Newstrike expects flagship Mexico project to appear on buyers’ radar
Newstrike CEO Richard Whittall says the company is exploring in one of the most significant gold districts in Mexico, which will likely prove up many more discoveries
By: Mariaan Webb
28th February 2014
The low-risk, high-grade Ana Paula gold exploration project in Mexico’s Guerrero gold belt, which precious metals explorer Newstrike Capital bought from Goldcorp about four years ago, could attract interest from several potential buyers.
Newstrike CEO Richard Whittall says the Ana Paula project is a “top quartile” gold project and offers compelling returns in any gold environment.
He believes mergers and acquisitions are likely to pick up by the second quarter of the year, as many gold producers could see a return to free cash flows, which will stir activity in the marketplace.
Last year, the company declared a maiden Canadian National Instrument 43-101- compliant resource for Ana Paula, which estimated the measured and indicated resource to contain 43-million tons of ore grading 1.63 g/t, resulting in about 2.26-million contained gold-equivalent ounces, which comprise 2.2-million ounces at 1.59 g/t of gold and 9.7-million ounces of contained silver at grades of 7 g/t of silver.
The inferred resource was estimated at 1.8-million tons of ore grading 0.89 g/t, containing a possible 60 000 gold- equivalent ounces, comprising 50 000 oz of gold grading 0.78 g/t and 1.1-million ounces of silver grading 18.7 g/t. The company used a cutoff grade of 0.45 g/t gold equivalent.
Newstrike intends to update Ana Paula’s resource statement in 2014 and it also plans to publish a preliminary economic assessment for the project. The Ana Paula project falls in the Aurea Norte project area, which stretches over 59 637 ha. Exploration results from a number of high priority drilling targets at Aurea Norte are expected this year.
Whittall believes Newstrike is exploring in one of the most significant gold districts in Mexico and that it will prove up many more discoveries. He is also upbeat about investment prospects in Mexico, despite the country having introduced new royalties on mining companies at the beginning of 2014.
“While no company benefits from an increase in corporate taxes, we think investors will continue to view Mexico as a powerhouse in the gold and silver business. The deterioration in the gold price, not the royalty tax, has been the primary cause of the significant weakness in exploration and production companies’ valuations. The introduction of the new royalty tax comes at a dreadful time in the industry, yet this sector has a long history of being resilient and innovative. Margins will recover through cost cutting and overall improvement in investor demand for precious metals,” he says.
Whittall is forecasting gold in the $1 300/oz to $1 400/oz range this year, which should improve the valuations of explorers and developers.
Last year, the falling gold price and significant competition from US equities weighed on exploration and development companies, with investor demand for stocks in the sector having fallen off a cliff.
“I suspect that in 2014, we will see a gradual return to the sector because of limited returns in US equities (non-materials) and significant margin improvement among producers because of cost-cutting measures over the last year,” he says.
Edited by: Creamer Media Reporter
Applied Research Associates: Biofuels Digest’s 2014 5-Minute Guide
Jim Lane | February 24, 2014
Applied Research Associates (ARA) is an international research and engineering company recognized for providing technically excellent solutions to complex and challenging problems in the physical sciences. Our mission is to provide in-depth and diversified research, engineering, and technical support services. We have a broad range of technical expertise in defense technologies, civil engineering, computer software and simulation, systems analysis, environmental technologies, and blast testing and measurement.
Type of Technology
The Biofuels ISOCONVERSION Process utilizes patented Catalytic Hydrothermolysis (CH) reactor technology, developed by Applied Research Associates (ARA), which utilizes water as a catalyst to quickly and inexpensively convert plant oils into stable intermediate oil products which are very similar to petroleum crude oil. The intermediate oils are processed with hydrogen using CLG’s ISOCONVERSION catalysts to produce drop-in jet fuel and diesel. Unlike most other process technologies, the renewable fuels produced by this process are 100% replacements for petroleum-based jet and diesel fuel.”
ARA scientists developed the CH Process using high temperature water to create biocrude. A U.S. patent on the CH Process technology was granted to ARA in 2010.
The drop-in fuel was produced using AgrisomaResonance Energy Feedstock, a dedicated industrial oilseed that was launched at commercial scale in 2012 across a broad region of western Canada. Resonance Energy Feedstock produces a unique industrial oil ideally suited for biofuel manufacturing. Resonance is part of a new generation of sustainable and scalable biomass crops, specially developed to provide a non-food oil that represent a step change for the renewable fuels industry, breaking the reliance on food crops to supply feedstock for biofuel manufacturing.
