Denison to Buy International Enexco for Shares and to Spinout Copper Assets

A cross section of the world's highest grade uranium mine, McArthur River (Source: International Enexco)

A cross section of the world’s highest grade uranium mine, McArthur River (Source: International Enexco)

The small cap uranium explorer, International Enexco (IEC:TSXV), announced today that it has agreed to be acquired by Lukas Lundin’s Denison Mines (DML:TSX) for shares.  Denison already owns roughly 8.4% of the company and they are acquiring the remaining shares for 0.26 Denison shares.  Based on Denison’s closing price of $1.77, this equates to ~$0.46 per IEC share, representing an 18% premium for their uranium only assets.  Plus shareholders get pro-rata shares in a spinco which will hold advanced-stage copper assets (see below).

Denison is only undertaking 2.1% dilution to acquire these strategic uranium assets.

International Enexco is a 30% partner in the Mann Lake project with Cameco (52.5% operator) and AREVA (17.5%).  They also hold a 20% interest in the Bachman Lake project (Denison holds remaining 80%).  Last week, Cameco announced an initial discovery on the Mann Lake project by intersecting 5.1m of 2.31% eU308 including 0.4m of 10.92% eU308 (read: International Enexco Hits Thickest and Highest Grade Hole to date at Mann Lake).

Skyharbour Resources recently acquired a 60% interest in their own Mann Lake property which is adjacent to Enexco’s.  At a well attended presentation last night, Skyharbour’s President, Jordan Trimble, said his focus for this year may include spending on exploration on that side of the basin based on International Enexco’s discovery there.

Ron Hochstein - President and CEO of Denison and board member of International Enexco (Source: BNN)

Ron Hochstein – President and CEO of Denison and board member of International Enexco (Source: BNN)

As we stated in our article last week, by Patterson Lake standards 5.1m of 2.31% uranium does not seem like a particularly exciting hole.  However, given that this eastern side of the Athabasca Basin is where Cameco, AREVA and others have vast amounts of experience in, it remains a focus for them.  Furthermore, it is important to understand just how rich 2.31% uranium is.  To put it in context, 1% uranium at $50 per pound is equal to ~25g/t gold or ~15% copper.

Lukas Lundin, Chariman of Denison commented: “Denison continues to focus on becoming the preeminent exploration company in the Athabasca Basin, and we believe that the acquisition of IEC represents another logical step towards achieving that goal.”

As part of the transaction, International Enexco will not only get 0.26 shares of Denison but they will also get shares in a spinco called CopperBank Resources.  CopperBank will be formed out of a three-way merger between Rob McLeod’s Full Metal Minerals (FMM:TSXV), Gianni Kovacevic’s Choice Gold (CHF:CSE) and the spinout assets of Enexco.

Choice will acquire Full Metal for 2 shares and 1 warrant and International Enexco for 8.8 shares and 4.4 warrants.  Choice is required to raise no less than $2 million to complete the deal.  They will roll the Choice shares back 5-for-1.  Full Metal, Choice and Enexco will own 19%, 6% and 60% of the new company, respectively (with new investors expected to hold the remaining 15%).

This represents, to Full Metal shareholders, a 178% premium to the close today of $0.015.

CopperBank will be an advanced-stage pure play copper play and will hold the Contact and Pyramid copper projects.  Contact holds over 1 billion pounds of copper in Nevada and is in the feasibility stage.

Read: Denison Mines Announces Letter of Intent for Acquisition of International Enexco

Read:  Full Metal Signs LOI with International Enexco and Choice Gold to Consolidate Copper Assets

Minsky Moment in China?

Fairfax Holdings recent annual letter to shareholders offers many nuggets of wisdom including this excerpt on China (emphasis our own):

In the last few years we have discussed the huge real estate bubble in China. In case you continue to be a skeptic, here are a few observations from Anne Stevenson Yang, an American who has been in China for over 20 years and is the founder of JCapital Research in Beijing:

1. China added 5.9 billion square metres of commercial buildings between 2008 and 2012 – the equivalent of more than 50 Manhattans – in just five years!

2. In 2012, China completed about 2 billion square metres of residential floor space – approximately 20 million units. For perspective, the U.S. at its peak built 2 million homes in a year.

3. At the end of 2013, China had about 6.6 billion square metres of new residential space under construction, around 60 million units.

4. Yinchuan, a city of 1.2 million people including the suburbs, has 30 million square metres of available apartments – roughly 300,000 units that could house 900,000 people. This is in addition to the delivered but unoccupied units. The city of Guiyang, capital of Guizhou Province, has roughly 5.5 million extra units for a city of 5 million.

