At an in-house conference for the retail side of Yorkton Securities, mining analysts Douglas Leishman and Art Ettlinger highlighted seven diversified junior exploration companies that they regard as relatively inexpensive with plenty of upside potential.
Altoro/Solitario
Leishman regards Altoro Gold, which recently merged with
Altoro brought to Solitario a portfolio of early-stage platinum group metal (PGM) and gold prospects in South America, including the Pedra Branca PGM property in northeastern Brazil. The Hunter-Dickinson group’s
Previous work identified a large ultramafic intrusive complex, with known platinum and palladium mineralization at surface, over a strike length of 40 km. Recent drilling in the Esbarro 1 area returned several near-surface intersections, outlining a flat-to-shallow-dipping zone measuring 600 by 200 metres. Results included 22.3 metres grading 1.8 grams palladium and 1.1 grams platinum per tonne (including 2.3 metres of 5.2 grams palladium plus 4.1 grams platinum) in hole 4, and 27.7 metres of 1.9 grams palladium and 0.9 gram platinum (including 6.5 metres of 4.1 grams palladium plus 2.6 grams platinum) in hole 6.
Only a small portion of the 420-sq.-km Pedra Branca property has been tested in any detail. Geological mapping identified 10 PGM-bearing chromitite occurrences over a 45-km strike length of the complex. Each occurrence contains massive chromitite layers 1 metre or more thick, with significant platinum, palladium, rhodium and gold values. In total, 226 grab samples of the chromitite were collected at surface from the 10 occurrences for an average grade of 7.5 grams combined PGM plus gold.
Rockwell is about to begin a 2-phase exploration program at Pedra Blanca. The first phase, budgeted at $2 million, will include property-wide airborne magnetic surveys, reconnaissance and detailed mapping, geochemical sampling and diamond drilling. Rockwell is trading at 63 in a 52-week range of 85-22.
Along with $10 million in cash, Solitario’s main asset is the Bongara zinc project in northern Peru. There, Pasminco of Australia can earn a 65% participating interest, held by
Solitario is 42%-owned by
Radius
The principals of Radius, President Simon Ridgway and Vice-President Robert Wasylyshyn, are noted for their involvement in the discovery of the San Martin gold deposit in Honduras and the Cerro Blanco prospect in Guatemala.
The company recently completed a 2,000-metre first pass of reverse-circulation (RC) drilling at El Satire, a hot-springs-style auriferous target in central Mexico.
Barrick funded this latest program through the purchase of 400,000 units of Radius priced at $1.25 each, for proceeds of $500,000. Each unit consisted of one share and two piggyback warrants. Barrick must exercise the first warrant by Dec. 4 at a price of $1.50 in order to keep the agreement in good standing.
In December 1999, Radius acquired the right to a 100% interest in the El Tambor gold project in central Guatemala. Radius has since applied to acquire several additional concessions totalling more than 2,000 sq. km
The El Tambor property hosts an epithermal gold zone related to a hot-spring centre. Due diligence sampling by Radius along the banks of a small river yielded 3.89 grams gold over 75 meters. Across the river, an old railway cut returned 2.6 grams over 65 metres.
This past summer, Radius’s field crew discovered new zones of gold mineralization in near-horizontal fault planes. These faults, or shears, have been identified over an area of 6 by 2.5 km and are still open for expansion. More than 2,500 samples have been collected to date. Trenching and drilling are planned.
“Guatemala, in my opinion, is the more exciting play,” says Leishman. “Radius is making new discoveries with grassroots exploration.” The analyst also believes that the extra attention
Redhawk
The management of ZincOx was involved with Reunion Mining, which secured a 60% option from
In southeastern British Columbia, Redhawk is exploring the zinc oxide potential of the past-producing Reeves MacDonald and Annex mine properties, where sulphide zinc ore grading 10-15% was mined long ago. The zinc oxide is believed to extend to depths of up to 450 metres below surface, and Redhawk estimates that 5 million tonnes of zinc oxide are still in place.
The company will attempt to confirm this resource and demonstrate that it can be economically extracted using the proprietary technology. ZincOx can earn a half-interest in the Remac project by spending $3 million over four years.
Redhawk recently released results for two holes drilled 50 metres along strike of surface projections of the previously mined F zone. The holes intersected 15 metres of true width grading 14.62% zinc, 3.26% lead and 50.2 grams silver, plus 21 metres of 9.64% zinc, 0.51% lead and 34.6 grams silver.
Redhawk has entered into a separate joint-venture agreement with ZincOx to explore and develop the Torlon zinc-oxide prospect in Guatemala. The property does have a mining history, with much of the previous work directed toward sulphide lead-silver mineralization in mantos and chimneys.
Initial work by ZincOx geologists has outlined a main area of interest along a strike length of 400 metres, a width of 50-80 metres and a vertical thickness of 100 metres. Grab samples have yielded values as high as 44.4% zinc.
Redhawk can earn a 30% interest by spending US$350,000 in exploration over three years. ZincOx would then be required to spend the next US$5 million to retain its 70% stake.
The initial work program is aimed at mapping the geology in the hope that drill targets can be identified. Although there are extensive small-scale workings, there is no evidence the property has ever been drilled.
Redhawk is trading within a 12-month range of 75-21 at 54.
Ashton
Ettlinger gives the nod to
and the Far North.
“I think they still have some good-quality exploration assets,” says Ettlinger. “The Ric property and Buffalo Hills are the two that stand out.”
Ashton is 68%-owned by Australia’s
It appears Rio will walk away as the winner after making an 11th-hour, unconditional bid of A$2.20 per Ashton share, which 49.7% majority owner Malaysia Mining has accepted. Analysts had feared that a De Beers win would spell the end of Ashton Mining of Canada, as the South African major would likely have dismantled the company and forced it to go private. A Rio win, on the other hand, is thought to be positive for Ashton Canada insofar as Ashton would complement Kennecott Canada, the wholly owned exploration subsidiary of Rio.
