Investment and Company Research Opportunity Resea
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Posted On: 10/10/2014 8:38:06 AM
Investment and Company Research
Opportunity Research
COMPANY REPORT
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Small Cap Research, 2014
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1
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BRAZIL MINERALS, INC.
The Most Attractive Revenue
-
Generating Mining Stock
Rob Goldman
September
16
, 20
1
4
rob@goldmanresearch.com
BRAZIL
MIN
ERALS, INC. (OTCQB
–
BMIX
-
$0.05
)
Price Target: $0.30
Rating: Speculative Buy
COMPANY SNAPSHOT
Brazil Minerals, Inc.
(“BMIX” or the “Company”)
is a revenue
-
generating U.S. holding company in the natural resources
area.
The Company’s primary holding is
its
86.88%
-
owned
Mineração Duas Barras Ltda. (“MDB”), a Brazilian producer
located in the state of Minas Gerais
, which
mines conflict free
diamonds and gold, and sells rough and polished d
i
amonds
and 96% purity gold. MDB ha
s a fully
-
operational mining
concession and the permit to export its production of rough
and polished diamonds. Additionally, BMIX holds 100%
ownership
of the mineral rights
for a 24,700 acre area with
known presence of gold and copper in the
state of
Amaz
on
as,
Brazil
.
Separately, BMIX has an option to acquire up to
a
75%
ownership interest in
a
titanium, vanadium and iron project in
the state of Piauí, Brazil.
KEY STATISTICS
Price as of
9/
15
/
14
$
0.
05
52 Week High
–
Low
$
0.
15
–
$0.
04
Est. Shares
Outstanding
84.6M
Market Capitalization
$
4.5
M
3 Mo Avg
.
Vol
.
132,000
Exchange
OTC
QB
COMPANY INFORMATION
Brazil Minerals, Inc.
151 North Lake Avenue
Suite 800
Pasadena CA 91101
Phone
:
213.590.2500
www.Brazil
-
Minerals.com
info@brazil
-
minerals.com
INVESTMENT HIGHLIGHT
S
Incredibly low valuation
for a revenue generating company with
potentially high margins and with m
ultiple
shots
on
goal
.
T
his
sub
-
$5M in market cap company
generated close to $800,000
in revenue in its core
diamond and gold
business
in its first
year of operations. I
ts majority
-
o
wned key property
and
business
could
ultimately
be
worth hundreds of millions of
dollars.
Pure play in the huge Brazilian natural resources space:
BMIX
is
the only
publicly
-
traded
diamond and gold
company
from
Brazil
.
Very importantly
,
the Company’s key s
ubsidiary
,
MDB
,
owns the largest alluvial processing plant in Latin America.
Not only does the early revenue success in its key propert
y
reduce the risk profile, but the
diversification into
other
minerals
beginning next year only increases the overall value of
the Company.
Additionally, the corporate structure whereby
BMIX
subsidiaries own majority stakes in properties enhances
access to capital and partnerships for each stand
-
alone
property
, since capital
raises will be
primarily
done at the level
of each subsidiary
,
t
hus not diluting BMIX
.
BIMX boasts an enviable executive team that is in the early
stages
of
executing a business model which mirrors that of
successful, multi
-
billion dollar market cap minin
g stocks.
In our view, this pure play on Brazil is grossly undervalued and
the stock is poised to move considerably higher in conjunction
with greater diamond production and the development of new
properties.
At current levels, its market cap appears to only
reflect its 2013 diamond production and sales. Based on the
indicated resource, we believe that the core diamond
properties alone are likely worth nearly $30M today
with
out
taking into account BMIX’s
other
two
property categories.
Therefore, we
rate these shares Speculative Buy with a $0.30
near term price target.
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COMPANY OVERVIEW
Brazil Minerals, Inc. (OTCQB
–
BMIX
) mines and sells diamonds, both rough and polished, as well as gold. Additionally, the
C
ompany owns majority exploration rights for other minerals including copper, titanium, vanadium and iron. The
C
ompany’s prima
ry holding is its
86.88%
-
owned Mineração
Duas Barras Ltda. (“MDB”), a B
razilian producer, which mines
conflict free
diamonds and gold, and has the B
razilian federal permit to export rough and polished diamonds.
On average,
97% of the diamonds mined at MDB are of quality for jewelry applications.
The characteristics of the
diamonds
produc
ed
at MDB
are
strong
. The highest color grade of MDB’s polished diamonds
has been
“E” in the GIA scale (where the
absolute maximum is “D”, and therefore E is the second best); the highest clarity of MDB’s polished
diamonds
has been
“VVS1” (where the maximum is “IR”, and VVS1 is the second best).
MDB has recently conclud
ed
the
build
-
out
of
a facility for cutting and polishing diamonds.
Currently
,
a small percentage of
the rough diamonds mined at MDB are directed to this facility
and
the
result i
s
a steady supply of polished diamonds
.
Such polished diamonds sell for 5 to 15 times the
price
of rough diamonds. Because of the fine quality of its gems,
BMIX
sells its polished diamonds ungraded to a
marquee
11
-
store jewelry chain in Brazil that has been operating since 1944.
Other polished diamonds are exported to the U.S. for grading and certification at the Gemological Institute of America
(
“
GIA
”
) befo
re being sold to private investors.
The
GIA is the diamond industry’s premier laboratory for grading and
certification.
In fact,
in the first six months of 2014,
BMIX has pre
-
sold $1,000,000 of its GIA graded diamonds for
future
delivery
through
December 3
1, 2015.
We should note that in August
2014
the Gemological Institute of America (“GIA”)
visited MDB’s facilities. This is a huge step that illustrates the quality of the Company’s diamond products.
MDB has a fully
-
operational mining concession and operate
s the largest alluvial processing plant in Latin America
.
MDB
has had two NI 43
-
101 geological reports completed and a
bankable feasibility study
on file with the local mining
department
. The
MDB
diamond and gold project is located on approximately 1,404 a
cres in the state of Minas Gerais,
Brazil. Through MDB, Brazil Minerals has been producing and selling diamonds and gold since 2013 when it recorded
$792,000 in revenue.
We believe that the Company is on track to roughly match that figure this year and pot
entially
double its revenue in 2015. As the Company executes its strategy, the $5M in sales mark is
possible
in the coming years.
Sepa
rately, Brazil Minerals holds
100%
ownership
in a 24,700 acre site in
a gold and copper area in
the
state of
Amazonas
,
Brazil. Prospector activity and geochemical studies have shown
the
presence of gold and copper. BMIX will
likely seek to
partner
or
enter into a
joint venture
with a third party for
this property
. The Company also has an option to acquire up to
75% owne
rship interest in
a
titan
ium, vanadium, and iron project
in the state of Piauí, Brazil. In order to divide its
opportunities into pure plays for future funding and partnerships at the best valuation, the Company utilizes subsidiaries
to hold controlling i
nterests in its key properties.
BMIX
was founded in 2011 and
its U.S. corporate office is
in Pasadena, California.
BMIX’s primary operational office is in
Belo Horizonte, the capital of the state of Minas Gerais in Brazil. “Minas Gerais” translates
in Eng
lish to
“General Mines”, a
testament
to
the prowess of natural resources in that part of Brazil. Belo Horizonte has a population of approximately 2.5
million and is the third largest Brazilian city. In Belo Horizonte, BMIX employs three individuals, one wi
th a lifelong
expertise in diamonds, and two with private equity experience.
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MDB
: A REVENUE
-
GENERATING
DIAMOND & GOLD
MINE WITH HUGE UPSID
E
Mineração
Duas Barras Ltda.
(“MDB
”), a producer of alluvial diamond and gold, is located on the left bank of the
Jequitinhonha River in the state of Minas Gerais, Brazil, approximately 265 miles north of Belo Horizonte, the state capital.
The diamond and gold processing plant at
MDB
is accessible by dirt road which connects to asphalt highways. Montes
Claros, the re
gional hub for northern Minas Gerais, with a population of over 400,000 people and a busy regional airport,
is located within a 90
-
minute drive. The Jequitinhonha River is a well
-
known area for diamond and gold production; it has
hosted alluvial mining ope
rations o
f varying sizes and s
cales
since the 18th century.
The
MDB
plant was originally built by then Toronto Stock Exchange
Venture
-
listed Vaaldiam Resources Ltd.
(“Vaaldiam”)
in 2006
-
2007 at a cost of approximately $2.5 million.
To the best of
BMIX
’s knowledge, the diamond and gold processing
plant at Duas Barras is t
he largest alluvial recovery plant of its kind in Latin America.
Additionally, Vaaldiam spent $3.6
million to acquire the minerals rights for the property, and
an
estimated $2.0 million for detailed drilling and technical
studies leading to the NI 43
-
101 geological report and bankable feasibility of the property, as well as an estimated $2.0
million for removal of overgrowth
o
n the property. Therefore, the total cos
t of development of MDB by Vaaldiam is
estimated at $10 million.
In addition to MDB, Vaaldiam had 300 workers elsewhere in Brazil in various exploratory, non
-
revenue projects. When the
2008
financial crisis hit the markets, Vaaldiam left Brazil unable to
satisfy local social security payments and other
demands. Initially, BMIX acquired a 55% stake in MDB, and subsequent rounds of acquisition have brought the percentage
ownership to 86.88%. BMIX has publicly announced its intention of getting to 100% owners
hip of MDB before the end of
2014
.
Approximate Location of
Mineração
Duas Barras
Ltda. (“MDB”)
in the state of Minas Gerais, Brazil
(Source:
www.Brazil
-
Minerals.com
)
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MDB owns
title to both a mining concession and a mineral right
, covering a total area of approximately 1,404 acres
.
MDB’s mining concession was granted on August 25, 2006 for diamonds and gold and is a perpetual right to mine. MDB’s
mining concession covers an area of approximately 422 acres.
In addition to the
mining concession,
MDB
has current
operating and environme
ntal licenses issued by state authorities to
mine and
operate its plant.