5. In almost every city Anne has visited, pretty much the whole existing housing stock has been replicated and is empty.

6. Home ownership rates in China are estimated to be over 100% versus 65% in the U.S. Many cities report ownership over 200%. Tangshan, near Beijing, is one.

7. This real estate boom could only be financed through unrestrained credit growth. Since 2009, the Chinese banks have grown by the equivalent of the entire U.S. banking system or 15% of world GDP.

8. The real estate bubble has resulted in companies extensively borrowing and investing in real estate or lending on real estate in the shadow banking system. This is exactly what happened in Japan in the late 1980s.

9. And one observation of our own: Since 2009, the easing by the Federal Reserve combined with the explosive growth in China, backed by higher interest rates, has resulted in huge inflows (‘‘hot money’’) into China. The near unanimous view that the renminbi would strengthen has resulted in a massive carry trade where speculators have borrowed at low rates across the world and invested in China, almost always backed by real estate. The shadow banking system in China – i.e., assets not on the books of the major Chinese banks – is estimated by Bank of America Merrill Lynch to be approximately $4.7 trillion or 51% of Chinese GDP. Oddly enough, prior to the credit crisis, the U.S. had $4.5 trillion in asset-backed securities outstanding or approximately 31% of U.S. GDP. You know what happened then. When the flows reverse in China, watch out!

The recent decline in copper might be a major shot across the bow that the Chinese real estate bubble and shadow banking ponzi finance game may be finally coming to an end:

Copper_Monthly

The sharp bearish reversals in other economically sensitive commodities such as crude oil and iron ore add further confirmation that all is not well out there. The Shanghai composite also remains mired in a bear market as it flirts with major long-term support near 1950-2000:

SSEC_Weekly

China has clearly caught a cold, the question now becomes whether it will catch a flu……

DSR – Desert Star Begins Permitting and Exploration Work on Their Portfolio of US Prospects

Desert Star has a number of assets located within a 15km radius of major mining projects held by Rio Tinto and BHP (Photo: Cronkite Newswatch)

Desert Star has a number of assets located within a 15km radius of major mining projects held by Rio Tinto and BHP (Photo: Cronkite Newswatch)

Today, Desert Star Resources (DSR:TSXV) quietly announced that they had begun the first steps in exploration on their recently acquired southwest US assets.  The company completed geological mapping and sampling at its Copper King project located in the prolific Laramide belt of Arizona.  The mapping and sampling have identified diorite porphyry dikes which intrude Apache Group statigraphy and diabase sills which looks similar to that seen at Rio Tinto and BHP’s large and high-grade Resolution copper-molybdenum project.

We spoke with Desert Star’s Daniel MacNeil (Project Acquisition and Development) by phone this afternoon and he tells us, “there are two main takeaways from the release today, one, we have begun the exploration permitting process on our projects which is a significant milestone and, two, we have initiated the first steps in defining drill targets on the projects.”

The company has undergone a significant change in focus over the past year with large-potential prospect acquisitions, name change, board and management changes and financings.  Recently they closed a ~$1 million raise at $0.18.

Mr. MacNeil told us that “the plan is to complete geophysical and geological mapping and surveys on the projects including Oro which should take us into the fall at which point we should have our permits and targets defined for drilling.”

Desert Star announced in the release that they expect to conduct an additional mapping campaign at Copper King and Red Top in March, 2014.

With the prospects that they have, the company is likely to find a joint venture partner for one, all or some of their assets.  This could happen prior to gaining exploration permits, but it would seem rational for it to be after.  The company is also more than capable of drill testing these targets themselves.

Also at their Oro project in New Mexico, Mr. MacNeil and Dr. Alan Wainwright (Desert Star’s Chief Geologist) reexamined historic core data and believe they have identified a large copper porphyry target below intense porphyry-style alteration exposed at surface.  They shared their excitement about this potential during our last interview and again, Mr. MacNeil reiterated that by phone today.

Shares are up over 175% from their summer lows:

DSR Chart

DSR data by YCharts

Read: Desert Star Conducts Sampling Program and Commences Process for Drill Permitting at Red Top, Copper King & Copper Springs Projects

Disclaimer: Author has a financial interest in Desert Star Resources and the company is an advertiser, therefore the article is not to be considered unbiased and fully independent. Please read Desert Star Resources Ltd.’s Cautionary Statement Regarding Forward-Looking Statements’s carefully.