Top Past Milestones
In September 2012, Applied Research Associates, Chevron Lummus Global, the National Research Council of Canada, the U.S. Air Force Research Laboratory and Agrisoma Biosciences, announced an agreement to CLG and ARA’s 100% drop-in ReadiJet Fuel. ARA and NRC will test the renewable jet fuel against ASTM and military specifications and evaluate the fuel in ground based engine tests, with the initiative culminating in a test flight with the NRC Falcon-20 twin engine jet. This flight will be the first time in the world a jet aircraft is powered by 100%, un-blended, renewable jet fuel that meets petroleum jet fuel specifications. The biofuel, ReadiJet, was produced by ARA, under contract to AFRL, from Agrisoma’s Resonance feedstock crop using CLG’s and ARA’s breakthrough Biofuel ISOCONVERSION process.
CLG’s Co-Managing Director, Leon DeBruyn, commented on the ARA-CLG relationship. “With the combination of ARA’s CH Process and CLG’s Isoconversion process technology, we can now produce fungible distillate fuels that meet full ASTM quality requirements and can be blended into refiners’ distillate fuel pools without the density and blending quality issues associated with other biodiesel processes on the market,” he said.
To date, flights on biofuels have been restricted to a 50% blend with petroleum, imposing limitations on fuel use. Using Applied Research Associates’ proprietary catalytic hydrothermolysis process, oil from Resonance Energy Feedstock was converted into a fuel that represents a complete replacement for conventional jet fuel, enabling flight at 100% biofuel use, a breakthrough for the renewable fuels industry. This historic flight symbolizes a significant step not only for the aerospace industry, but also towards advancing sustainable sources of renewable energy.
“Today, I flew the world’s first 100 percent biofuel flight,’’ said Tim Leslie, NRC pilot. “We have been working hard with our partners for many months, and it is most rewarding to see it all come together. It is truly inspiring to take this step towards an eco-friendly future!’’
“This flight represents the culmination of a significant and strategic effort within Canada to demonstrate leadership ingreen aviation, from the commercialization of a sustainable and scalable feedstock crop to an “at altitude” flight demonstration with real-time emissions monitoring during the flight. Agrisoma is proud to be a part of this landmark work,” said Steven Fabijanski, President and CEO of Agrisoma, who was present on the tarmac. “To date, all powered flight has relied on fossil fuel. This flight changes everything: we have witnessed petroleum free aviation.”
Distribution, Research, Marketing or Production Partnerships or Alliances.
In May 2012, ARA announced that Chevron Lummus Global has joined the ReadiJet Alternative Fuel Initiative to develop drop-in biofuels for jet and diesel engines, eliminating the need for blending with petroleum. The joint development effort combines ARA’s CH PROCESS technology with Chevron Lummus Global’s ISOCONVERSION process technology. Commercial samples of ReadiJet™ fuel are currently being produced in anticipation of a number of key upcoming activities including ground engine testing at OEM facilities, a test flight planned for June 2012 and generation of fit-for-purpose data necessary for ASTM certification.
In August 2012, Aemetis announced a license agreement with Chevron Lummus Global for the inexpensive, rapid production of renewable jet and diesel fuel by the conversion of existing biofuels and petroleum refineries. The license agreement grants Aemetis Advanced Fuels Inc., a wholly-owned subsidiary of Aemetis, the use of the Biofuels ISOCONVERSION Process for the production of 100% drop-in renewable jet fuel and diesel in Aemetis biorefineries throughout North America. The license agreement grants Aemetis Advanced Fuels Inc., a wholly-owned subsidiary of Aemetis, the use of the Biofuels ISOCONVERSION Process for the production of 100% drop-in renewable jet fuel and diesel in Aemetis biorefineries throughout North America.
In January 2013, Applied Research Associates and Blue Sun Energy announced a partnership to build a biofuels isoconversion process demonstration system to produce drop-in renewable jet fuel, diesel, and gasoline. The demonstration facility is scheduled to break ground in St. Joseph, Mo, in Q1 of 2013 and will be operational by Q3 of 2013.
Demonstration, ready for commercial.
CEO OF LARGEST NORTH AMERICAN BIOREFINERY JOINS TEAM
John Plaza has agreed to join Calyx Bio-Ventures Inc.’s investee Agrisoma’s board of directors as Calyx nominee effective Jan. 20, 2014. Mr. Plaza brings extensive biorefinery and executive leadership experience to Agrisoma.