MD
B’s
other mineral
right
is an exploration and research right that may become a mining concession after MDB performs some limited studies. This
right covers approximately 982 acres a
nd is located within the same
Jequi
tinhonha
R
iver valley
, and
its
diamond
ifer
o
us
and auriferous
gravel can be processed in
the same MDB
plant.
MDB’s
plant
recovers
alluvial diamonds and gold and
as of
September 2014
ha
d
18
employees.
BMIX
ended 2013 with nearly $800,000 in revenue and recorded nearly $100,000 in sales for the first half of 2014.
Seasonality, in the form of a 4
to
5 month rainy
season from December
-
April mean
s
that much of the
open pit
mining
excavation work at MDB
is perfo
rmed in
later
months
.
The
BMIX
revenue mix has gone from 69% from rough diamonds
and 31% from gold in 2013 to
43% from rough diamonds, 32% from polished diamonds, and 25% from gold in the first six
months of 2014. There has also been geographical
diversification of buyers from 100% of sales being in Brazil in 2013 to
68% in Brazil and 32% in the U.S. in the first six months of 2014.
It should be noted that
BMIX
has not performed any geological studies in
MDB
,
b
ut
has relied on the
NI 43
-
101 technic
al
report
from Vaaldiam
,
publicly
-
issued
in 2007,
as required by the rules of the Canadian securities administrator, since the
previous owner of the property was a Canadian listed company. The technical report illustrates mineralized materials
amounting to
1,639,200 cubic meters with 0.16 carats of diamonds per cubic meter and 182 milligrams of gold per cubic
meter. The detailed drilling program underscoring this result was performed on approximately 7% of the entire area of
the mineral rights available to
MDB.
The
MDB
NI 43
-
101
technical
report
contains on its page 9 the following table:
Detail of the MDB diamond and gold recovery plant. For size
comparison, note the employee standing on the foreground
with a blue shirt.
(
Source:
www.Br
azil
-
Minerals.com
)
Rough diamonds from MDB.
The larger diamonds at the
bottom are normally cut and polished at MDB’s facility, and
sold as polished diamonds achieving much higher revenue on
a per carat basis.
(
Source:
www.Brazil
-
Minerals.com
)
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Based on these figures, we estimate that this small (7%) portion of the property is worth as much as $75M alone
according to today’s prevailing prices
of rough diamonds
and gold. If using prices for polished diamonds, even for only a
percentage, the valuation jumps up dramatically
. Given the geology and mineralization trends in the region, it is possible
that the resource found on the entire
1,404 acre of MDB
could be worth well into the hundreds of millions of dollars.
GOLD & COPPER
–
PROJECT IN STATE OF
AMAZONAS, BRAZIL
BMIX
holds
100%
ownership
of the research and exploration permit
in a 24,700 acre site
located between the cities of
Borba and Apuí in the State of Amazonas, Brazil.
Prospector activity has shown presence of gold in depths varying from 1
to 5 meters, and usually in conglomerate format. Geochemical studies have confirmed the presence of gold
and copper. A
drilling survey has been yet to be done.
BMIX
may
seek to partner or
engage in a
joint venture
with a third party regarding
this property
to share any exploration costs
.
Amazon area gold projects have been sold at prices ra
nging from $110
million for
Tocantizinho,
which was
acquired by
Eldorado Gold
, to a $13
million sal
e for Sao Jorge
, which was recently acquired by Brazil Resources.
Mineral Resource
Volume (m
3
)
Diamond
Grade
(cts/m
3
)
Diamond
Content (carats)
Fine Gold Grade (mg/m
3
)
Fine Gold Content (kg)
Indicated
1,843,000
0.16
295,000
182
335
Inferred
856,000
0.16
137,000
182
156
TOTAL
2,699,000
0.16
432,000
182
491
Mineralization of conglomerate type in the Amazonas gold &
copper project
.
(
Source:
www.Brazil
-
Minerals.com
)
Location of the gold & copper project in the state of
Amazonas, Brazil
.
(
Source:
www.Brazil
-
Minerals.com
)
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TITANIUM,
VANADIUM
& IRON
-
PROJECT IN THE STATE
OF
PIAUI
, BRAZIL
This site is located in the State of Piauí, Brazil and
BMIX
has an
option to acquire up to
a
75%
ownership interest.
Preliminary reports have demonstrated
very
promising results for titanium, vanadium, and iron.
Vanadium and
t
itanium
are considered strategic minerals and have a
substantial use in military and
high technology applications. Both are utilized
to improve strength in steel alloys. Vanadium is used in
green energy applications such as advanced batteries as well as in
superconductors while titanium is utilized in pigments, additives, and coatings. Iron is the basic material used for the
production of steel and one of the major commodities in demand by gr
owing economies
.
M
ARKET/INDUSTRY OVERVIEW
Expanding economies and overextended government fiscal policies have sparked a revolution of investment in precious
and commodity metals over the 15
-
20 years. Gold and diamonds have led the charge in the precious
metals segment
while applications in the use of metals such as copper have grown dramatically in conjunction with the evolution and
broad utilization of modern technology as well as the growth of emerging economies. In recent months, some
institutional in
vestors have sought inflation protection as well as traditional equity gains via investment in mined metals
companies and the underlying assets themselves.
DIAMONDS
Sold as either rough or polished stones, an estimated 57,000 pounds of diamonds are mined
each year, and diamonds
remain one of the most sought after gemstones in the world. Known as the hardest material on earth, diamonds are often
used in industrial cutting and polishing tools. However, many in the investment community also utilize diamonds a
s a low
volatility inflation hedge. Nonetheless, this resource, particularly polished diamonds, remain a girl’s best friend and are
primarily sold as jewelry. The chart below illustrates diamond prices
’
10
-
year history along with
15
-
year forecasts for bot
h
rough and polished diamond classes.
It should be observed that the prices of both indices grew by approximately 100% over
the 10
-
year period from 2003 to
2013 and is expected to grow at a similar rate over the next 10 years. Clearly, this forecast illustrates the potentially
profitable diamond mining opportunity and reinforces our thesis.
10
-
Year Growth in Diamond Prices and 15 Year Forecast
(Source: WWW International Diamond Consultants Limited/Scotia Bank 2014)
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GOLD
Since 2013, the price of gold
has dropped significantly after completing an extended bull market run as the 10
-
year and 1
-
year charts below illustrate. Gold prices enjoyed a sharp rise of nearly 400% from the early 2000’s through mid
-
2011. A
slight drop from 2011 to 2013 prompted the
current environment of an oscillating price range of $1,200 to $1,400
per
ounce. Even with the decline in prices since 2011, gold prices remain over 300% higher than
they were
10 years ago.
Although there are strong indications that favorable
monetary
policies are coming to an end, gold remains a key tool in
hedging stock
portfolios, combating inflation, and protecting downside risk for fixed income.
T
he figure below
presents a sample of the latest gold price estimates over t
he next two years from leading Wall Street
banks. The consensus
forecast
indicates a stable environment similar to the present whereby prices remain in a range of
$1,200 to $1,400 per ounce.
Most Recent Analysts’ Forecast for Gold
(
Source: Goldman Small C
ap Research
)
Firm
Forecast Date
Gold 2014
Gold 2015
UBS
02/20/14
$ 1,280
$ 1,200
Bank of America
07/15/14
$ 1,308
$ 1,375
J.P. Morgan
01/06/14
$ 1,263
$ 1,275
Barclays
04/17/14
$ 1,205
$ 1,150
HSBC
03/03/14
$ 1,292
$ 1,310
Average
$ 1,270
$ 1,262
10
-
Year Gold Spot Price
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Copper is broadly used in a variety of
construction, power, and industrial applications. O
ther metals like titanium and
vanadium offer a strategic and in
-
demand metallurgical additive to steel given the broad use in green technology and in
steel by companies in emerging markets.
BMIX
offers exposure to all of the areas mentioned above with a p
rimary
near term focus on diamonds and
gold.
Additionally, Brazil is an extremely mining
-
friendly nation with limited regulation
,
an abundant low cost workforce
,
a
growing middle class
, and
a stable democratically
-
elected government. These factors combin
ed with meaningful
competitive advantages reinforce our thesis that BMIX may be the most attractive and undervalued stock in the mining
space.
BMIX
MANAGEMENT
TEAM
The management, counsel, and directors of
BMIX
have nearly 200 years of combined experience in mining, private equity,
legal counsel, finance, and operations in several countries, with an emphasis on Brazil.
Key members of the management are listed below, and the entire team is described at
www.Brazil
-
Minerals.com
.
MARC FOGASSA
Chairman and Chief Executive Officer
Mr. Fogassa has a 15
-
year career in private equity/venture capital and public equity investments. He has extensive direct
investing experience,
including cross
-
border deal structuring, due diligence, management build
-
up, and Board of Directors
oversight. He was born and raised in Brazil, and speaks Portuguese fluently. In 2012 he founded Brazil Mining, Inc.,
currently the largest shareholder of BM
IX.
Mr. Fogassa is frequently invited as an international speaker on Brazilian issues, and has written an op
-
ed in one of Brazil’s
foremost newspapers. Mr. Fogassa has worked at Goldman Sachs & Co. and Atlas Venture, and has been a director on the
boards
o
f several private companies.
Mr. Fogassa carried a double
-
major at the Massachusetts Institute of Technology, earning Bachelor of Science degrees in
Electrical Engineering and Biology. He subsequently graduated from the Harvard Medical School with a Doctor
of
Medicine degree and later from the Harvard Business School with a Master in Business Administration degree. He was
elected to Tau Beta Pi, Eta Kappa Nu, and Sigma Xi honor societies.
ROBLEDO DELATORRE RI
BEIRO
Head of Operations, Brazil & Vice President
, Finance & Admin
Mr. Ribeiro has substantial experience in both the diamond business and private equity, and experience in managing
hundreds of employees. His family controls GAR Mineração S.A., one of the largest diamond
-
mining companies in Brazil.
