A precious metals company with three projects in Mexico, Monarchy Ventures Inc (OTCMKTS:MONK) is based in the municipality of Hidalgo del Parral within the state of Chihuahua, Mexico. The company is publicly traded in the U.S. on the OTCQB marketplace by the ticker symbol "MONK." The company's approach to precious metals mining is to partner with small operators that are already mining, rather than independently explore and develop its own mines. Quoting from its corporate description, "We allow operators to remain focused on their operated interests, and in return Monarchy receives revenue share of the profits from such participation." Consistent with this vision, Monarchy Ventures is now committed to a 45% investment stake in an operational mining company in Mexico, New World Metals.
New World Metals is a private company with Spanish language research coverage from BN Americas. Although New World Metals is not subject to public company disclosure requirements, a cached webpage at recentminingnews.com reveals 23 full-time employees and three operational mines with combined daily profit of $78,074 as of 2013, as well as proven, indicated and inferred reserves of gold and silver worth over $1 billion combined. Monarchy Ventures forecasted net revenue from its partnership with New World Metals to total approximately $8 million (adjusted for its 45% stake) after a full year of operation, and presumably this figure would increase during subsequent years. Monarchy Ventures is an equity holder in all three mining operations; two are located within the state of Chihuahua and one is located within the state of Durango.
Shareholders can expect Monarchy Ventures to report results of its most recent fiscal year by approximately February 23, 2015. (The SEC received the company's extension request to file its 10-K annual report late on January 29, 2015, and a similar extension from a prior request lasted 3.5 weeks.) Note that the company's fiscal year ends each October 31, not each December 31.
Monarchy Ventures was incorporated in Nevada on June 16, 2010 and applied to go public in March 2011. The SEC approved its application in March 2012, and the company began actively trading on U.S. markets in June 2013. The company maintains minor, legacy investments from its formative years \'97 representing low-single-digit percentages of its total assets \'97 yet the vast majority of its assets are currently invested in New World Metals.
Mexico is a leading precious metals mining country, ranked the top silver producer in the world and a Top 10 gold-producing country. Mexico also ranks #1 as the Hardest-Working Country in the world, with domestic laborers averaging 45 full-time hours per week despite average annual wages of just $9,885.* Direct, 100% foreign ownership of Mexican mining companies is legal, and the government revoked mining-specific royalties and taxes in the 1990s. Utilities, transportation, equipment, and infrastructure are reliably accessible in most areas of the country, with KPMG ranking Mexico second among Latin American countries for Ease of Doing Business. Dozens of major gold companies are currently operating in Mexico, including Goldcorp (NYSE:GG), Arcelor Mittal (NYSE:MT), Yamana Gold (NYSE:AUY) and Hecla Mining (NYSE:HL).
As with many mineral-rich countries, Mexican law stipulates that the country technically retains ownership of all mineral resources within its borders, yet the government grants multi-year concessions to private mining companies to allow exploration and extraction. New World Metals received this concession and retains it by filing periodic SEMARNAT and STPS reports and paying a nominal, biannual duties of $5 to $124.74 MXN ($0.33 to $8.36 USD) per hectare.
The company's common shares are currently trading near the low of their 52-week price range which widely spans from $0.30 to $32.70 per share (split adjusted). The highest price ticked approximately one year ago: February 19, 2014. This was just four days after a shareholder update wherein Monarchy Ventures disclosed that New World Metals anticipated shipping a substantial shipment of gold and silver concentrate to a Mexican refinery by June 2014. Donald Baillargeon had also interviewed the company's CEO on television the prior week.
Note that historical price charts should be adjusted to reflect FINRA's approval of the company's 1-for-3 reverse split that became effective on November 24, 2014 (the stock opened that day at $0.90 per share after previously closing at $0.30 per share), as well as an earlier 1-for-100 reverse split that became effective August 20, 2014.
There are several events that will be material for shareholders in 2015. As mentioned above, shareholders can expect the company to file its 10-K annual report by approximately February 23, 2015. Second, the company could provide an update on its NI 43-101 report, which was mentioned in a February 2014 shareholder update. (A prestigious yet abstruse certification, NI 43-101 reports usually require more than one year to complete.) Finally, shareholders can expect an update on New World Metals' new 100-tons-a-day ore processing facility. Construction on this second facility commenced in late fall 2014 due to bottlenecks at its first, 20-tons-a-day capacity facility, which had become backlogged. All of these updates will affect the company's forward revenue potential.
Historically, New World Metals' two mines in Chihuahua had been paying third parties to process the mines' gold and silver concentrates. Subsequent to receiving capital and infrastructure support from Monarchy Ventures in 2013, however, New World Metals began securing its own facilities to process its own concentrates in order to eliminate these third party fees.
Additional information regarding Monarchy Ventures can be found at its current domain, www.monarchyresourcesinc.com, although the company will soon update this domain to reflect its November 24, 2014 surname change from Resources to Ventures. Its SEC documents are filed under the persistent Central Index Key 0001514324.
* All figures in USD unless otherwise indicated.