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NGQ – Lundin’s NGEx Resources Hits 0.63% CuEq over 340m in Argentina

NGEx plans for 120-160,000tpd open-pit copper mine at Josemaria (Photo: Bloomberg)

NGEx plans for 120-160,000tpd open-pit copper mine at Josemaria (Photo: Bloomberg)

Lukas Lundin’s base metals explorer, NGEx Resources (NGQ:TSX) this morning released seven of fourteen holes from their 2013/2014 field season at their Josemaria project in Argentina.  The focus of their 7,302m program was to define the high-grade supergene zone near the north end of the project and to test a possible extension there.

Two of the holes successfully intersected this high-grade supergene zone with hole JMDH78 intersecting 0.54% copper and 0.11g/t gold (0.63% copper equivalent) over 340m.  JMDH80 was drilled into the indicated resource block and therefore is expected to increase that portion of the model.  They also completed several large step-out holes to test a broad area of leached cap which extends to the north and northwest.

Other highlight holes included hole JMDH81 which intersected 510m (starting at 94m downhole) of 0.35% copper and 0.2g/t gold (0.50% copper equivalent).  Also, hole JMDH80 which intersected 0.44% copper and 0.22g/t gold (0.61% copper equivalent) over 432.5m.  These two holes were drilled along the edge of the indicated block and should convert inferred resources into indicated.

Three step-out holes were drilled between 90 and 300m from the inferred resource block at Josemaria and represent an extension to the northwest of the known mineralized zone as well as the potential to host a separate mineralized porphyry centre.  The company intends to complete follow-up drilling here.

NGEx also provided a preliminary update on the engineering studies that were started in the second half of last year and aimed to determine preliminary development ideas for Josemaria.  The work focused on an open-pit operation, processing between 120 to 160,000tpd.  Within the total resource estimate there is a shallower and higher-grade component with an estimated grade of 0.44% copper (versus indicated grade of 0.35% copper and inferred grade of 0.28% copper).  The engineers are now investigated the economic pros and cons of processing this material in the early days of a potential mine.

Baseline environmental programs, including review of areas for potential infrastructure, are under way, with fieldwork in progress during the current South American summer season.

The company holds three projects within 15km of eachother which hold over 21.3 billion pounds of copper and 15.5 million ounces of gold (Image: NGEx Resources Inc.)

The company holds three projects within 15km of eachother which hold over 21.3 billion pounds of copper and 15.5 million ounces of gold (Image: NGEx Resources Inc.)

At Filo del Sol, which is located 15km away from Josemaria and straddles the Argentine and Chilean borders, the company updated investors on their planned 7,000m drill program there.  As of February 9, 2014 NGEx had completed 5,875m in 18 holes with assays pending for all of them.  The company’s focus for this years program at Filo del Sol was to provide enough drill data to compile an initial resource estimate for a stratabound, high-grade silver-copper zone.

They also are focused on testing the potential for a feeder zone to the stratabound mineralization comprised of significant copper and gold mineralization   Drilling here is expected to be completed by early March.

Between Q2 and Q3, the company was burning roughly $1.7 million per month and ended September 2013 with $18 million.  This would leave them with roughly $10 million in cash remaining (assuming a similar burn).  NGEx last raise was $34 million at $3.40 per share in January of last year.

Japan Oil and Gas National Corporation ( or “JOGMEC”) as well as Pan Pacific Copper Company Ltd. are both NGEx’s project partners for these world-class base metals projects.  NGEx is the 60% operator with JOGMEC and Pan Pacific holding 60% interests in the projects.  Pan Pacific owns 75% of the Caserones Copper and Molybdenum project located 10km north of Los Helados and had a price tag of $3 billion.

Read: NGEx Intersects 0.63% Copper Equivalent Over 340 Metres at Josemaria and
Provides General Exploration Update for Argentina Projects

“You Have to Kiss a lot of Frogs in this Business” – Desert Star’s Dr. Alan Wainwright and Daniel MacNeil

dsr

Recently, we had the pleasure of sitting down with two of exploration geology’s brightest young stars; Dr. Alan Wainwright and Daniel MacNeil.  Dr. Wainwright (Chief Geologist) and Mr. MacNeil (Project Acquisition and Development) allowed us to visit them in the humble Vancouver offices of their current venture, Desert Star Resources (DSR:TSXV).