At GA
R,
he was General Manager and headed activities and projects in operations, finance, administrative, and mining
department and government relations.
BMIX has benefited from a very productive relationship with GAR and has located
its Belo Horizonte office
in the same building as the GAR headquarters.
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Previously, Mr. Ribeiro was an Investment Associate with Culturinvest Investimentos S.A., a private equity fund in Brazil.
He has managed family
-
owned businesses including a group of restaurants. Mr. Ribeiro ha
s a master
’s
degree in
Corporate Economics, and an undergraduate degree in Business Administration.
JAY WEIL, ESQ.
General Counsel
Mr. Weil has more than
35 years of legal experience, having represented public and private companies and individuals in a
wid
e range of business transactions and securities laws compliance matters. He has experience on virtually every aspect
of corporate and securities law,
including the preparation of contracts and SEC filings, advice on the law, and
development of strategies r
egarding business terms of deals.
Mr. Weil
also handles all phases of both public offerings and
private placements of securities as well as reverse mergers and secured and unsecured debt financing. He has also
experience in mergers and acquisitions.
Prior
to joining BMIX as General Counsel, Mr. Weil had worked on matters of Brazil Mining and BMIX since the inception
of these companies, as a
partner attorney
with law firm Ofsink LLC in New York from 2003 to 2014.
Previously, Mr.
Weil
was a securities and co
rporate partner with the New York office of Wolf, Block, Schorr and Solis
-
Cohen, then a
regional law firm with more than 200 attorneys, and prior to that a partner in a 30
-
attorney firm.
Mr. Weil
began his
career as an associate in the corporate securities
practice of Shea & Gould in New York, New York.
Mr. Weil has a J.D.
from the NYU School of Law and a B.A. from Binghamton University.
FERNANDO MANUEL DUAR
TE VIEIRA
Chief Mining Engineer
Mr. Vieira has 37 years of mining experience and is a well
-
known
mining engineer in Brazil. He was General Manager
for
Mineração Tejucana S.A., one of the most successful companies that have operated in alluvial diamond mining in
Brazil. At Tejucana, he ran the mining operation, and had wide responsibilities in operatio
nal, commercial, administrative,
and government relation areas. Prior to Tejucana, Mr. Vieira was the General Manager for
TP Mineração S.A., a producer
of alluvial gold in Brazil.
Mr. Vieira has solid experience and knowledge in the management and developm
ent of diamond and gold projects of the
type that BMIX has. Additionally he has the entrepreneurial dedication needed for our team. He has interacted with the
Brazilian National Mining Department on numerous occasions and has expertise in licensing and mai
ntenance of mineral
rights.
Mr. Vieira has also worked as executive for Amazon Resources and Escom Mining, both alluvial diamond and mining
companies. His degree is in Mining Engineering from
Universidade Técnica of Lisbon, Portugal.
CARL
OS HENRIQUE DE OLI
VEIRA GARCIA
Director of Operations
Mr. Garcia has background in private equity in Brazil. He worked as director and earlier as financial manager and analyst
for a private equity group investing in
various
industries. Connected to his work with portfolio
companies, he became a
member of the fiscal advisory board of the organization representing cinemas in the greater Belo Horizonte area. Mr.
Garcia has experience as entrepreneur in technology
-
related projects.
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Mr. Garcia has a
b
achelor’s degree in Business
Administration from Universidade Salgado de Oliveira in Belo Horizonte,
Brazil.
BMIX
BOARD OF DIRECTORS
The BMIX Board is stellar. It includes a former U.S. Assistant Secretary of State who knows Presidents and businessman
throughout Latin America, a form
er Canadian Ambassador with extensive service in Latin America, and a top Brazilian
mining lawyer who is also a licenses geologist.
AMBASSADOR
ROGER
NORIEGA
(Washington,
DC)
Ambassador Roger Noriega is an independent member of the Board of Directors of
Brazil Minerals, Inc. Mr. Noriega
was U.S. Assistant Secretary of State from July 2003 to August 2005, appointed by President George W. Bush and
confirmed by the U.S Senate. In that capacity, Mr. Noriega managed a 3,000
-
person team of professionals in
Wash
ington and 50 diplomatic posts to design and implement political and economic strategies in Canada, Latin
America, and the Caribbean.
Previously, Mr. Noriega was appointed by President George W. Bush as Ambassador to the Organization of American
States (OA
S), and confirmed by the U.S. Senate, a post he held from August 2001 to July 2003. In this capacity, Mr.
Noriega coordinated complex and sensitive multilateral diplomacy in a 34
-
member international organization to
bolster OAS efforts to promote trade, fi
ght illicit drugs, and defend democracy.
Mr. Noriega has been decorated by the Governments of Nicaragua and Peru, and has received numerous awards for
public service from organizations committed to the promotion of democracy in the Americas. He serves as V
ice
Chairman of the Board of Directors of the Congressional Award Foundation and as a member of the advisory boards of
the Hispanic Community for Policy, the Canadian American Border Trade Partnership, and the Hispanic American Civics
Foundation. Mr. Norie
ga is the founder and managing director of Visión Américas LLC, which advises U.S. and foreign
clients on international business issues, and also is a visiting fellow at the prestigious American Enterprise Institute for
Public Policy Research. He serves as
Vice Chairman of the Board of Directors of the Congressional Award Foundation
and as a member of the advisory boards of the Canadian American Border Trade Partnership and The Americano, an
online forum reaching out to Latino voters.
AMBASSADOR
PAUL
DURAND
(Ottawa,
Canada)
Ambassador Paul Durand is an independent Member of the Board of Directors of Brazil Minerals, Inc.
Mr. Durand has
had extensive international experience in both the private and public sectors. From 1992 to 1995, Ambassador Durand
was Can
ada’s Ambassador to Costa Rica, with concurrent accreditation to Honduras, Nicaragua and Panama. From
1995 to August 2000, he was Director General responsible for Canada’s relations with Latin America and the Caribbean
in the Department of Foreign Affairs
and International Trade. In August 2000, he was appointed Canada’s Ambassador
to Chile. In August 2001, he was appointed Ambassador to the Organization of American States (OAS) in Washington
and Canada’s National Coordinator for the Summits of the Americas
process, positions that he held until 2006. From
2007 until 2009 he was the resident representative of the OAS in the Dominican Republic.
Mr. Durand has participated in numerous electoral observer missions in Central and South America, and was
appointed t
o lead the OAS observer mission to the 2006 elections in Costa Rica, as well as the OAS Mission to observe
the referendum on free trade in Costa Rica in 2007. In Canada’s diplomatic service, Mr. Durand specialized in Latin
America, but also served in East
Africa and South Asia (India and Nepal). He worked for the Canadian International
Development Agency and also as a foreign policy advisor in the office of the Canadian Prime Minister (Privy Council
Office), before joining the Department of Foreign Affairs
and International Trade.
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He was educated in Canada, obtaining a B.A. in Political Economy from the University of Toronto; he also pursued
further studies in International Relations and Economics at Northwestern University in Chicago and Carleton University
in Ottawa. He joined the Canadian government after working in international banking in Latin America (Colombia, El
Salvador), the Caribbean (Bahamas) and the U.S.
LUÍS
MAURICIO
FERRAIUOLI
DE
AZEVEDO,
J.D.
(Rio
de
Janeiro,
Brazil)
Mr. Azevedo is an indepen
dent Member of the Board of Directors of Brazil Minerals, Inc.
Mr. Azevedo is both a
licensed lawyer and geologist with 25 years of business and mining experience in Brazil. He is currently the Managing
Partner at FFA Legal, a legal firm he founded with ma
in office in Rio de Janeiro, Brazil, and which is focused solely on
natural resources companies. His practice is highly active in mergers in acquisitions for companies owning mineral
assets and/or operating mining enterprises in Brazil. His experience span
s industrial minerals, diamonds, and precious
metals, and he continually works in contact with the highest federal levels of all branches of government in Brazil. Prior
to his election to the Board of Directors of the Company, Mr. Azevedo had served on its
Board of Advisors since July,
2013.
Mr. Azevedo previously worked for Western Mining, Barrick Gold, and Harsco. He assembled land packages that
.
resulted in four initial public offerings of Canadian companies in Brazil (Talon, Avanco, Beadell, and Carnava
le) since
2004. In addition to his Board seat at the Company’s Board, he is currently on the Board of Directors of three mining
companies: Avanco, Avenue, and Talon Metals.
Mr. Azevedo received a Geology degree from UERJ
–
Universidade do
Estado do Rio de
Janeiro in 1986, a Law degree from Faculdade Integradas Cândido Mendes in 1992, and a Master of
Law degree from PUC
-
Rio, Pontifícia Universidade Católica of Rio de Janeiro in 1995.
MARC
FOGASSA
Mr. Fogassa is the Chairman and CEO of BMIX.
COMPETITIVE
ADVANTAGES
In our view, junior
exploration
and mining company
BMIX
has a number of competitive advantages over peers large and
small and represents a uniquely undervalued revenue
-
generating opportunity that offers three
opportunities
for the price
of one.
BMIX acquired a
premier
diamond and gold
operating mine (MDB)
in Brazil at an attractive price and is already
generating revenue from the sale of diamonds and gold developed on the property.
MDB’s NI 43
-
101
indicates to us that diamonds and gold potential
ly worth hundreds of millions of dollars could be
developed on the properties.
Having a completed bankable feasibility study on
MDB
and a distributed corporate structure via subsidiary
ownership of its key properties means that access to capital and partners is a virtual slam
-
dunk. Plus, these
measures foster pure play opportunities for investors and partners alike into key the varied
mining verticals.
The depth and experience of the BMIX leadership team
and Board of Directors
is enviable for a company of its
size.
BMIX offers the potential of pure play opportunities via its three projects. Moreover, the revenue generation of the key
project lowers the risk profile of the whole company essentially indicating that the stock is grossly undervalued based on
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12
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MDB
alone.
