Mako Mining: Wexford’s Next Big Gold Bet ?

Introduction – Why Mako Mining Is Turning Heads

Mako Mining (MKO) isn’t your average gold microcap. What sets it apart is backing from Wexford Capital, the highly respected investment firm best known for building Diamondback Energy (FANG) into a shale powerhouse. Wexford brings a track record of disciplined strategy, sector insight, and hands-on operational support—making MKO the flagship gold play within its portfolio.

MKO is effectively Wexford’s dedicated gold vehicle, giving investors rare access to the expertise and capital of a $4 billion+ fund that’s proven its ability to scale and unlock hidden value in natural resources. Many small shareholders may not realize they’re piggybacking on the same investment acumen that drove Diamondback’s success.

Why pay attention now?
Mako Mining is at an inflection point, with major production upside on the horizon:

• Restarting and ramping up mines (notably at Moss in Arizona and ongoing expansions at San Albino in Nicaragua) create a step-change in output potential.
• The company trades at a very low valuation compared to its fast-growing gold cash flow, offering significant re-rating potential if expansion milestones are met.
• Backing from Wexford provides a safety net and strategic momentum unusual for a microcap, raising the odds of successful execution.

Bottom line: For investors seeking undervalued exposure to rising gold production—supported by expert sponsorship and a catalytic growth pipeline—Mako Mining stands out as a microcap with the potential for a big-league revaluation.

Ownership & Corporate Structure – The Wexford “Sidecar” Model

Mako Mining (MKO) operates uniquely in the gold microcap space due to its close relationship with Wexford Capital—a $4B+ private investment firm renowned for building resources champions like Diamondback Energy (FANG).

How Wexford Controls MKO

• Indirect Control:
  Wexford Capital controls Mako Mining through investment vehicles managed on behalf of its clients. This means that strategic decisions, capital allocation, and operational oversight are guided by Wexford’s team and interests.
• Management & Performance Fees:
  Wexford collects management and performance fees from its clients regardless of MKO’s public float or microcap status, ensuring continuity of interest and professional stewardship even if MKO remains small-cap for an extended period.

The “Sidecar” Arrangement

• Retail Advantage:
  MKO holders essentially ride in a “sidecar”—gaining full exposure to the resource scaling engine, operational discipline, and deep capital of Wexford, without being directly subject to private fund management or performance fees. Public shareholders enjoy the same catalyst pipeline and growth trajectory as Wexford clients, piggybacking on institutional sponsorship.
• Alignment:
  This structure aligns MKO’s microcap retail investors with a powerful resource investor’s strategy, processes, and timelines—something rarely accessible at the small-cap level.

Historical Precedent: FANG (Diamondback Energy)

• The Playbook:
  Diamondback Energy (FANG), launched by Wexford in 2007 and taken public in 2012, began as Wexford’s dedicated oil growth vehicle. Early backers of FANG saw substantial returns as the company scaled under Wexford’s capital discipline and sector insight.
• What It Means for MKO:
  Wexford is now deploying this proven playbook in gold via MKO. The parallels—dedicated asset focus, aggressive resource expansion, operational best practices, and strategic capital allocation—suggest that the long-term upside for MKO could mirror FANG’s success if milestones are executed and sector cycles remain supportive.

Key Takeaway

Mako Mining’s structure gives retail investors rare, direct access to the upside historically unlocked by resource-specialist fund managers like Wexford Capital. The “sidecar” model means you get to participate alongside the professionals—benefiting from their discipline, strategy, and deep pockets—without shouldering the usual private fund costs or entry barriers. This structure, and its FANG precedent, anchor a credible long-term growth thesis for MKO if Wexford successfully executes its gold strategy.

Assets & Production Profile

Mine 1: San Albino (Nicaragua) — Producing, Generating Near-Term Cash Flow

• Status: Fully operational, delivering consistent cash flow.
• Q2 2025 Output: 10,911 oz gold mined, 10,104 oz gold sold at US$3,323/oz.
• Financial Impact: Major contributor to record quarterly revenue of US$38.1 million; increased cash reserves to US$28.6 million by quarter-end.
• Stockpile: 127,897 tonnes at 2.52 g/t Au for 10,352 contained oz ensures visible production runway.