Mr. MacNeil has over a decade of experience working with seniors as well as juniors in exploration.  Dr. Wainwright completed his PhD at the University of British Columbia on the super-giant porphyry copper-gold deposits at Oyu Tolgoi (Ivanhoe Mines, Mongolia). Last month he won the H.H. “Spud” Huestis Award for excellence in prospecting and mineral exploration along with his former Kaminak Gold colleagues for their role in the discovery of the 4.2 million ounce Coffee deposit in the Yukon.

“We had a meeting at the beginning of the downturn,” MacNeil tells me, “and we decided we had two options.  We could shut off the lights and wait for better times, or we could take the capital we had and get into [mineral] belts that we wouldn’t otherwise be able to get into.”

Dr. Alan Wainwright, Chief Geologist of Desert Star (Photo: Wainwright)

Dr.  Wainwright, DSR Chief Geologist (Photo: Wainwright)

The two geologists showed me a world map with a dot for each of the +350 projects they reviewed, telling me they simply narrowed in on the areas on the map where the most dots were.

“You have to kiss a lot of frogs in this business,” MacNeil jokes.

That area, it turned out, was the southwest United States and specifically Nevada, New Mexico and Arizona.  The two have acquired a project portfolio for Desert Star that consists of four copper projects in the Laramide belt of Arizona and New Mexico and two Carlin-type gold projects in Nevada.

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CDB – Cordoba Minerals Mobilizes RAB Rig at Their San Matias Project

RAB drilling is a cost effective exploration tool for shallow mineralized targets (Image: Layne)

RAB drilling is a cost effective exploration tool for shallow mineralized targets (Image: Layne)

Simon Ridgeway’s Cordoba Minerals (CDB:TSXV) has begun its 2014 exploration efforts with the mobilization of a RAB (rotary air blasted) rig to begin drilling their Montiel prospect on the San Matias project in Cordoba, Colombia.  The company recently closed a $15 million (expanded from $12 million) financing to consolidate the San Matias project as well as to fund exploration plans.  The company previously drilled the project and announced 101.1m of 1.1% copper and 0.65g/t gold (November 2013).

On a project like Montiel, RAB drilling is a cost effective way to narrow targets in order to do deeper, follow-up diamond drilling later.  There are four main drilling methods in mining with the lowest cost being Auger drilling which can only be completed to roughly 20m depth.  Then there RAB which can be drilled to 150m depth followed by RC (reverse circulation) which can be drilled up to 500m.  Finally diamond drilling, the most expensive, which can be drilled up to 2,000m.

Drill core from previous diamond drilling encountered up to 101m of 1% copper (Photo: Cordoba Minerals)

Drill core from previous diamond drilling encountered up to 101m of 1% copper (Photo: Cordoba Minerals)

The company has designed the RAB drill specifically for the San Matias project and will drill the upper 50 vertical metres of the exposed porphyry copper-gold mineralization.  Percussion drilling will move west to east on the project.  Once the first pass of RAB drilling is complete, the company will drill narrowed targets with diamond drilling.

Simon Ridgway, CEO of Cordoba, commented: “We are extremely pleased to commence our 2014 drilling program at the Montiel prospect, the first of numerous porphyry Cu-Au targets identified to date, and start unlocking the full potential of the San Matias project.”

The company has identified a 1km in diameter copper-gold anomaly on the Montiel prospect which has mineralized porphyry copper-gold intrusive centres in outcrop and shallow artisanal mine shafts throughout the project.  The company expects to close the remaining consolidation of the project in early 2014.  Cordoba is well funded for exploration in 2014.

Read: Cordoba Minerals Announces the Mobilization of a RAB Drill-Rig to Commence
Exploration Drilling of the Montiel Prospect

A Flight to Safety Rally in Gold?

The most interesting aspect of today’s nearly $20 gold rally was the fact that other metals appear to still be stuck in neutral while gold and stocks rocket higher:

Click to enlarge

Copper Daily

Copper_Daily_2.11.2014

Silver Daily

Silver_Daily_2.11.2014

Platinum Daily

Platinum_Daily_2.11.2014

While silver has a mix of industrial and investment uses, copper and platinum are almost exclusively industrial metals. The lackluster price action in copper/platinum/silver indicate that all is not well in the global growth story and today’s massive reaction higher in equities may have been a bit overdone.

