in rich mineral bearing zones.

 

The Spinoff:

 

The management is somewhat frustrated with the market not appreciating their land position and value, so they decided to spinout Trifecta Gold, which has 4 projects, 3 of which are owned outright, one of which the company has options on in the so call White Gold district in the Yukon. I believe the record date for shareholders is June 1.

 

What the company has shown over the years is that it is conservative and non-promotional, which is a welcome relief to the usual shenanigans in the junior mining space.  I would not say that they have optimized their financing, i.e. they are conservative to a fault, but their land position is the very, very good.