Medical Marijuana Markets Fire Up Canadian Junior Miners
March 25 2014 - 9:30AM
In mining, claims staked are the first step in mine development. As
the rules in Canada change April 1st to allow licensed commercial
growing of medical marijuana, junior mining companies are doing
what they are good at; staking their claims in this high growth
space. As more US states plan and/or pass the legalization to allow
medical and in some cases recreational marijuana—20 have
legislations pending-- the market is forecast to hit $10.2 billion
in less than 5 years.
Investors could be well served by this trend, but as the space
builds out, it is important that the players also have viable
mining businesses. What links the two industries is that they are
both highly regulated. Having worked within a regulated mining
framework definitely gives a new entrant a leg up in this new
industry.
Cavan Ventures (CVN:TSXV) is just such a company. Whether it is
advancing it's two, drill ready graphite properties in Quebec or
diversifying into new ventures, management's eye is firmly focused
on adding shareholder value.
"While we advance our flagship graphite properties, we are
actively moving to strengthen our board and management team to add
significant value through the Legal Medical Marijuana space,"
stated Peter Swistak, President of Cavan Ventures. "Given our
reputation in the mining business as company builders, we have had
substantive opportunities brought to our attention which we are
treating as added value to enhance and expand our mandate of
driving consistent shareholder value."
Cavan recently announced drill programs at both of its 100%
owned Buckingham and Tetepiska-east graphite properties in western
and northeastern Quebec. Buckingham covers 1700ha and is 1.7 km
north of the Walker mine, which produced from 1876-1920. Cavan
plans to drill 5 holes (1200m) to the graphite mineralization.
Tetepiska-East covers 3000 ha. The diamond drilling program at
Tetepiska will include five to six holes totaling up to 1,200
meters, designed to test the graphitic mineralization at depth as
well as their lateral extension. Channel samples showed grades
including 48.8% Cg, 52.65% and as high as 63.5%. Several of the
claims are close to or adjacent to Mason Graphite's Lac Guéret,
which recently reported measured plus indicated resources of 50
million tonnes at an average grade of 15.6% Cg and cut-off grade of
5% Cg.
Both of these properties show exceptional potential and the
Company intends to release results as available.
With a modest market cap of $2.3 million, Cavan investors appear
to be getting a decent set of asset for the money. Add in the
exploration potential and value-add of diversifying into the
Marijuana and hemp space, CVN makes a compelling spec.
Activity in the Medical Marijuana space has been buoyant over
the last few weeks. Many companies' who have mentioned plans to get
into the space have seen share prices gap on the news. The true
test will come upon fleshing out the details, but news will be
coming rapid fire, so it pays for investors to remain attentive and
vigilant.
To wit:
Nest Gen announced the Company is taking steps to become the
financier, mentor and strategist of choice for companies with
substantive business plans and opportunities. Shares moved from sub
$0.10 in early February hitting $0.70 last week.
Satori Resources announced contracting Agribusiness consultant
Scott Walters after announcing Medical Marijuana direction in
February. Shares moved from $0.01 then to peak at $0.15 last
week.
Thelon Capital adds Scott Walters to the Board. Shares move from
$0.01 in early February to peak at $0.16 last week.
The catharsis in the mining space appears to be growing daily,
and is obviously past the point of merely being a trend. The
constituents of the companies noted bring decades of business
building expertise to these new initiatives and the industry will
likely move extremely quickly once the April 1st deadline
passes.
Changes in the Health Canada regulations will allow licensed
commercial growers to supply the marketplace. Individual licenses
(people with existing authorization to possess, designated-person
production or personal-use production licences issued under the old
rules) will still be permitted to possess and/or grow medical
marijuana past April 1.
Obviously the need is paramount to sort out this fragmented
industry quickly. The key for investors will be to align themselves
with savvy business builders who can quickly and decisively
evaluate and execute either organically, or on the best potential
business proposals among dozens, if not hundreds that will likely
appear.
Until then, it is important to not eschew the core businesses of
companies like Cavan, which continues to advance its properties
through drill programs and on to production. Cavan believes it is
very near to a major discovery to prove up its Quebec properties.
The need for quality graphite is unquestioned, particularly in
light of recent announcements by Tesla and its plans to build the
largest Lithium Ion battery plant in the world, driving a further
wedge into an already challenging supply profile.
Continue to buy juniors for the E&P potential, but stay
focused on the Medical Marijuana sector which appears to be
unfolding quickly and profitably.
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CONTACT: Cavan Ventures Inc
Suite 1220 - 789 West Pender Street
Vancouver, BC, Canada
V6C 1H2
Email: info@cavanventuresinc.com
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