The recent rally in gold has a strong flight to safety flavor to it, especially when overlaid against a backdrop of volatile equity markets, downtrending/stagnant industrial metals, and steeply declining emerging market currencies:

Gold_fibs_2.11.2014

Next resistance zone $1300-$1308 with the ‘magical’ $1321 level up next

HI/ORV – Highland Copper to Acquire Orvana’s Copperwood for $25M

Michigan has a long history of copper mining that dates back to the 1800's (Photo: miningartifacts.org)

Michigan has a long history of copper mining that dates back to the 1800′s (Photo: miningartifacts.org)

Orvana Minerals (ORV:TSX) has found a buyer for their Copperwood project in Highland Copper (HI:TSXV).  Orvana has been considering divesting the asset for sometime now in order to focus on its two producing assets and to strengthen its balance sheet.  Orvana announced this morning they have signed a definitive agreement with Highland Copper which will generate $20 million in up front cash for them and another $2.5 million within 36 months and $2.5 million once in production.

The Copperwood project is a ‘shovel ready’ copper project that is set to produce over 850 million pounds of copper concentrate over a 13 year mine-life. The project hosts 2P reserves of 27.4Mt at 1.41% copper and 3.62g/t silver.  All permits have been granted and the project has essentially been waiting on the financial green light.  Pre-production capex is estimated at $213 million.

Orvana has been looking to strengthen its balance sheet and pay off near-term debt obligations of $2.7 million.  The company operates the copper-gold-silver mines in Spain and Bolivia and intend to use some of the proceeds to advance exploration efforts at these existing operations.  Globally, the company is forecasting production of 80-93,000 ounces of gold, 18-20 million pounds of copper and 875-950,000 ounces of silver.

Copperwood sits on Michigan's Copper range (Image: Orvana Minerals)

Copperwood sits on Michigan’s Copper range (Image: Orvana Minerals)

Highland Copper has been trying to develop a portfolio of copper assets in Michigan.  In the fall of last year, Highland Copper announced its intention to acquire the White Pine copper project located in Michigan from First Quantum.  That project hosts a historical copper resource of over 4.3 billion pounds at 1.04% copper.  Highland Copper would pay First Quantum in cash or shares in the amount of $0.005 for the first 1 billion pounds of 2P reserves of copper and $0.0025 for every pound after that.  We spoke with the company this morning and they informed us they intend on closing both acquisitions.

David Fennell, executive chairman of Highland, stated: “This transaction is part of a strategy that Highland has undertaken to consolidate an emerging copper district in the Upper Peninsula of Michigan. The acquisition of Copperwood in conjunction with our previously announced acquisition of the White Pine project, and combined with our existing Keweenaw projects, establishes the foundation for an emerging intermediate copper producer. The synergistic combination of these three assets in a single portfolio will bring together a large-scale historical estimate of copper reserves and resources at White Pine and Copperwood, and additional potential copper resources from the Keweenaw projects.”

The Copperwood project is located just 30km southwest of White Pine.

Highland Copper was sitting on just over $4 million in cash as of September 30, 2013.  On January 8th, the company announced a $25 million financing and the company told us by phone this morning that they would likely be expanding that financing to fund both acquisitions.

Shares in Orvana were up $0.06 or 8.8% on 300k at the time of writing.  Highland remains halted.

Read: Highland to Acquire Orvana’s Copperwood Project

HBM/AZC – Hudbay Goes Hostile on Augusta As Rosemont Awaits Final Permits

Rosemont is set for production in 2016 (Photo: Mark Duggan/Arizona Public Media)

Rosemont is set for production in 2016 (Photo: Mark Duggan/Arizona Public Media)

Late last night, Hudbay Minerals (HBM:TSX) announced it was making an unsolicited offer for the remaining shares of Augusta Resource Corp (AZC:TSX).  Hudbay is offering 0.315 (~$2.96 per Augusta) of its shares for each share of Augusta representing a 62% premium to the 20-day VWAP and an 18% premium to Friday’s close.  The offer values Augusta at a $540 million enterprise value.

Hudbay was already Augusta’s largest shareholder at over 16% or roughly 23.5 million shares.  Augusta’s board intends to meet this week and will update shareholders afterwards.  Augusta shares were trading above the offer at $3.17 (at time of writing) as the market anticipates a white knight or bump in the bid.

The offer appears opportunistic as Augusta is on the brink of receiving its final permits for their Rosemont copper project in Arizona.  Rosemont is one of the best undeveloped copper assets in the world, given its access to infrastructure, its cost profile (both capex and operating) and its jurisdiction.  Augusta expects they will be granted their final Record of Decision on the Environmental Impact Statement by the end of April.  The company is also expected to close a +$1 billion project debt package for the project shortly.  Construction of Rosemont is expected by year-end.