As a result, investors essentially
are
get
ting
the
Amazonas gold and copper project
and the rights to the other
properties
as call options for
close to zero cost
.
BMIX’s
primary objective is to grow as a diversified miner of precious and
commodity metals with a focus on diamonds and gold.
Perhaps the most similar business model peer is
Royal Gold, Inc. (NASDAQ
–
RGLD).
The $
4.6B in market cap RGLD
utilizes
a capital deployment strategy combined with a private equity mentality, the acquisition of revenue generating mines, and
options on potential early
-
stage resources with huge upside potential.
The result has been
nearly a 40
0% increase in stock
price can be observed
in the 10
-
year chart
. We believe that BMIX is essentially at the same stage as RGLD in 2005.
10
-
Year Stock Chart for RGLD
(Source Yahoo! Finance)
R
ISKS
There are two types of risks associated with these
shares: business risk and capital markets risk. The most critical business
risk relates to po
tentially slowing demand for the Company’s
products or difficulty developing its diamond properties due
to geological issues or a limited access to capital. Moreov
er, while the Brazil domicile is a plus, emerging markets can carry
additional,
geopolitical and
business risks. Nonetheless, given the corporate structure and early success, we believe that
BMIX will indeed have access to capital on favorable terms and we
believe that its sales success history insulates the
Company from risks
typically
associated with companies of its size.
Investor or capital markets risks include the small capitalization of BMIX and its trading on a non
-
listed exchange.
However, BMIX i
s fully reporting and we believe that as the Company achieves its objectives, management could elect to
up
-
list to a senior exchange in the next 12
-
18 months.
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13
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17
CONCLUSION
In addition to an incredibly low valuation, we believe that
BMIX
offers investors mo
re competitive advantages than its
comparably
-
sized peers. For example, this sub
-
$5M in market cap stock is poised to generate hundreds of thousands in
revenue in its core business this year and its majority
-
owned key property could ultimately
be worth hun
dreds of millions
of dollars.
BMIX
is one of the few pure diamond and gold plays domiciled in Brazil that trade in U.S. markets. Plus, the Company’s
key subsidiary owns the largest alluvial processing plant in Latin America.
Through MDB,
BMIX
has been prod
ucing and
selling diamonds and gold since 2013 when it recorded $792,000 in revenue. We believe that the Company is on track to
roughly match that figure this year and potentially double its revenue in 2015. As the Company executes its strategy, the
$5M in
sales mark is
possible
in the coming years.
Not only does the early revenue success in its key properties reduce the risk profile, but the mineral diversification into
gold, copper and others beginning next year only increases the overall value of the Company. Additionally, the corporate
structure w
hereby BMIX subsidiaries own majority stakes in properties enhances access to capital and partnerships for
each stand
-
alone property.
BIMX boasts an enviable executive team that is in the early stages executing a business model which mirrors that of
succe
ssful, multi
-
billion dollar market cap mining stocks.
In our view, this pure play on Brazil is grossly undervalued and the stock is poised to move considerably higher in
conjunction with greater diamond production and the development of new properties. At
current levels, its market cap
appears to only reflect its 2013 diamond production and sales. Based on the indicated resource, we believe that the core
diamond properties alone are likely worth ne
arly $30M today
not including
two
other
property categories
.
Therefore, we
rate these shares Speculative Buy with a $0.30 near term price target.
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17
Recent Trading History For BMIX
(Source: Stockta.com)
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15
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17
SENIOR ANALYST: ROB
GOLDMAN
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research
experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side
analyst, Rob was a senior m
ember of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led
Josephthal & Co.'s Washington
-
based Emerging Growth Research Group. In addition to his sell
-
side experience Rob served
as Chief Investment Officer of a boutique i
nvestment management firm and Blue and White Investment Management,
where he managed Small Cap Growth portfolios and
The Blue and White Fund
.
ANALYST CERTIFICATIO
N
I, Robert Goldman, hereby certify that the view expressed in this research report accuratel
y reflect my personal views
about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or
indirectly, related to the recommendations or views expressed in this research report.
DISCLAIMER
This
Opp
ortunity Research
report was prepared for informational purposes only.
Goldman Small Cap Research
, (a division of Two Triangle Consulting Group, LLC)
produces research via two formats:
Goldman Select Research
and
Goldman Opportunity Research.
The
Select
format reflects the Firm’s internally generated
stock ideas along with economic and stock market outlooks.
Opportunity Research
reports, updates and Microcap Hot
Topics articles reflect sponsored (paid) research but can also include non
-
sponsored mi
cro
-
ca
p research ideas that
typically carry greater risks than those stocks covered in the
Select Research
category. It is important to note that while
we may track performance separately, we utilize many of the same coverage criteria in determining coverage of
all stocks
in both research formats. Research reports on profiled stocks in the
Opportunity
Research
format typically have a higher
risk profile, and may offer greater upside.
Goldman Small Cap Research
was compensated by the Company in the amount
of $4000
for a research subscription service. All information contained in this report was provided by the Company via
filings, press releases or its website, or through our own due diligence. Our a
nalysts are responsible only to the public, and
are paid in advanc
e to eliminate pecuniary interests, retain editorial control, and ensure independence. A
nalysts are
compensated on a per report basis and not on the basis of his/her recommendations.
Goldman Small Cap Research is not affiliated in any way with Goldman Sach
s & Co.
The information used and statements of fact made have been obtained from sources considered reliable but we neither
guarantee nor represent the completeness or accuracy.
Goldman Small Cap Research
did not make an independent
investigation or inquir
y as to the accuracy of any information provided by the Company, or other firms
. Goldman Small
Cap Research
relied solely upon information provided by the Company through its filings, press releases, presentations,
and through its own internal due diligenc
e for accuracy and completeness.
Such information and the opinions expressed
are subject to change without notice. A
Goldman Small Cap
Research
report or note is not intended as an offering,
recommendation, or a solicitation of an offer to buy or sell the
securities mentioned or discussed.
This report does not take into account the investment objectives, financial situation, or particular needs of any particular
person. This report does not provide all information material to an investor’s decision about wh
ether or not to make any
investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the ris
ks
mentioned. Neither
Goldman Small Cap Research
, nor its parent, is registered as a securities broker
-
dea
ler or an
Investment and Company Research
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16
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17
investment adviser with FINRA, the U.S. Securities and Exchange Commission or with any state securities regulatory
authority.
Safe
Harbor
Statement
This
report
may
contain
forward
-
looking
statements
made
under
the
"safe
harbor"
provisions
of
the
U.S.
Private
Securities
Litigation
Reform
Act
of
1995.
Forward
looking
statements
are
based
upon
the
current
plans,
estimates
and
projections
of
Brazil
Minerals,
Inc.'s
management
a
nd
are
subject
to
risks
and
uncertainties,
which
could
cause
actual
results
to
differ
from
the
forward
looking
statements.
Such
statements
include,
among
others,
those
concerning
market
and
industry
segment
growth
and
demand
and
acceptance
of
new
and
exist
ing
products;
any
projections
of
production,
reserves,
sales,
earnings,
revenue,
margins
or
other
financial
items;
any
statements
of
the
plans,
strategies
and
objectives
of
management
for
future
operations;
any
statements
regarding
future
economic
conditio
ns
or
performance;
uncertainties
related
to
conducting
business
in
Brazil,
as
well
as
all
assumptions,
expectations,
predictions,
intentions
or
beliefs
about
future
events.
Therefore,
you
should
not
place
undue
reliance
on
these
forward
-
looking
statements.
The
following
factors,
among
others,
could
cause
actual
results
to
differ
from
those
set
forth
in
the
forward
-
looking
statements:
business
conditions
in
Brazil,
general
economic
conditions,
geopolitical
events
and
regulatory
changes,
availability
of
capit
al,
BMIX's
ability
to
maintain
its
competitive
position
and
dependence
on
key
management.
This
press
release
does
not
constitute
an
offer
to
sell
or
the
solicitation
of
an
offer
to
buy
any
security
and
shall
not
constitute
an
offer,
solicitation
or
sale
of
any
securities
in
any
jurisdiction
in
which
such
offer,
solicitation
or
sale
would
be
unlawful
prior
to
registration
or
qualification
under
the
securities
laws
of
such
jurisdiction.
Cautionary
note
regarding
estimates
of
Indicated
and
Inferred
Mineral
Res
ources
of
Diamonds
and
Gold
as
found
in
MDB's
NI
43
-
101
Technical
Reports.
We
advise
U.S.
investors
that
while
these
terms
and
amounts
are
recognized
by
Canadian
regulations,
the
U.S.
Securities
and
Exchange
Commission
("SEC"
does
not
recognize
them.
U.S.
investors
are
cautioned
not
to
assume
that
any
part
or
all
of
the
mineral
deposits
in
these
categories
will
ever
be
converted
into
mineral
reserves
as
defined
by
the
U.S.'s
Industry
Guide
7.
Cautionary
note
regarding
estimates
of
Mineral
Reserves
of
Diamo
nds
and
Gold
as
found
in
MDB's
Bankable
Feasibility
Study.
We
advise
U.S.
investors
that
while
these
terms
and
amounts
are
recognized
by
Brazilian
regulations,
the
SEC
does
not
recognize
them.
U.S.
investors
are
cautioned
not
to
assume
that
any
part
or
all
of
the
mineral
deposits
in
this
category
will
ever
be
converted
into
mineral
reserves
as
defined
by
the
U.S.'s
Industry
Guide
7.
ALL INFORMATION IN THIS REPORT IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR
REPRESENTATIONS OF ANY KIND. T
O THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW,
TWO TRIANGLE
CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR
TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPE
CIAL OR PUNITIVE
DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT
LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY
INACCURACY OR INCOMPLETENESS OF THIS
INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW,
TWO
TRIANGLE
CONSULTING GROUP
, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT,
NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION
OF
INFORMATION.
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17
BRAZIL MINERALS, INC.