Mine 2: Moss Mine (Arizona) — Restarting, Deep Value Acquisition

• Status: Acquired from bankruptcy at approximately 0.1× projected 2026 operating cash flow.
• Q2 2025 Status: 1,372 oz gold sold from residual leach; preparations underway for full mining restart.
• Growth Plan: Targeting a return to 30,000 oz/year production as optimization is completed; full cash flow impact expected in 2026.
• Value Proposition: The distressed purchase price significantly enhances incremental return potential as output ramps.

Mine 3: Eagle Mountain (Guyana) — Coming Online in 2027

• Status: Development stage, with production targeted in 2027.
• Resource Base: 1.18 Moz indicated, 582 koz inferred gold; significant scale for next growth wave.
• Current Activity: Advancing engineering, permitting, and early construction plans, funded by cash flow from San Albino and soon, Moss.

“Triple Pipeline” Production Ramp

This tiered portfolio results in three key cash flow inflection points over the next 2–3 years:

• Ongoing production and cash flow from San Albino (2025+)
• Material revenue boost as Moss ramps back to full capacity (2026)
• Large-scale growth as Eagle Mountain comes online (2027+)

Valuation: “Sum of the Parts” Undervaluation

• Market Stance: MKO continues to trade at a valuation below 1× its projected run-rate cash flow by 2028, despite sequential asset de-risking and production visibility out to late-decade.
• Implication: The current market price does not fully reflect the stepwise, multi-asset cash flow build, nor the significant margin of safety achieved via low acquisition cost and strong operational performance.

Key Takeaway:
Mako Mining’s structure—a producing mine, a value-accretive restart, and another large project in near-term development—offers a rare “triple pipeline” of growth. With near- and medium-term cash flow catalysts, and deep undervaluation based on forward-operating cash flow, MKO is uniquely positioned among small and mid-cap gold names.

Mako Mining (MKO) Financial Snapshot & Performance Highlights (as of mid-2025)

• Revenue Growth (Last 3 Years):
  Mako has demonstrated strong revenue growth, with Q1 2025 revenue at $31.8 million USD, up 65.6% year-over-year from 2024, and Q2 2025 revenue reaching a record $38.1 million USD. This reflects robust operational scaling primarily driven by San Albino and Moss Mine operations.
• Profit Margin:
  Recent quarters show a profit margin around 22.19% as you indicated, consistent with reported adjusted EBITDA margins and net income improvement (e.g., Q1 2025 net income $9.4 million USD, profit margin approx. 30% in earlier quarters) indicating improving operational efficiency amid growth.
• Net Income:
  Your figure of 23.23 million CAD (about $17.5 million USD equivalent) matches well with quarterly net income trends reflecting the company’s transition toward sustained profitability and cash flow generation.
• Capital Expenditures (Capex):
  Capex has been around 14.3 million CAD recently, aligned with investments in mine restarts (Moss Mine) and development projects (Eagle Mountain) sustaining growth momentum.
• Cash Acquisition:
  The company enhanced its liquidity by increasing cash balances by approximately 6 million CAD through gold sales and operational cash flow, reaching about $28.6 million USD (~38.3 million CAD) by Q2 2025, enabling project funding.
• PE Ratio:
  The Price to Earnings (P/E) ratio at about 11.7 suggests the market values Mako Mining at a reasonable multiple relative to earnings, attractive for a growth-focused gold producer with strong operational momentum.
• Debt/Equity:
  Mako maintains very low leverage, with debt/equity around 0.07, reflecting a conservative balance sheet supportive of expansion and risk management.
• Return on Equity (ROE):
  With ROE over 40%, the company shows strong profitability and efficient capital use, reflecting operational improvements and strong gold price realization.
• Return on Assets (ROA):
  An ROA of 28.5% underscores effective asset utilization across producing and development mines.

Summary

Mako Mining is showing strong financial health characterized by:

• High revenue growth driven by productive assets and acquisitions
• Improving profitability with solid margins and net income gains
• Conservative capital structure and strong liquidity
• Attractive valuation multiples and strong returns on equity/assets

These metrics collectively support Mako’s positioning as a growth-focused and efficiently managed gold producer well-aligned with investor expectations for 2025.