Newmont could be a potential white knight (Image: Newmont Mining Corp)

Newmont could be a potential white knight (Image: Newmont Mining Corp)

Given the quality of Rosemont, we would expect there to be many discussions ongoing with various groups for acquisition.  As is standard with confidentiality agreements in these instances, the standstill language becomes void when a takeover is on the table.  Therefore, a white knight appears to be possible.  Possible white knights could be any number of candidates, including: Lundin, Teck, Freeport, Capstone or even Newmont given they recently announced their intention of acquiring additional copper asset(s).

In addition to copper, Rosemont is expected to produce significant amounts of silver and molybdenum over its 21+ year mine life. Rosemont hosts 2P reserves of 5.9B lbs of copper and 194M lbs of molybdenum and another 1.1B lbs of copper and 35M lbs of molybdenum in Inferred resources.  Production is projected to commence in 2016.

Hudbay originally became an 11% shareholder in Augusta in 2011 as part of a strategic private placement.  Since then they have quietly acquired another 5% stake.  This led Augusta’s management to implementing a shareholders rights plan in October 2013.  Hudbay just closed a $172 million bought deal which was thought to be used for M&A (highlighted in our January 9th piece ‘Hudbay Hits it out of the Park with $150 Million Bought Deal’).

The offer is a 30% premium to where Augusta started the year in 2013 but a 47% discount to its 2011 high of $5.97.  Here’s the 5-year chart:

AZC Chart
AZC data by YCharts

Read: Hudbay to Make Offer to Acquire Augusta Resource Corporation

‘Big Mick’ Davis Seeks to Raise $3 Billion Before he Makes Acquisition for X2 Resources

Mick Davis net worth is estimated to be in excess of $5 billion (Photo: Gianluca Colla/Bloomberg)

Mick Davis net worth is estimated to be in excess of $5 billion (Photo: Gianluca Colla/Bloomberg)

According to a Bloomberg article last week, ‘Big Mick’ Davis, the former CEO of Xstrata Plc, is seeking to raise $3 billion for his private, X2 Resources, prior to him acquiring any assets.  Davis, the 55 year-old South African, has raised $1 billion from investors including private equity firm TPG and Asia’s largest metals trader, Noble Group.  With that amount of cash, X2 may be able to target acquisitions in excess of $12 billion when combined with a debt.  According to the sources, Davis may first limit investors to six or seven at $500 million each.  It is rumored that Australian private equity fund IFM is set to be one of those investors.

Davis originally oversaw one of the great transactions in the mining business between BHP and Billiton to create the world giant, BHP Billiton.  Then, he followed that success up by growing Xstrata Plc’s market value from $500 million to over $50 billion in the course of a decade through a number of accretive acquisitions which eventually led to its merger with Glencore.

According to sources close to Davis, he favors copper, coal and/or zinc assets.  Additionally, he is looking to acquire mines already in production or ones that are close to producing.

Davis plans to keep his new venture private and may consider selling once it grows enough to return value to its investors, according to the sources.

Read: Ex-Xstrata CEO Davis Said to Seek $3 Billion to Buy Mines

PLG – Pilot Gold Releases Resource Estimate for KCD Deposit, Hosts Turkey’s Third Largest Silver Component

The maiden KCD resource estimate hosts Turkey's third largest silver deposit at (Photo: Balint Porneczi/Bloomberg)

The maiden KCD resource estimate hosts Turkey’s third largest silver deposit at over 17 million ounces (Photo: Balint Porneczi/Bloomberg)

Pilot Gold (PLG:TSX) has released their maiden resource for the KCD deposit on the TV Tower project.  The resource estimate focused on the Kucukdag gold-silver-copper deposit which is the first of several targets on the TV Tower property (40% Pilot Gold/60% Teck Resources).  The estimate was divided into a lower gold zone and an overlying silver zone as they are found in distinct zones.  The gold zone hosted an inititial indicated resource of 456,000 ounces of gold at an average grade of 1.22g/t and another 46,000 ounces of gold in inferred at an average grade of 0.85g/t gold.  The silver zone hosted 17.2 million ounces of silver at an average grade of 46.7g/t silver in the indicated category and an addition 15.4 million ounces of silver at 52.7g/t silver.

In total on a gold equivalence basis, the KCD resource estimate, provides an indicated resource of 996,000 gold equivalent (AuEq) ounces at 1.34 g/t AuEq and an inferred resource of 351,000 AuEq ounces at 1.01 g/t AuEq.

