Carson Block, Muddy Waters Capital, on CNBC's Delivering Alpha, September 28, 2022.
Scott Mlyn | CNBC
Muddy Waters Capital's Carson Block, best known for his short-selling campaigns, took an unusually bullish stance at the Sohn London Investment Conference on Wednesday, introducing the junior miner Snow line gold as a top takeover candidate in the mining sector.
Snowline, worth about C$2.1 billion, has made a discovery that Block called the “first of its kind” in Canada's Yukon Territory, a region with limited historical production but great geological potential, he said. The company controls a large land package in an emerging district that Block said could potentially host a new multi-deposit gold camp.
The focus is on the Rogue Project's Valley deposit, which is estimated to contain 8 million ounces of gold in the measured and indicated category at an average grade of 1.21 grams per tonne. While Snowline has other exploration targets, Valley is likely the asset that will attract interest from major producers facing declining reserves, according to Block.
“This is one of the few assets in the world that can make or break the difference for a mid- or large-cap gold miner,” Block’s presentation materials said, calling the company “an elephant.”
Block expects Snowline to be acquired within the next three years. If a transaction occurs in the next 12 months, he sees a potential value of C$4 billion to C$6 billion and suggests the price could rise further as drilling continues.
“The longer it takes to buy that asset, the more expensive it becomes,” he said.
Snowline's shares have increased more than tenfold since early 2022, when the company drilled its first discovery hole at Valley. Still, Block argued that the stock does not yet reflect the resource's strategic value in a mining industry that has seen increasing consolidation.
The Canadian-listed stock rose more than 6% after Block made his decision.
Carson Block will appear on “The Exchange” with CNBC's Jon Fortt at 1 p.m. ET.