The Most Attractive Revenue
-
Generating Mining Stock
Rob Goldman
September
16
, 20
1
4
rob@goldmanresearch.com
BRAZIL
MIN
ERALS, INC. (OTCQB
–
BMIX
-
$0.05
)
Price Target: $0.30
Rating: Speculative Buy
COMPANY SNAPSHOT
Brazil Minerals, Inc.
(“BMIX” or the “Company”)
is a revenue
-
generating U.S. holding company in the natural resources
area.
The Company’s primary holding is
its
86.88%
-
owned
Mineração Duas Barras Ltda. (“MDB”), a Brazilian producer
located in the state of Minas Gerais
, which
mines conflict free
diamonds and gold, and sells rough and polished d
i
amonds
and 96% purity gold. MDB ha
s a fully
-
operational mining
concession and the permit to export its production of rough
and polished diamonds. Additionally, BMIX holds 100%
ownership
of the mineral rights
for a 24,700 acre area with
known presence of gold and copper in the
state of
Amaz
on
as,
Brazil
.
Separately, BMIX has an option to acquire up to
a
75%
ownership interest in
a
titanium, vanadium and iron project in
the state of Piauí, Brazil.
KEY STATISTICS
Price as of
9/
15
/
14
$
0.
05
52 Week High
–
Low
$
0.
15
–
$0.
04
Est. Shares
Outstanding
84.6M
Market Capitalization
$
4.5
M
3 Mo Avg
.
Vol
.
132,000
Exchange
OTC
QB
COMPANY INFORMATION
Brazil Minerals, Inc.
151 North Lake Avenue
Suite 800
Pasadena CA 91101
Phone
:
213.590.2500
www.Brazil
-
Minerals.com
info@brazil
-
minerals.com
INVESTMENT HIGHLIGHT
S
Incredibly low valuation
for a revenue generating company with
potentially high margins and with m
ultiple
shots
on
goal
.
T
his
sub
-
$5M in market cap company
generated close to $800,000
in revenue in its core
diamond and gold
business
in its first
year of operations. I
ts majority
-
o
wned key property
and
business
could
ultimately
be
worth hundreds of millions of
dollars.
Pure play in the huge Brazilian natural resources space:
BMIX
is
the only
publicly
-
traded
diamond and gold
company
from
Brazil
.
Very importantly
,
the Company’s key s
ubsidiary
,
MDB
,
owns the largest alluvial processing plant in Latin America.
Not only does the early revenue success in its key propert
y
reduce the risk profile, but the
diversification into
other
minerals
beginning next year only increases the overall value of
the Company.
Additionally, the corporate structure whereby
BMIX
subsidiaries own majority stakes in properties enhances
access to capital and partnerships for each stand
-
alone
property
, since capital
raises will be
primarily
done at the level
of each subsidiary
,
t
hus not diluting BMIX
.
BIMX boasts an enviable executive team that is in the early
stages
of
executing a business model which mirrors that of
successful, multi
-
billion dollar market cap minin
g stocks.
In our view, this pure play on Brazil is grossly undervalued and
the stock is poised to move considerably higher in conjunction
with greater diamond production and the development of new
properties.
At current levels, its market cap appears to only
reflect its 2013 diamond production and sales. Based on the
indicated resource, we believe that the core diamond
properties alone are likely worth nearly $30M today
with
out
taking into account BMIX’s
other
two
property categories.
Therefore, we
rate these shares Speculative Buy with a $0.30
near term price target.
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COMPANY OVERVIEW
Brazil Minerals, Inc. (OTCQB
–
BMIX
) mines and sells diamonds, both rough and polished, as well as gold. Additionally, the
C
ompany owns majority exploration rights for other minerals including copper, titanium, vanadium and iron. The
C
ompany’s prima
ry holding is its
86.88%
-
owned Mineração
Duas Barras Ltda. (“MDB”), a B
razilian producer, which mines
conflict free
diamonds and gold, and has the B
razilian federal permit to export rough and polished diamonds.
On average,
97% of the diamonds mined at MDB are of quality for jewelry applications.
The characteristics of the
diamonds
produc
ed
at MDB
are
strong
. The highest color grade of MDB’s polished diamonds
has been
“E” in the GIA scale (where the
absolute maximum is “D”, and therefore E is the second best); the highest clarity of MDB’s polished
diamonds
has been
“VVS1” (where the maximum is “IR”, and VVS1 is the second best).
MDB has recently conclud
ed
the
build
-
out
of
a facility for cutting and polishing diamonds.
Currently
,
a small percentage of
the rough diamonds mined at MDB are directed to this facility
and
the
result i
s
a steady supply of polished diamonds
.
Such polished diamonds sell for 5 to 15 times the
price
of rough diamonds. Because of the fine quality of its gems,
BMIX
sells its polished diamonds ungraded to a
marquee
11
-
store jewelry chain in Brazil that has been operating since 1944.
Other polished diamonds are exported to the U.S. for grading and certification at the Gemological Institute of America
(
“
GIA
”
) befo
re being sold to private investors.
The
GIA is the diamond industry’s premier laboratory for grading and
certification.
In fact,
in the first six months of 2014,
BMIX has pre
-
sold $1,000,000 of its GIA graded diamonds for
future
delivery
through
December 3
1, 2015.
We should note that in August
2014
the Gemological Institute of America (“GIA”)
visited MDB’s facilities. This is a huge step that illustrates the quality of the Company’s diamond products.
MDB has a fully
-
operational mining concession and operate
s the largest alluvial processing plant in Latin America
.
MDB
has had two NI 43
-
101 geological reports completed and a
bankable feasibility study
on file with the local mining
department
. The
MDB
diamond and gold project is located on approximately 1,404 a
cres in the state of Minas Gerais,
Brazil. Through MDB, Brazil Minerals has been producing and selling diamonds and gold since 2013 when it recorded
$792,000 in revenue.
We believe that the Company is on track to roughly match that figure this year and pot
entially
double its revenue in 2015. As the Company executes its strategy, the $5M in sales mark is
possible
in the coming years.
Sepa
rately, Brazil Minerals holds
100%
ownership
in a 24,700 acre site in
a gold and copper area in
the
state of
Amazonas
,
Brazil. Prospector activity and geochemical studies have shown
the
presence of gold and copper. BMIX will
likely seek to
partner
or
enter into a
joint venture
with a third party for
this property
. The Company also has an option to acquire up to
75% owne
rship interest in
a
titan
ium, vanadium, and iron project
in the state of Piauí, Brazil. In order to divide its
opportunities into pure plays for future funding and partnerships at the best valuation, the Company utilizes subsidiaries
to hold controlling i
nterests in its key properties.
BMIX
was founded in 2011 and
its U.S. corporate office is
in Pasadena, California.
BMIX’s primary operational office is in
Belo Horizonte, the capital of the state of Minas Gerais in Brazil. “Minas Gerais” translates
in Eng
lish to
“General Mines”, a
testament
to
the prowess of natural resources in that part of Brazil. Belo Horizonte has a population of approximately 2.5
million and is the third largest Brazilian city. In Belo Horizonte, BMIX employs three individuals, one wi
th a lifelong
expertise in diamonds, and two with private equity experience.
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17
MDB
: A REVENUE
-
GENERATING
DIAMOND & GOLD
MINE WITH HUGE UPSID
E
Mineração
Duas Barras Ltda.
(“MDB
”), a producer of alluvial diamond and gold, is located on the left bank of the
Jequitinhonha River in the state of Minas Gerais, Brazil, approximately 265 miles north of Belo Horizonte, the state capital.
The diamond and gold processing plant at
MDB
is accessible by dirt road which connects to asphalt highways. Montes
Claros, the re
gional hub for northern Minas Gerais, with a population of over 400,000 people and a busy regional airport,
is located within a 90
-
minute drive. The Jequitinhonha River is a well
-
known area for diamond and gold production; it has
hosted alluvial mining ope
rations o
f varying sizes and s
cales
since the 18th century.
The
MDB
plant was originally built by then Toronto Stock Exchange
Venture
-
listed Vaaldiam Resources Ltd.
(“Vaaldiam”)
in 2006
-
2007 at a cost of approximately $2.5 million.
To the best of
BMIX
’s knowledge, the diamond and gold processing
plant at Duas Barras is t
he largest alluvial recovery plant of its kind in Latin America.
Additionally, Vaaldiam spent $3.6
million to acquire the minerals rights for the property, and
an
estimated $2.0 million for detailed drilling and technical
studies leading to the NI 43
-
101 geological report and bankable feasibility of the property, as well as an estimated $2.0
million for removal of overgrowth
o
n the property. Therefore, the total cos
t of development of MDB by Vaaldiam is
estimated at $10 million.
In addition to MDB, Vaaldiam had 300 workers elsewhere in Brazil in various exploratory, non
-
revenue projects. When the
2008
financial crisis hit the markets, Vaaldiam left Brazil unable to
satisfy local social security payments and other
demands. Initially, BMIX acquired a 55% stake in MDB, and subsequent rounds of acquisition have brought the percentage
ownership to 86.88%. BMIX has publicly announced its intention of getting to 100% owners
hip of MDB before the end of
2014
.
Approximate Location of
Mineração
Duas Barras
Ltda. (“MDB”)
in the state of Minas Gerais, Brazil
(Source:
www.Brazil
-
Minerals.com
)
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MDB owns
title to both a mining concession and a mineral right
, covering a total area of approximately 1,404 acres
.
MDB’s mining concession was granted on August 25, 2006 for diamonds and gold and is a perpetual right to mine. MDB’s
mining concession covers an area of approximately 422 acres.
In addition to the
mining concession,
MDB
has current
operating and environme
ntal licenses issued by state authorities to
mine and
operate its plant.
MD
B’s
other mineral
right
is an exploration and research right that may become a mining concession after MDB performs some limited studies. This
right covers approximately 982 acres a
nd is located within the same
Jequi
tinhonha
R
iver valley
, and
its
diamond
ifer
o
us
and auriferous
gravel can be processed in
the same MDB
plant.