“The KCD resource estimate is an important milestone in the evolution of TV Tower, and demonstrates the property’s potential to host meaningful precious metals deposits,” said Matt Lennox-King, President and CEO, Pilot Gold. “Over the 15 months that Pilot Gold has led TV Tower exploration, KCD has grown from a primarily gold system to a deposit hosting a sizable silver resource that, on its own, is estimated to be Turkey’s third-largest silver deposit. The KCD resource provides a solid foundation on which to advance TV Tower, along with the potentially game-changing copper-gold discovery at the nearby K2 target.”

Pilot was burning $2 million per month drilling with most of that going into the ground in Turkey (Image: Pilot Gold)

Pilot was burning $2 million per month drilling with most of that going into the ground in Turkey (Image: Pilot Gold)

Earlier this week, the company announced the discovery of a major supergene copper component to their nearby K2 target which suggest that at least two copper-gold porphyry systems are present at K2.  This new supergene copper zone has been identified as a 300m wide and 60m thick zone.

The new silver zone at KCD is estimated at 600m by 600m and remains open to the north and northwest.  KCD will continue to progress through metallurgical testing and preliminary engineering.

Preliminary metallurgical testing including concentrate tests of oxide and sulphide material shows oxide recoveries in the range of 70-97% by conventional cyanide leaching.  It appears transitional material is also amenable to conventional leaching with recoveries of this material ranging from 40-90%.  The sulphide material would be generally amenable to flotation to produce a rougher concentrate ranging from 80- to 94-per-cent recovery for copper, 55 to 95 per cent for gold and 60 to 75 per cent for silver.

Pilot Gold is the operator of the TV Tower project with their ability to increase their ownership to 60% by spending $21 million in exploration work over the next 3 years.

Read: Pilot Gold Reports Silver-Rich Maiden Resource Estimate for the KCD Deposit, TV  Tower

Related: Pilot Gold Finds Supergene Copper Mineralization in Turkey Which Could be a ‘Game Changer’

KZD – Kaizen Completes Initial 49% Earn-in of Fairholme Copper-Gold Project in Australia

Kaizen plans to use its proprietary Typhoon IP technology to generate more world-class targets (Image: Kaizen Discovery)

Kaizen plans to use its proprietary Typhoon IP technology to generate more world-class targets (Image: Kaizen Discovery)

Kaizen Discovery (KZD:TSXV) has closed its initial 49% earn-in for the Fairholme copper-gold porphyry exploration project in central New South Wales, Australia (Clancy Exploration owns remaining 51%).   The Fairholme project is located on the Fairholme Igneous Complex.  The company can earn up to 65% in the project by spending $4 million on the ground over the next two years.  Depending on those results, they can earn up to 95% by completing several staged developments and delivering a feasibility study.

According to the company, the Fairholme project is highlighted by three prospects; Boundary, Dungarvan and Gateway, which are all located within one high-priority target area.  This target hosts basement copper-gold-molybdenum anomalies.  The company’s website claims they are of the size and scale that would put them in a similar category to the footprint of several world-class porphyry copper deposits; including Alumbrera.

With HPX TechCo and Clancy, the project had an IP survey completed on a 74 square-kilometer area.  This was done using HPX TechCo’s patented deep “Typhoon IP” technology which was used to discover the Oyu Tolgoi deposit in Mongolia, now under the umbrella of Turquoise Hill (TRQ:TSX) and Rio Tinto.  According to the company, they began drilling in December at Fairholme, so results should be expected within the first quarter.

The new company with its new management team, led by Matthew Hornor (the guy behind the $300 million investment by the Japanese consortium into Ivanplats Flatreef project), has $10 million in cash with access to an additional $5 million.

Robert Friedland, the resource mogul and billionaire, owns roughly 42.5% of Kaizen stock through his 50% ownership in HPX TechCo (private).

Read: Kaizen Discovery Completes Earn-in of an Initial 49% Interest in the Fairholme Copper-Gold Project in Australia

Related: Friedland Protégé Matthew Hornor Launches KZD – Kaizen Discovery

CDB – Cordoba to Close Asset Acquisition After Announcing $12 Million Financing

Cordoba Minerals is now being led by the same team that's behind Continental Gold's success (Image: Cordoba Minerals Corp.)

Cordoba Minerals is now being led by the same team that’s behind Continental Gold’s success (Image: Cordoba Minerals Corp.)

Colombian copper-gold explorer, Cordoba Minerals (CDB:TSXV) has announced plans to raise $12 million to finish acquiring the Cordoba project and other exploration work being done there and the San Matias proejct.  And, guess who is behind this financing?  If you guessed GMP Securities, you are right.  This financing is being done on a best efforts basis at $0.50 per subscription receipt (a 12% discount to close of $0.57 per share).  The receipts are exchangeable into one share and one $0.75 three year warrant.  The money raised will be used to finish the acquisition of the Cordoba and San Matias projects to consolidate the whole play under one roof (now named the San Matias Project).