Execution Risks & What to Track

Execution Risks

1. Operational Execution on Restart Timelines and Production Targets
   • Mako plans to restart mining operations at the Moss Mine in early Q3 2025, with steady-state production expected by the end of Q4 2025.
   • Execution risk exists around timely delivery and commissioning of mining equipment, ramp-up of production, and ensuring the refurbished plant operates efficiently.
   • Over 80,000 tonnes of blasted material waiting for processing provides a backlog to accelerate early output, but operational delays could impact meeting full-year targets.
2. Capital Affordability and Financial Runway
   • Mako has a strong cash position (~US$28.6 million as of June 2025) and has recently recovered the full acquisition cost of the Moss Mine (~US$6.4 million) prior to restart.
   • Continued cash flow from San Albino and generating incremental cash flow from Moss ramp-up will be critical to funding expansions, including Eagle Mountain project development.
   • Maintaining financial discipline is crucial amid investment needs for mine restart, expansion, and exploration.
3. Gold Price Sensitivity
   • Mako is highly exposed to spot gold price fluctuations, which directly impact revenue, cash flow, and ultimately the valuation of its assets and operations.
   • While current gold prices support the business case, a decline in gold prices could pressure operating cash flow and delay project funding.
4. Regulatory and Political Risks
   • The company operates mines in Nicaragua, Arizona (US), and Guyana, each with distinct regulatory environments.
   • Political or regulatory changes, permitting delays (notably at Eagle Mountain), or local community issues could impact mine development timelines and operational continuity.
5. Wexford Capital’s Track Record Mitigates Some Concerns
   • Mako benefits from backing by Wexford Capital, which has a strong history of successful resource investments and operational discipline, providing experienced oversight and financial support[previous context].
   • That said, the small-cap mining sector remains volatile with execution risk inherent in mine restarts and development projects.

What to Track Next

• Progress on Moss Mine Restart:
  Timely delivery of equipment, ramp-up metrics, ore processing rates, and interim production updates will be key signals.
• Q3 & Q4 2025 Production and Revenue:
  Meeting or exceeding production targets at Moss and maintaining performance at San Albino will be crucial.
• Cash Flow and Liquidity:
  Monitoring cash balances and available capital to fund expansions without excessive dilution or debt build-up.
• Gold Price Trends:
  Impact on near-term revenue and long-term planning.
• Regulatory Updates:
  Any permitting progress or issues at Eagle Mountain and operational licenses in current jurisdictions.

Conclusion & Investor Thesis — Mako Mining (MKO) 2025 Outlook

Bull Case

• Experienced Track Record Manager: Backed by Wexford Capital, whose resource investment expertise and success with Diamondback Energy provide strong strategic oversight and credibility.
• Pipeline of Growth Mines: MKO benefits from a “triple pipeline” of production sources — a producing mine (San Albino), a value-accretive restart (Moss Mine), and a development-stage project (Eagle Mountain) poised to significantly increase output by 2027.
• Deep Undervaluation: MKO trades well below 1× projected run-rate cash flow by 2028 despite strong growth potential, operational progress, and improving cash flow and profit margins (~22%). The current market cap is approximately CAD 410 million with solid fundamentals and a low P/E of ~11.7.

Bear Case

• Execution Uncertainty: Risks around the timely restart and ramp-up of Moss Mine, delivery of expansion projects, and sustaining production grades and costs remain.
• Sector and Commodity Exposure: MKO’s performance is highly dependent on volatile gold prices and sector sentiment, which can impact cash flow and valuation.
• Small-Cap Volatility: Despite Wexford’s backing, MKO is still a microcap stock with higher operational and market risks typical of smaller juniors.

Verdict

Mako Mining represents a small, speculative investment opportunity with a strong growth pipeline and backing by an experienced capital manager. It carries execution and commodity risks, but the potential rewards are significant if the company delivers on production and expansion milestones while gold prices remain supportive. MKO is most suited for investors comfortable with capital-intensive, commodity-dependent microcaps who seek leveraged exposure to a multi-asset gold producer pivoting into a growth phase.