World-Class Emerald Asset - And The Time Is Right!

Looking at the number of posts round here or the volume of trade in MGU, you probably wouldn't realise Magnum Mining had quietly, a couple of years ago, acquired what can truly be called a company-making asset - one of the largest historical emerald mines in the world, and an asset with huge upside potential.

(Announcement 28 January, 2015: http://www.mmel.com.au/Pdfs/pdf-MGUExecutionofaSharePurchaseAgreement.pdf).

Given market conditions at the time, the Company was content not to beat the drum on its bargain - a majority (74%) holding in the Gravelotte Project in South Africa, for which it paid only about AU$1.2m, including 8.5m South African rand and 20m shares, valued at AU$260,000.

But roll the clock forward, and I believe rumblings are beginning to be heard that may at last presage rapid forward development of the project.

[I am reminded of the ancient Magratheans in Douglas Adams' wonderful Hitchhiker's Guide to the Galaxy, who spent long periods in hibernation between economic cycles, waiting for perfect conditions to ply their specialised trade.]

Anyway, among gemstone dealers, Gravelotte is known as the Cobra emerald mine (try Googling "Cobra emeralds" for lots of splendid photos of the product).

Gravelotte reportedly produced more than 100m carats from its discovery in 1927 until its closure in the 1980s and indeed, during the 1960’s, the Gravelotte Project was the largest mine of its type in the world, employing over 400 sorters!

Of course, the emerald-bearing zones are far from depleted. The mine area hosts schists that form a star-shaped outcrop pattern defined by two structural trends and northeast-trending steep-sided granite bodies. The emerald-bearing zones and their sub-divisions are listed below:

- Cobra – comprising Cobra North, Cobra South and Cobra Underground;
- Discovery – comprising Discovery Pit, Discovery East and Discovery South;
- Beryl Kop – comprising Beryl Kop East and Beryl Kop West; and
- Sable Kop

In addition, large emerald tailings dumps offer immediate potential for re-treatment.


Magnum management has always been very careful. It searched long & hard to find a suitable, near-production, low capex mining project. This one came with existing mine infrastructure and buildings on the site, as well as an extensive database of historic mining data and grades.

And its acquisition was perfect contrarian timing, so extraordinarily cheap.

Now too, I believe, the Company has carefully weighed up its timing. The decision may at last be that the times are right to actually turn the key on the project. Gem prices are solid and the world economy seems to be on the up.

Just last month came the appointment to the Board of Mr Howard Dawson as a Non-Executive Director - perhaps another indicator of things on the move. Mr Dawson is a geologist who spent 11 years in the field before switching to become an analyst for the securities industry with firms such as Hartley Poyntons, McIntosh Securities and ABN Amro Morgans. After 16 years in the role, Howard is known as a pretty hard-headed tyre-kicker, so not a bad vote of confidence that he joined the Company.


All the usual caveats for spec stocks apply with this one - plus, I suppose, sovereign risk for South Africa. But the shares are exceedingly cheap for what's here, in my view, and the register drum tight.

As is often said ...the time to buy 'em is when they're unloved.


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