Pacific North West takes 100% of River Valley

Pacific North West Capital (PFN-T, PAWEF-O) is acquiring Anglo Platinum‘s (AGPPY-O) 50% interest in the River Valley platinum group metals (PGM) joint-venture project in northern Ontario, one of Canada’s largest primary PGM deposits, bringing its total ownership to 100%.

The deal follows just two months after Stillwater Mining (SWC-N) closed its acquisition of Marathon PGM’s platinum assets, also in Ontario, in a cash-and-share deal valued at $118 million – underscoring the attractiveness of standalone PGM projects in North America. (Stillwater Mining is the only U.S. producer of palladium and platinum and is also the largest primary producer of PGMs outside of South Africa and Russia.)

In exchange for its stake in the River Valley project, Anglo Platinum, the world’s leading primary producer of PGMs, which accounts for about 40% of the world’s newly mined platinum, will receive a 12% interest in Pacific North West.

The aggregate purchase price involves 8.12 million Pacific North West Capital shares and three-year warrants exercisable to buy 3 million shares at 30¢ apiece.

Pacific North West acquired the project, about 60 km from Sudbury, in 1998. A year later it entered into a joint-venture with Anglo Platinum. It remained the operator and defined a NI 43-101 compliant measured resource of 8.53 million tonnes grading 1.29 grams palladium per tonne for 353,000 oz. palladium; 0.43 gram platinum per tonne for 116,800 oz. platinum; and 0.07 gram gold per tonne for 20,400 oz. gold in the measured category. 

In the indicated category, the deposit is estimated to contain 22.02 million tonnes of 0.85 gram palladium for 600,700 oz. palladium; 0.30 gram platinum for 212,800 oz. platinum, and 0.06 gram gold for 39,000 oz. gold.

Inferred resources add 2.39 million tonnes of 0.87 gram palladium for 67,000 oz. palladium; 0.31 gram platinum for 23,800 oz. platinum, and 0.05 gram gold for 4,000 oz. gold.

Pacific North West says it plans to target areas where mineralization is open to depth and along a strike length of 9 km, but weren’t followed up due to the outbreak of the financial crisis in 2008.

Induced-polarization surveys have identified mineralized zones on the property and the company now plans to enhance earlier work with more recent 3D technology.

More than 110,000 metres in 550 holes have been drilled so far.

Spiros Cacos, Pacific North West Capital’s manager of investor relations, told The Northern Miner that the company is “looking to put together a budget of $5 million for exploration” this year, and says management is also open to finding a new joint-venture partner. “With small companies like us, joint ventures make sense,” he explains. “It makes sense to look at some of the companies in the Sudbury area who might want to move the company forward.”

Cacos explained that Anglo Platinum had always been a good partner and had invested about $20 million into the River Valley project, but “had a few issues on its plate” that diverted some of its focus, including recurring brownouts in South Africa, fighting off a hostile takeover bid from Xstrata, and internal restructuring. 

“Our president Harry Barr did a really good job over the last two years of painfully negotiating with Anglo Platinum to get that project back and we’ve finally made that happen,” he continues. “We’ve now acquired 100% of the project and with the price of palladium close to US$830 per oz. again, this gives us an opportunity to further explore this project, which is open along a 9-km strike length and open at depth.”

At presstime in Toronto, Pacific North West Capital was trading at 19¢ per share, within a 52-week range of 8¢-21.5¢. It has 67.6 million shares outstanding.