The Ric property is 250 km northwest of Yellowknife, in far-northern Nunavut, and is held as part of the Slave Regional joint venture between Ashton and
Recent exploration at Ric culminated in the discovery of a sill-like kimberlite body at the head of a diamondiferous indicator mineral train. An initial 25-kg till sample and a follow-up 100-kg sample yielded a total of 14 microdiamonds. Another till sample, collected 500 metres to the east, contained a macrodiamond measuring 0.85 by 0.6 by 0.6 mm.
Follow-up prospecting revealed abundant kimberlite float widely distributed over a strike length of 1.4 km. Four separate samples of the float all contained diamonds, with the best results coming from a 31-kg sample that returned nine micros. This sample occurs in a 300-metre-wide indicator mineral train that leads to a small (400-by-600-metre) lake. The lake is associated with a geophysical anomaly.
In its first drill hole, Ashton intersected 11.6 metres of kimberlite at a depth of 45.7 metres in its first hole.
Four angle holes were initially drilled at the Perseus discovery, with a subsequent hole drilled 50 metres to the east. All five holes encountered similar intersections of kimberlite, which suggests that Perseus may be a shallow dipping kimberlite sill, with a true thickness of 10 metres. Microdiamond results are pending.
Meanwhile, at the Buffalo Hills project in north-central Alberta, Ashton has been busy collecting a mini-bulk sample from kimberlite K252, one of 35 pipes discovered thus far. The microdiamond results from K252 are among the best for these kimberlites, with a total of 8 macros and 135 micros recovered from 107.1 kg of material.
The kimberlite body exhibits two distinct phases: a fine-to-medium-grained volcaniclastic kimberlite, and a kimberlite breccia. A 41.6-kg sample from the volcaniclastic phase yielded 3 macros and 34 micros. One of the macros exceeded 0.5 mm in two dimensions.
A 65.5-kg sample from the breccia phase returned 5 macros and 101 micros, with three of the macros measuring greater than 0.5 mm in two dimensions. The two largest stones measured 2.35 by 2.19 by 0.63 mm, and 1.68 by 1.49 by 1.25 mm.
Kimberlite K252 is covered by 77 metres of overburden and is represented by a complex geophysical anomaly estimated to be 150 metres in diameter.
The Buffalo Hills project is a joint venture, with Ashton and
Ashton has 37.9 million shares outstanding and trades at 70 in 52-week range of $1.50-50.
Diamondex
Randy Turner’s
In early 2001, Diamondex will begin drilling the King property, near the Camsell Lake boundary, the objective being to test for the northern downdip extension of the Snap Lake NW kimberlite dyke. During the summer, Winspear completed a dozen stepout and infill holes on the NW dyke as part of a “value recognition program” in response to De Beers’ takeover bid.
The NW dyke was extended 3.2 km in a north-south direction and 3.1 km east-west. One of the most northerly holes intersected a 3.3-metre intercept of kimberlite (including 0.63 metre of internal waste) within 400 metres of the King property boundary. However, the depth of the dyke is approaching 1,000 metres to the north and to the east. The eastern margin of the structure appears to have narrowed to about 1.3 metres.
This past year, Diamondex has focused its exploration activities on the Hilltop, Carat and Kelsey properties, all of which are in the Northwest Territories. In addition, Kennecott conducted limited exploration over the company’s Alymer West property.
Diamondex is arranging a private placement flow-through financing, with units priced at about $1.20.
“This is an exploration team that, because of the management, definitely has some speculative premium built into it,” says Ettlinger. “And what’s wrong with that?
“If Diamondex is successful and they do hit [the extension the NW dyke], obviously the depth will be too great for a stand-alone operation, but I don’t think De Beers will want a Canadian junior company reporting geochemical data and diamond counts from one of its assets.”
Hope Bar/Miramar
Ettlinger’s final picks are
“It’s the premier gold exploration project in North America, outside of Placer Dome’s Getchell project and its 30 or so rigs,” Ettlinger says. “From a junior company standpoint, this is the greatest gold exploration project I have ever seen.”
The two partners control an entire 80-km-long greenstone belt, and although the far northern project is remote, it is nonetheless close to tidewater. Spanning 1,000 sq. km, it is 160 km north of the Arctic Circle.
“There is continuous and well-developed mesothermal-hydrothermal alteration exposed on the surface and underground, and there is some splashy gold coming from it,” Ettlinger says.
During the first half of 2000, the joint venture completed 39,000 metres of infill drilling aimed at the Boston and Doris deposits in the Hope Bay belt. The program was designed to increase the resource to the measured and indicated categories. The previous owner, Australia’s Broken Hill Proprietary, estimated an inferred resource of 4.3 million oz. contained in 12.8 million tonnes grading 10.4 grams gold for the three principle systems of mineralization, namely Boston, Doris and Madrid. A new resource estimate is in the works.
Surface exploration this past summer expanded the search for additional showings of mineralization outside of the principle areas. A further 6,300 metres of drilling in 30 holes were completed, targeting extensions of Boston, Doris and Madrid. Miramar and Hope Bay recently announced highlights of two holes from that drilling, including a 51.8-metre near-surface intercept grading 6.9 grams (including 11.4 metres of 21.4 grams), 250 metres west of the Madrid deposit.
Hope Bay has 170 million fully diluted shares outstanding and trades at 41 in a 52-week range of 60-25, whereas Miramar, with 60 million shares fully diluted, sits at $1.21 in a year-long range of $1.44-60. Ettlinger believes the ownership structure of the joint venture will change if the project reaches the production stage.
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