MDB’s
plant
recovers
alluvial diamonds and gold and
as of
September 2014
ha
d
18
employees.
BMIX
ended 2013 with nearly $800,000 in revenue and recorded nearly $100,000 in sales for the first half of 2014.
Seasonality, in the form of a 4
to
5 month rainy
season from December
-
April mean
s
that much of the
open pit
mining
excavation work at MDB
is perfo
rmed in
later
months
.
The
BMIX
revenue mix has gone from 69% from rough diamonds
and 31% from gold in 2013 to
43% from rough diamonds, 32% from polished diamonds, and 25% from gold in the first six
months of 2014. There has also been geographical
diversification of buyers from 100% of sales being in Brazil in 2013 to
68% in Brazil and 32% in the U.S. in the first six months of 2014.
It should be noted that
BMIX
has not performed any geological studies in
MDB
,
b
ut
has relied on the
NI 43
-
101 technic
al
report
from Vaaldiam
,
publicly
-
issued
in 2007,
as required by the rules of the Canadian securities administrator, since the
previous owner of the property was a Canadian listed company. The technical report illustrates mineralized materials
amounting to
1,639,200 cubic meters with 0.16 carats of diamonds per cubic meter and 182 milligrams of gold per cubic
meter. The detailed drilling program underscoring this result was performed on approximately 7% of the entire area of
the mineral rights available to
MDB.
The
MDB
NI 43
-
101
technical
report
contains on its page 9 the following table:
Detail of the MDB diamond and gold recovery plant. For size
comparison, note the employee standing on the foreground
with a blue shirt.
(
Source:
www.Br
azil
-
Minerals.com
)
Rough diamonds from MDB.
The larger diamonds at the
bottom are normally cut and polished at MDB’s facility, and
sold as polished diamonds achieving much higher revenue on
a per carat basis.
(
Source:
www.Brazil
-
Minerals.com
)
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Based on these figures, we estimate that this small (7%) portion of the property is worth as much as $75M alone
according to today’s prevailing prices
of rough diamonds
and gold. If using prices for polished diamonds, even for only a
percentage, the valuation jumps up dramatically
. Given the geology and mineralization trends in the region, it is possible
that the resource found on the entire
1,404 acre of MDB
could be worth well into the hundreds of millions of dollars.
GOLD & COPPER
–
PROJECT IN STATE OF
AMAZONAS, BRAZIL
BMIX
holds
100%
ownership
of the research and exploration permit
in a 24,700 acre site
located between the cities of
Borba and Apuí in the State of Amazonas, Brazil.
Prospector activity has shown presence of gold in depths varying from 1
to 5 meters, and usually in conglomerate format. Geochemical studies have confirmed the presence of gold
and copper. A
drilling survey has been yet to be done.
BMIX
may
seek to partner or
engage in a
joint venture
with a third party regarding
this property
to share any exploration costs
.
Amazon area gold projects have been sold at prices ra
nging from $110
million for
Tocantizinho,
which was
acquired by
Eldorado Gold
, to a $13
million sal
e for Sao Jorge
, which was recently acquired by Brazil Resources.
Mineral Resource
Volume (m
3
)
Diamond
Grade
(cts/m
3
)
Diamond
Content (carats)
Fine Gold Grade (mg/m
3
)
Fine Gold Content (kg)
Indicated
1,843,000
0.16
295,000
182
335
Inferred
856,000
0.16
137,000
182
156
TOTAL
2,699,000
0.16
432,000
182
491
Mineralization of conglomerate type in the Amazonas gold &
copper project
.
(
Source:
www.Brazil
-
Minerals.com
)
Location of the gold & copper project in the state of
Amazonas, Brazil
.
(
Source:
www.Brazil
-
Minerals.com
)
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TITANIUM,
VANADIUM
& IRON
-
PROJECT IN THE STATE
OF
PIAUI
, BRAZIL
This site is located in the State of Piauí, Brazil and
BMIX
has an
option to acquire up to
a
75%
ownership interest.
Preliminary reports have demonstrated
very
promising results for titanium, vanadium, and iron.
Vanadium and
t
itanium
are considered strategic minerals and have a
substantial use in military and
high technology applications. Both are utilized
to improve strength in steel alloys. Vanadium is used in
green energy applications such as advanced batteries as well as in
superconductors while titanium is utilized in pigments, additives, and coatings. Iron is the basic material used for the
production of steel and one of the major commodities in demand by gr
owing economies
.
M
ARKET/INDUSTRY OVERVIEW
Expanding economies and overextended government fiscal policies have sparked a revolution of investment in precious
and commodity metals over the 15
-
20 years. Gold and diamonds have led the charge in the precious
metals segment
while applications in the use of metals such as copper have grown dramatically in conjunction with the evolution and
broad utilization of modern technology as well as the growth of emerging economies. In recent months, some
institutional in
vestors have sought inflation protection as well as traditional equity gains via investment in mined metals
companies and the underlying assets themselves.
DIAMONDS
Sold as either rough or polished stones, an estimated 57,000 pounds of diamonds are mined
each year, and diamonds
remain one of the most sought after gemstones in the world. Known as the hardest material on earth, diamonds are often
used in industrial cutting and polishing tools. However, many in the investment community also utilize diamonds a
s a low
volatility inflation hedge. Nonetheless, this resource, particularly polished diamonds, remain a girl’s best friend and are
primarily sold as jewelry. The chart below illustrates diamond prices
’
10
-
year history along with
15
-
year forecasts for bot
h
rough and polished diamond classes.
It should be observed that the prices of both indices grew by approximately 100% over
the 10
-
year period from 2003 to
2013 and is expected to grow at a similar rate over the next 10 years. Clearly, this forecast illustrates the potentially
profitable diamond mining opportunity and reinforces our thesis.
10
-
Year Growth in Diamond Prices and 15 Year Forecast
(Source: WWW International Diamond Consultants Limited/Scotia Bank 2014)
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GOLD
Since 2013, the price of gold
has dropped significantly after completing an extended bull market run as the 10
-
year and 1
-
year charts below illustrate. Gold prices enjoyed a sharp rise of nearly 400% from the early 2000’s through mid
-
2011. A
slight drop from 2011 to 2013 prompted the
current environment of an oscillating price range of $1,200 to $1,400
per
ounce. Even with the decline in prices since 2011, gold prices remain over 300% higher than
they were
10 years ago.
Although there are strong indications that favorable
monetary
policies are coming to an end, gold remains a key tool in
hedging stock
portfolios, combating inflation, and protecting downside risk for fixed income.
T
he figure below
presents a sample of the latest gold price estimates over t
he next two years from leading Wall Street
banks. The consensus
forecast
indicates a stable environment similar to the present whereby prices remain in a range of
$1,200 to $1,400 per ounce.
Most Recent Analysts’ Forecast for Gold
(
Source: Goldman Small C
ap Research
)
Firm
Forecast Date
Gold 2014
Gold 2015
UBS
02/20/14
$ 1,280
$ 1,200
Bank of America
07/15/14
$ 1,308
$ 1,375
J.P. Morgan
01/06/14
$ 1,263
$ 1,275
Barclays
04/17/14
$ 1,205
$ 1,150
HSBC
03/03/14
$ 1,292
$ 1,310
Average
$ 1,270
$ 1,262
10
-
Year Gold Spot Price
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Copper is broadly used in a variety of
construction, power, and industrial applications. O
ther metals like titanium and
vanadium offer a strategic and in
-
demand metallurgical additive to steel given the broad use in green technology and in
steel by companies in emerging markets.
BMIX
offers exposure to all of the areas mentioned above with a p
rimary
near term focus on diamonds and
gold.
Additionally, Brazil is an extremely mining
-
friendly nation with limited regulation
,
an abundant low cost workforce
,
a
growing middle class
, and
a stable democratically
-
elected government. These factors combin
ed with meaningful
competitive advantages reinforce our thesis that BMIX may be the most attractive and undervalued stock in the mining
space.
BMIX
MANAGEMENT
TEAM
The management, counsel, and directors of
BMIX
have nearly 200 years of combined experience in mining, private equity,
legal counsel, finance, and operations in several countries, with an emphasis on Brazil.
Key members of the management are listed below, and the entire team is described at
www.Brazil
-
Minerals.com
.
MARC FOGASSA
Chairman and Chief Executive Officer
Mr. Fogassa has a 15
-
year career in private equity/venture capital and public equity investments. He has extensive direct
investing experience,
including cross
-
border deal structuring, due diligence, management build
-
up, and Board of Directors
oversight. He was born and raised in Brazil, and speaks Portuguese fluently. In 2012 he founded Brazil Mining, Inc.,
currently the largest shareholder of BM
IX.
Mr. Fogassa is frequently invited as an international speaker on Brazilian issues, and has written an op
-
ed in one of Brazil’s
foremost newspapers. Mr. Fogassa has worked at Goldman Sachs & Co. and Atlas Venture, and has been a director on the
boards
o
f several private companies.
Mr. Fogassa carried a double
-
major at the Massachusetts Institute of Technology, earning Bachelor of Science degrees in
Electrical Engineering and Biology. He subsequently graduated from the Harvard Medical School with a Doctor
of
Medicine degree and later from the Harvard Business School with a Master in Business Administration degree. He was
elected to Tau Beta Pi, Eta Kappa Nu, and Sigma Xi honor societies.
ROBLEDO DELATORRE RI
BEIRO
Head of Operations, Brazil & Vice President
, Finance & Admin
Mr. Ribeiro has substantial experience in both the diamond business and private equity, and experience in managing
hundreds of employees. His family controls GAR Mineração S.A., one of the largest diamond
-
mining companies in Brazil.
At GA
R,
he was General Manager and headed activities and projects in operations, finance, administrative, and mining
department and government relations.
BMIX has benefited from a very productive relationship with GAR and has located
its Belo Horizonte office
in the same building as the GAR headquarters.
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Previously, Mr. Ribeiro was an Investment Associate with Culturinvest Investimentos S.A., a private equity fund in Brazil.
