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MARL: A Stock Not Far from the World Cup

 3 min read / 

Instead of having eyes on the Wold Cup, some investors have had their eyes on a company called Mariana Resources Ltd. (LON:MARL). It‘s a miner of Gold, Silver and Copper in Peru and Argentina. Even though there‘s no direct relation between this company and the World Cup, geographically it‘s ‘not far‘ (as the title suggests) from where the World Cup is being held. Another indirect connection is the Argentina national team getting through to the World Cup – Argentina being home to MARL. The company‘s share price managed to increase by a quarter (25%) within days during the thick of the group stage of the World Cup so with all these indirect similarities and connections, it would be interesting to see why this sudden sharp increase occurred and to learn more about an AIM listed miner scattered in emerging markets.

During the sharp increase, there weren’t any significant RNS released to suggest why this was occurring which may fool investors into thinking it was just another ‘pump and dump‘ or similar scheme but current MARL investors were posting on forums (significantly Interactive Investors forum) suggesting the rise was in anticipation of an RNS. Low and behold, and RNS was released stating that the company has started additional drilling at two of its sites. However, it should be noted that this was the company‘s objective to begin with so may not be able to take full credit for the share price increase. Within a week, and after the share price had died down a little from it‘s peak, they released another RNS stating they had found a large mineralised area in Soledad – one of their Peru mines.

It‘s also interesting to note they have a joint venture with Condor Resources (CVE:CN) (ticker from Google Finance) which has helped MARL to enter Peru. This could be an interesting partnership if it continues long term.

Onto the financials. Their sales have dropped in 2013 from 2012, with the net loss after all costs increasing by nearly 40%. Assets were about the same with cash more than doubling from £1.18m to £2.93m and liabilities decreased to a ratio of 0.019:1. Whilst the revenue and losses aren‘t great, the balance sheet is healthy with cash being strong.

So what are the prospects? Well, Argentina have a few political issues at the moment so it may be that MARL decides to ‘maintain‘ their current position in Argentina and focus on new projects in Peru (with or without the joint venture) or maybe either expand into other local emerging markets. If this occurs however, investors should be cautious of share dilution to raise more capital. Certainly sales need to increase and a profit to be sought after. Either way, the key question is; will this stock be a World Cup winner for investors like Argentina or will they too fall at the last hurdle?

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