In August of last year Cordoba announced they would acquire a 100%-interest in the Cordoba copper-gold porphyry project from Minatura Group as well as acquire the San Matias project from Sabre Metals.  The goal of these acquistions was to consolidate the targets under one large land package which will lend itself better to potential takeover or development in the future.

As part of the agreement Minatura would become 36% shareholders in CDB and Sabre would become 32%.  The company has to pay $4 million to close he transaction which will be taken from the $12 million raised in this round.  Minatura is backed by Continental Gold (CNL:TSX) and Grupo de Bullet (Robert Allen’s private exploration company).

Cordoba's Montiel target represents a significant copper-gold prospect with success in trenches and geochem (Image: Cordoba Minerals Corp.)

Cordoba’s Montiel target represents a significant copper-gold prospect with success in trenches and geochem (Image: Cordoba Minerals Corp.)

Cordoba has undergone change at the board and management level with a new slate of directors including Ari Sussman coming on as Chairman and Robert Allen a director as wel a new CEO in Mario Stifano (current CEO of Sabre).With the cash left over after the closing, roughly $11 million in the treasury and will be able to drill any of the mirad of high-priority targets the company has.  These include the Montiel and Costa Azul where strong geochemical anomolies and trenching confirm copper and gold occurances.  The company has no shortage of anomolies in their identified 13km corridor of megnetite rich intrusives.

It’s early days, but the company is clearly onto something.  Now they have to prove it with the drill bit, which the company intends to do with a active drill campaign this year.

Read: Cordoba Minerals Announces C$12 Million Equity Financing

Related: Incoming Cordoba CEO Mario Stifano Is Pumped About The San Matias Matias High Grade Copper Gold Porphyry Discovery

RRI – Riverside Builds Foundation for Big 2014 Campaign

Riverside is actively exploring in BC and Mexico with majors Antofagasta and Hochschild (Source: The Courier-Mail)

Riverside is actively exploring in BC and Mexico with majors Antofagasta and Hochschild (Source: The Courier-Mail)

Riverside Resources (RRI:TSXV), the North American focused prospect generator, announced their plans for 2014 this morning.  The company highlights the strategic partnerships created in 2013 and how they intend to build on them in 2014 and beyond.  During 2013, the company secured two new strategic alliances with Antofagasta and Hochschild for gold and copper prospects in Mexico where the companies are intending to spend at least $4 million over the next three years.  Riverside is also focused in BC on the Flute and Lennac projects where Antofagasta and Riverside discovered a new massive sulphide zone.

In 2014, the company plans to follow-up on drilling of the high-grade Penoles silver project, located near the historic Jesus Maria mine in Mexico.  Riverside recently announced an update to their partnership on the Penoles project whereby they will get $750,000 spent on the project by March 31, 2014 and get $1.5 million in stock and $1.35 million cash by the end of June 2014 from Morro Bay Capital.  The company is targeting a maiden modern resource here in 2014.

Riverside is also intent on generating new gold targets in Mexico with Hochschild.  Riverside expects to receive results back from their target definition drilling at he Clemente silver-gold project under option with Hochschild in Mexico.

In Canada, Riverside will also drill the Swift Katie Copper Project with Antofagasta as well as continue exploration at the Flute and Lennac projects in BC.  The company hopes to generate a substantial new copper-porphyry discovery in BC.

John-Mark Staude, President and CEO, stated: “We now have three active strategic alliances with major metal producers and are confident that our team will deliver new high-quality projects into each alliance within the first half of 2014. We are in position to deliver discovery exposure through several partner-funded drill programs this year and look forward to strengthening Riverside’s core assets.”

The company continues to be diligent with their capital.  They are sitting on $5 million cash (roughly the same balance as they came into 2013 with) and they received roughly $6.5 million worth of work expenditures on their projects last year.  With the success of 2013, the company expects their partnerships to continue to fund existing projects and for project generation.  In an email this morning, the company said they are expecting greater than $6 million in funding in 2014.  The company strongly believes they will be able to deliver additional strategic alliances and find new prospects for option or joint venture.

Below is an interview Riverside’s President and CEO, John-Mark Staude did with Beacon Research:

Read: Riverside Resources Outlines Corporate Growth Plans for 2014

Related: Riverside Resources is Being Proactive, Even in This Market

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