He has managed family
-
owned businesses including a group of restaurants. Mr. Ribeiro ha
s a master
’s
degree in
Corporate Economics, and an undergraduate degree in Business Administration.
JAY WEIL, ESQ.
General Counsel
Mr. Weil has more than
35 years of legal experience, having represented public and private companies and individuals in a
wid
e range of business transactions and securities laws compliance matters. He has experience on virtually every aspect
of corporate and securities law,
including the preparation of contracts and SEC filings, advice on the law, and
development of strategies r
egarding business terms of deals.
Mr. Weil
also handles all phases of both public offerings and
private placements of securities as well as reverse mergers and secured and unsecured debt financing. He has also
experience in mergers and acquisitions.
Prior
to joining BMIX as General Counsel, Mr. Weil had worked on matters of Brazil Mining and BMIX since the inception
of these companies, as a
partner attorney
with law firm Ofsink LLC in New York from 2003 to 2014.
Previously, Mr.
Weil
was a securities and co
rporate partner with the New York office of Wolf, Block, Schorr and Solis
-
Cohen, then a
regional law firm with more than 200 attorneys, and prior to that a partner in a 30
-
attorney firm.
Mr. Weil
began his
career as an associate in the corporate securities
practice of Shea & Gould in New York, New York.
Mr. Weil has a J.D.
from the NYU School of Law and a B.A. from Binghamton University.
FERNANDO MANUEL DUAR
TE VIEIRA
Chief Mining Engineer
Mr. Vieira has 37 years of mining experience and is a well
-
known
mining engineer in Brazil. He was General Manager
for
Mineração Tejucana S.A., one of the most successful companies that have operated in alluvial diamond mining in
Brazil. At Tejucana, he ran the mining operation, and had wide responsibilities in operatio
nal, commercial, administrative,
and government relation areas. Prior to Tejucana, Mr. Vieira was the General Manager for
TP Mineração S.A., a producer
of alluvial gold in Brazil.
Mr. Vieira has solid experience and knowledge in the management and developm
ent of diamond and gold projects of the
type that BMIX has. Additionally he has the entrepreneurial dedication needed for our team. He has interacted with the
Brazilian National Mining Department on numerous occasions and has expertise in licensing and mai
ntenance of mineral
rights.
Mr. Vieira has also worked as executive for Amazon Resources and Escom Mining, both alluvial diamond and mining
companies. His degree is in Mining Engineering from
Universidade Técnica of Lisbon, Portugal.
CARL
OS HENRIQUE DE OLI
VEIRA GARCIA
Director of Operations
Mr. Garcia has background in private equity in Brazil. He worked as director and earlier as financial manager and analyst
for a private equity group investing in
various
industries. Connected to his work with portfolio
companies, he became a
member of the fiscal advisory board of the organization representing cinemas in the greater Belo Horizonte area. Mr.
Garcia has experience as entrepreneur in technology
-
related projects.
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Mr. Garcia has a
b
achelor’s degree in Business
Administration from Universidade Salgado de Oliveira in Belo Horizonte,
Brazil.
BMIX
BOARD OF DIRECTORS
The BMIX Board is stellar. It includes a former U.S. Assistant Secretary of State who knows Presidents and businessman
throughout Latin America, a form
er Canadian Ambassador with extensive service in Latin America, and a top Brazilian
mining lawyer who is also a licenses geologist.
AMBASSADOR
ROGER
NORIEGA
(Washington,
DC)
Ambassador Roger Noriega is an independent member of the Board of Directors of
Brazil Minerals, Inc. Mr. Noriega
was U.S. Assistant Secretary of State from July 2003 to August 2005, appointed by President George W. Bush and
confirmed by the U.S Senate. In that capacity, Mr. Noriega managed a 3,000
-
person team of professionals in
Wash
ington and 50 diplomatic posts to design and implement political and economic strategies in Canada, Latin
America, and the Caribbean.
Previously, Mr. Noriega was appointed by President George W. Bush as Ambassador to the Organization of American
States (OA
S), and confirmed by the U.S. Senate, a post he held from August 2001 to July 2003. In this capacity, Mr.
Noriega coordinated complex and sensitive multilateral diplomacy in a 34
-
member international organization to
bolster OAS efforts to promote trade, fi
ght illicit drugs, and defend democracy.
Mr. Noriega has been decorated by the Governments of Nicaragua and Peru, and has received numerous awards for
public service from organizations committed to the promotion of democracy in the Americas. He serves as V
ice
Chairman of the Board of Directors of the Congressional Award Foundation and as a member of the advisory boards of
the Hispanic Community for Policy, the Canadian American Border Trade Partnership, and the Hispanic American Civics
Foundation. Mr. Norie
ga is the founder and managing director of Visión Américas LLC, which advises U.S. and foreign
clients on international business issues, and also is a visiting fellow at the prestigious American Enterprise Institute for
Public Policy Research. He serves as
Vice Chairman of the Board of Directors of the Congressional Award Foundation
and as a member of the advisory boards of the Canadian American Border Trade Partnership and The Americano, an
online forum reaching out to Latino voters.
AMBASSADOR
PAUL
DURAND
(Ottawa,
Canada)
Ambassador Paul Durand is an independent Member of the Board of Directors of Brazil Minerals, Inc.
Mr. Durand has
had extensive international experience in both the private and public sectors. From 1992 to 1995, Ambassador Durand
was Can
ada’s Ambassador to Costa Rica, with concurrent accreditation to Honduras, Nicaragua and Panama. From
1995 to August 2000, he was Director General responsible for Canada’s relations with Latin America and the Caribbean
in the Department of Foreign Affairs
and International Trade. In August 2000, he was appointed Canada’s Ambassador
to Chile. In August 2001, he was appointed Ambassador to the Organization of American States (OAS) in Washington
and Canada’s National Coordinator for the Summits of the Americas
process, positions that he held until 2006. From
2007 until 2009 he was the resident representative of the OAS in the Dominican Republic.
Mr. Durand has participated in numerous electoral observer missions in Central and South America, and was
appointed t
o lead the OAS observer mission to the 2006 elections in Costa Rica, as well as the OAS Mission to observe
the referendum on free trade in Costa Rica in 2007. In Canada’s diplomatic service, Mr. Durand specialized in Latin
America, but also served in East
Africa and South Asia (India and Nepal). He worked for the Canadian International
Development Agency and also as a foreign policy advisor in the office of the Canadian Prime Minister (Privy Council
Office), before joining the Department of Foreign Affairs
and International Trade.
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He was educated in Canada, obtaining a B.A. in Political Economy from the University of Toronto; he also pursued
further studies in International Relations and Economics at Northwestern University in Chicago and Carleton University
in Ottawa. He joined the Canadian government after working in international banking in Latin America (Colombia, El
Salvador), the Caribbean (Bahamas) and the U.S.
LUÍS
MAURICIO
FERRAIUOLI
DE
AZEVEDO,
J.D.
(Rio
de
Janeiro,
Brazil)
Mr. Azevedo is an indepen
dent Member of the Board of Directors of Brazil Minerals, Inc.
Mr. Azevedo is both a
licensed lawyer and geologist with 25 years of business and mining experience in Brazil. He is currently the Managing
Partner at FFA Legal, a legal firm he founded with ma
in office in Rio de Janeiro, Brazil, and which is focused solely on
natural resources companies. His practice is highly active in mergers in acquisitions for companies owning mineral
assets and/or operating mining enterprises in Brazil. His experience span
s industrial minerals, diamonds, and precious
metals, and he continually works in contact with the highest federal levels of all branches of government in Brazil. Prior
to his election to the Board of Directors of the Company, Mr. Azevedo had served on its
Board of Advisors since July,
2013.
Mr. Azevedo previously worked for Western Mining, Barrick Gold, and Harsco. He assembled land packages that
.
resulted in four initial public offerings of Canadian companies in Brazil (Talon, Avanco, Beadell, and Carnava
le) since
2004. In addition to his Board seat at the Company’s Board, he is currently on the Board of Directors of three mining
companies: Avanco, Avenue, and Talon Metals.
Mr. Azevedo received a Geology degree from UERJ
–
Universidade do
Estado do Rio de
Janeiro in 1986, a Law degree from Faculdade Integradas Cândido Mendes in 1992, and a Master of
Law degree from PUC
-
Rio, Pontifícia Universidade Católica of Rio de Janeiro in 1995.
MARC
FOGASSA
Mr. Fogassa is the Chairman and CEO of BMIX.
COMPETITIVE
ADVANTAGES
In our view, junior
exploration
and mining company
BMIX
has a number of competitive advantages over peers large and
small and represents a uniquely undervalued revenue
-
generating opportunity that offers three
opportunities
for the price
of one.
BMIX acquired a
premier
diamond and gold
operating mine (MDB)
in Brazil at an attractive price and is already
generating revenue from the sale of diamonds and gold developed on the property.
MDB’s NI 43
-
101
indicates to us that diamonds and gold potential
ly worth hundreds of millions of dollars could be
developed on the properties.
Having a completed bankable feasibility study on
MDB
and a distributed corporate structure via subsidiary
ownership of its key properties means that access to capital and partners is a virtual slam
-
dunk. Plus, these
measures foster pure play opportunities for investors and partners alike into key the varied
mining verticals.
The depth and experience of the BMIX leadership team
and Board of Directors
is enviable for a company of its
size.
BMIX offers the potential of pure play opportunities via its three projects. Moreover, the revenue generation of the key
project lowers the risk profile of the whole company essentially indicating that the stock is grossly undervalued based on
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MDB
alone.
As a result, investors essentially
are
get
ting
the
Amazonas gold and copper project
and the rights to the other
properties
as call options for
close to zero cost
.
BMIX’s
primary objective is to grow as a diversified miner of precious and
commodity metals with a focus on diamonds and gold.
Perhaps the most similar business model peer is
Royal Gold, Inc. (NASDAQ
–
RGLD).
