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Billionaire Doctor Behind Disruptive Miner/Biotech Merger

Keith Kohl

Written By Keith Kohl

Posted April 22, 2015

“Mining Company Acquires Hepatitis Cure.”

Well, you definitely don’t see this headline every day.

An acquaintance from British Columbia — the capital of the world’s mining industry — emailed me a link a few weeks ago that had me scratching my head, wondering, “Is this some sort of corporate subterfuge or a budding new trend for the volatile precious metals and resource mining markets?”

In this case, the company is a silver miner — a medium microcap explorer with a 100% stake in a 122,000-acre project in Mexico’s Chihuahua State.

And this is no small project, either. With 488 million ounces of silver and 1.37 million ounces of gold indicated, the current market value of this 190-square-mile property is $9.45 billion.

That’s an 88-fold increase over today’s market capitalization of $107 million.

The problem is, with its production prices exceeding market price of the metals, it would cost the company over $11 billion just to get those metals out of the ground.

Now, this isn’t the end of the world… It happens all the time in the mining industry, and companies react to it by temporarily scaling back or halting operations in anticipation of a market turnaround.

As you well know, market turnarounds for precious metals are just as common and just as inevitable as market turnarounds for the overall economy.

Creative Hedging on a Corporate Level

For every recession, there’s a new rush to buy metals.

This company, however, decided to go another route — something I’d never heard of before…

It decided to invest in a biotech.

More specifically, it decided to buy the ownership of a commercial-stage, potentially best-in-class hepatitis B vaccine.

Big emphasis on “commercial-stage,” because that means it’s done, or almost done, having to deal with regulators.

scibvac

The vaccine is called Sci-B-Vac, and it’s already on the market in Israel, where the drug was first developed, as well as 10 other countries.

The Big Name Behind the Big Deal

Now, here’s where it gets really interesting…

At the moment, parent company SciVac is private, with 45% of its shares held by another biotech company, OPKO Health, Inc. (NYSE: OPK) — a $6.4 billion giant headed by billionaire investor and industrialist Dr. Phillip Frost, MD.

Worth more than $10 billion, Dr. Frost has taken numerous biotech companies from development through product rollout to acquisition.

In fact, Jim Cramer recently referred to this man as “the Warren Buffett of biotech.”

drfrost

So why would a billionaire doctor want to merge with a silver and gold producer?

Because he sees the value in it in the long term. Because he knows that eventually, when that resource is worth two or three times what it is now and production cost is still the same, share value will explode.

Whether it happens in a month or in a year makes no real difference to an investor ready to hold long term.

For short-term holders of the mining company that’s now about to start making the world’s best hepatitis B vaccine, the benefit comes in the form of shares in SciVac.

According to the company’s press releases, anybody holding shares of the mining company on April 24 — two days from now — will be granted one share of SciVac for every share of the miner.

The details of the merger are far more complicated, and you can peruse them at your leisure right here, but this information is public, so access is unlimited.

Have the Planets Aligned?

So why do I care about any of this? Well, two reasons…

The first is the current pricing of gold and silver.

Gold is just $50/ounce shy of crossing over the profit threshold for this mining company. It might sound like a lot, but just one bad month on the stock market could send investors back into hedge mode — and we’re definitely due for one of those.

Silver has $4 to go to that same threshold — admittedly a 25% gain from the current market price, but if you look back at what happened to silver during the last downturn, you’ll see just how mobile of a commodity it is.

It rose more than 400% — which would have put a company like the miner I’ve been talking about more than $10.5 billion in the black in terms of total resource value.

silver15

But the second reason has everything to do with the main name behind all of this: Dr. Phillip Frost.

Whether he really believes the chunk of a precious metals miner he’s about to own will appreciate to the tune of a few billion dollars in the next year or whether he’s got some other idea in mind, the one irrefutable fact is that shareholders of the mining company get to join forces with a serious player.

To me, that alone is pretty reassuring.

The mining company is called Levon Resources (TSX: LVN) (OTC: LVNVF), and it trades right now for less than a buck.

Check out its website right here, and do your own research… Then Google Sci-B-Vac, and you’ll start to understand what sort of potential we’re dealing with here.

So to answer my original question: Is this a legitimate new strategy of radical hedge diversification or just a billionaire pulling the strings?

I’m thinking it might be a bit of both. It usually is, after all.

I’m also thinking it might not make a difference.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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