The $
4.6B in market cap RGLD
utilizes
a capital deployment strategy combined with a private equity mentality, the acquisition of revenue generating mines, and
options on potential early
-
stage resources with huge upside potential.
The result has been
nearly a 40
0% increase in stock
price can be observed
in the 10
-
year chart
. We believe that BMIX is essentially at the same stage as RGLD in 2005.
10
-
Year Stock Chart for RGLD
(Source Yahoo! Finance)
R
ISKS
There are two types of risks associated with these
shares: business risk and capital markets risk. The most critical business
risk relates to po
tentially slowing demand for the Company’s
products or difficulty developing its diamond properties due
to geological issues or a limited access to capital. Moreov
er, while the Brazil domicile is a plus, emerging markets can carry
additional,
geopolitical and
business risks. Nonetheless, given the corporate structure and early success, we believe that
BMIX will indeed have access to capital on favorable terms and we
believe that its sales success history insulates the
Company from risks
typically
associated with companies of its size.
Investor or capital markets risks include the small capitalization of BMIX and its trading on a non
-
listed exchange.
However, BMIX i
s fully reporting and we believe that as the Company achieves its objectives, management could elect to
up
-
list to a senior exchange in the next 12
-
18 months.
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CONCLUSION
In addition to an incredibly low valuation, we believe that
BMIX
offers investors mo
re competitive advantages than its
comparably
-
sized peers. For example, this sub
-
$5M in market cap stock is poised to generate hundreds of thousands in
revenue in its core business this year and its majority
-
owned key property could ultimately
be worth hun
dreds of millions
of dollars.
BMIX
is one of the few pure diamond and gold plays domiciled in Brazil that trade in U.S. markets. Plus, the Company’s
key subsidiary owns the largest alluvial processing plant in Latin America.
Through MDB,
BMIX
has been prod
ucing and
selling diamonds and gold since 2013 when it recorded $792,000 in revenue. We believe that the Company is on track to
roughly match that figure this year and potentially double its revenue in 2015. As the Company executes its strategy, the
$5M in
sales mark is
possible
in the coming years.
Not only does the early revenue success in its key properties reduce the risk profile, but the mineral diversification into
gold, copper and others beginning next year only increases the overall value of the Company. Additionally, the corporate
structure w
hereby BMIX subsidiaries own majority stakes in properties enhances access to capital and partnerships for
each stand
-
alone property.
BIMX boasts an enviable executive team that is in the early stages executing a business model which mirrors that of
succe
ssful, multi
-
billion dollar market cap mining stocks.
In our view, this pure play on Brazil is grossly undervalued and the stock is poised to move considerably higher in
conjunction with greater diamond production and the development of new properties. At
current levels, its market cap
appears to only reflect its 2013 diamond production and sales. Based on the indicated resource, we believe that the core
diamond properties alone are likely worth ne
arly $30M today
not including
two
other
property categories
.
Therefore, we
rate these shares Speculative Buy with a $0.30 near term price target.
Investment and Company Research
Opportunity Research
COMPANY REPORT
www.goldmanresearch.com
Copyright © Goldman
Small Cap Research, 2014
Page
14
of
17
Recent Trading History For BMIX
(Source: Stockta.com)
Investment and Company Research
Opportunity Research
COMPANY REPORT
www.goldmanresearch.com
Copyright © Goldman
Small Cap Research, 2014
Page
15
of
17
SENIOR ANALYST: ROB
GOLDMAN
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research
experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side
analyst, Rob was a senior m
ember of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led
Josephthal & Co.'s Washington
-
based Emerging Growth Research Group. In addition to his sell
-
side experience Rob served
as Chief Investment Officer of a boutique i
nvestment management firm and Blue and White Investment Management,
where he managed Small Cap Growth portfolios and
The Blue and White Fund
.
ANALYST CERTIFICATIO
N
I, Robert Goldman, hereby certify that the view expressed in this research report accuratel
y reflect my personal views
about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or
indirectly, related to the recommendations or views expressed in this research report.
DISCLAIMER
This
Opp
ortunity Research
report was prepared for informational purposes only.
Goldman Small Cap Research
, (a division of Two Triangle Consulting Group, LLC)
produces research via two formats:
Goldman Select Research
and
Goldman Opportunity Research.
The
Select
format reflects the Firm’s internally generated
stock ideas along with economic and stock market outlooks.
Opportunity Research
reports, updates and Microcap Hot
Topics articles reflect sponsored (paid) research but can also include non
-
sponsored mi
cro
-
ca
p research ideas that
typically carry greater risks than those stocks covered in the
Select Research
category. It is important to note that while
we may track performance separately, we utilize many of the same coverage criteria in determining coverage of
all stocks
in both research formats. Research reports on profiled stocks in the
Opportunity
Research
format typically have a higher
risk profile, and may offer greater upside.
Goldman Small Cap Research
was compensated by the Company in the amount
of $4000
for a research subscription service. All information contained in this report was provided by the Company via
filings, press releases or its website, or through our own due diligence. Our a
nalysts are responsible only to the public, and
are paid in advanc
e to eliminate pecuniary interests, retain editorial control, and ensure independence. A
nalysts are
compensated on a per report basis and not on the basis of his/her recommendations.
Goldman Small Cap Research is not affiliated in any way with Goldman Sach
s & Co.
The information used and statements of fact made have been obtained from sources considered reliable but we neither
guarantee nor represent the completeness or accuracy.
Goldman Small Cap Research
did not make an independent
investigation or inquir
y as to the accuracy of any information provided by the Company, or other firms
. Goldman Small
Cap Research
relied solely upon information provided by the Company through its filings, press releases, presentations,
and through its own internal due diligenc
e for accuracy and completeness.
Such information and the opinions expressed
are subject to change without notice. A
Goldman Small Cap
Research
report or note is not intended as an offering,
recommendation, or a solicitation of an offer to buy or sell the
securities mentioned or discussed.
This report does not take into account the investment objectives, financial situation, or particular needs of any particular
person. This report does not provide all information material to an investor’s decision about wh
ether or not to make any
investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the ris
ks
mentioned. Neither
Goldman Small Cap Research
, nor its parent, is registered as a securities broker
-
dea
ler or an
Investment and Company Research
Opportunity Research
COMPANY REPORT
www.goldmanresearch.com
Copyright © Goldman
Small Cap Research, 2014
Page
16
of
17
investment adviser with FINRA, the U.S. Securities and Exchange Commission or with any state securities regulatory
authority.
Safe
Harbor
Statement
This
report
may
contain
forward
-
looking
statements
made
under
the
"safe
harbor"
provisions
of
the
U.S.
Private
Securities
Litigation
Reform
Act
of
1995.
Forward
looking
statements
are
based
upon
the
current
plans,
estimates
and
projections
of
Brazil
Minerals,
Inc.'s
management
a
nd
are
subject
to
risks
and
uncertainties,
which
could
cause
actual
results
to
differ
from
the
forward
looking
statements.
Such
statements
include,
among
others,
those
concerning
market
and
industry
segment
growth
and
demand
and
acceptance
of
new
and
exist
ing
products;
any
projections
of
production,
reserves,
sales,
earnings,
revenue,
margins
or
other
financial
items;
any
statements
of
the
plans,
strategies
and
objectives
of
management
for
future
operations;
any
statements
regarding
future
economic
conditio
ns
or
performance;
uncertainties
related
to
conducting
business
in
Brazil,
as
well
as
all
assumptions,
expectations,
predictions,
intentions
or
beliefs
about
future
events.
Therefore,
you
should
not
place
undue
reliance
on
these
forward
-
looking
statements.
The
following
factors,
among
others,
could
cause
actual
results
to
differ
from
those
set
forth
in
the
forward
-
looking
statements:
business
conditions
in
Brazil,
general
economic
conditions,
geopolitical
events
and
regulatory
changes,
availability
of
capit
al,
BMIX's
ability
to
maintain
its
competitive
position
and
dependence
on
key
management.
This
press
release
does
not
constitute
an
offer
to
sell
or
the
solicitation
of
an
offer
to
buy
any
security
and
shall
not
constitute
an
offer,
solicitation
or
sale
of
any
securities
in
any
jurisdiction
in
which
such
offer,
solicitation
or
sale
would
be
unlawful
prior
to
registration
or
qualification
under
the
securities
laws
of
such
jurisdiction.
Cautionary
note
regarding
estimates
of
Indicated
and
Inferred
Mineral
Res
ources
of
Diamonds
and
Gold
as
found
in
MDB's
NI
43
-
101
Technical
Reports.
We
advise
U.S.
investors
that
while
these
terms
and
amounts
are
recognized
by
Canadian
regulations,
the
U.S.
Securities
and
Exchange
Commission
("SEC"
does
not
recognize
them.
U.S.
investors
are
cautioned
not
to
assume
that
any
part
or
all
of
the
mineral
deposits
in
these
categories
will
ever
be
converted
into
mineral
reserves
as
defined
by
the
U.S.'s
Industry
Guide
7.
Cautionary
note
regarding
estimates
of
Mineral
Reserves
of
Diamo
nds
and
Gold
as
found
in
MDB's
Bankable
Feasibility
Study.
We
advise
U.S.
investors
that
while
these
terms
and
amounts
are
recognized
by
Brazilian
regulations,
the
SEC
does
not
recognize
them.
U.S.
investors
are
cautioned
not
to
assume
that
any
part
or
all
of
the
mineral
deposits
in
this
category
will
ever
be
converted
into
mineral
reserves
as
defined
by
the
U.S.'s
Industry
Guide
7.
ALL INFORMATION IN THIS REPORT IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR
REPRESENTATIONS OF ANY KIND. T
O THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW,
TWO TRIANGLE
CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR
TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPE
CIAL OR PUNITIVE
DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT
LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY
INACCURACY OR INCOMPLETENESS OF THIS
INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW,
TWO
TRIANGLE
CONSULTING GROUP
, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT,
NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION
OF
INFORMATION.
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