Mr. Plaza is president, chief executive officer and founder of Imperium Renewables in Seattle. Mr. Plaza started the company in February, 2004, by building the first commercial-scale biodiesel production facility in the western United States. By 2007, Imperium developed, built and now currently operates Imperium Grays Harbor, one of the largest biodiesel production facilities in the world at 100 million gallons per year. The company’s core focus was to develop and build advanced technology for biofuel production that differentiated itself in the market with fuel quality and scale. This innovative direction, which was led by Mr. Plaza, facilitated Imperium’s significant growth. Most recently, Imperium has been focused on renewable jet fuel production platforms. These include building commercial-scale facilities to produce renewable jet fuel, as well as research and development of future production pathways for renewable jet fuel from biomass sources. Prior to founding Imperium Renewables, Mr. Plaza was a commercial airline pilot for 20 years. Mr. Plaza has flown over 17,000 hours in more that 50 different aircraft, starting his career as a bush pilot in northern Alaska, then going on to fly B747, DC-10 and A-320 aircraft for Northwest Airlines. Mr. Plaza has acted as an adviser to the Clinton Global Initiative Americas, 2012 Clean Fuel and Transportation, and is a contributor to the Sustainable Alternative Fuels for Aviation Expert Group (SUSTAF) created by ICAO. He has been named one of the top-100 people in bioenergy the last three years.
“I am excited to be a part of the team for this innovative company and greatly support their efforts to assist with the diversification of agricultural products for farmers throughout the world. The vision and opportunities for the supply of a non-food oilseed crop like carinata is of critical importance for the future of renewable fuels. Biofuels produced from carinata provide an important option to meeting the rapid growth in energy demand, while effectively balancing social and environmental needs,” said Mr. Plaza.
“We are delighted to have John sit as a Calyx nominee on the Agrisoma board. John is a well-connected, big-vision guy with industry-leading bioenergy knowledge and the track record to back it up. His experience in both aviation and biorefining are vital in the commercialization of carinata,” commented Don Konantz, chief executive officer of Calyx.
By: Henry Lazenby
24th January 2014
TORONTO (miningweekly.com) – Following a tumultuous period of volatile commodity price declines that caused many miners to cut costs, shutter operations and halt projects, those actions are expected to result in significant free cash flows when companies report their first-quarter results of 2014, which could, in turn spark a period of vigorous mergers and acquisitions activity, Newstrike CEO Richard Whittall said.
As a flicker of life is potentially starting to shine in the minerals and mining sector, he told Mining weekly Online on the sidelines of the 2014 Vancouver Resource and Investment Conference that there were visible signs that the markets were starting to recover.
“Money always goes to where there is a rate of return. Last year, everybody in the sector were cutting costs, delaying schemes, closing projects etcetera owing to the falling gold price, however the other markets and international markets – except the emerging markets – were doing very well.
“Free cash flow is about to recover. I am expecting some amazing free cash flows reports during the first quarter from the majors. They are going to use the money to buy smaller companies, kicking off a ‘M&A season’, which was indeed already started by Goldcorp’s C$2.6-billion offer for Osisko Mining,” he said.
Whittal believes the gold market could stabilise this year as a lot of production is cut back, which in turn, would provide added support for the price, on top of continued strong demand. He sees the price potentially touching $1 300/oz to $1 400/oz later in the year.
“People want to buy stocks in companies that have done what was necessary to expand margins, and that would produce free cash flow. I expect to see tremendous activity, but not extreme values,” he predicted.
Further, he noted that there had in recent times not been many new ‘Ana Paula’s’ being developed, referring to Newstrike’s flagship gold exploration project in Mexico’s Guerrero gold belt, which it bought from Goldcorp about four years ago. He said the project could attract the interest from several potential buyers.
“That is why we are racing to complete our preliminary economic assessment (PEA) by the second quarter to further de-risk the project. The PEA-level metallurgy is already complete, allowing us to know what kind of mill we should get. It’s a big milestone behind us,” he said.
In a wide-ranging interview, Whittal also said that the new tax regime in Mexico was of lesser consequence than the impact of lower commodity prices. “Last year the corporate tax rate was 30%. This year, if you enter into no additional deals, it would be 35.25%. With the additional taxes, our tax rate went up by 5.25%,” he said.
Since May, and all through 2013, Newstrike was busy undertaking about 36 000 m of infill drilling on the project. The latest work covered a transition from the initial 100 holes, which formed the basis of the project’s 2.2-million ounce maiden resource, including the global resource of about 5.4-million gold-equivalent ounces.
Ana Paula consists of a high-grade core that outcrops, surrounded by a large continuous halo of lower-grade ore. The deposit measures 350 m from surface to bottom. “If we can determine that the deposit extends and is open at depth, we can design the pit larger. But the kicker is, we would be dropping the pit into an extremely high-grade zone,” Whittal said.
Any prospective buyers might have questions about the mineral continuity of the project’s high-grade core zone. Because the high-grade deposit is structurally controlled, but irregularly shaped, it would be a focal point for prospective partners or suitors, which were the main reason behind the most recent the infill-drilling campaign.
He explained that in a low-price environment, project resources tend to shrink, mentioning Goldcorp’s recent announcement of a reduction in Peñasquito’s expected mine life from 19 years to 13 years, owing to a lower-price environment.
The company also undertook a deep-hole programme through the summer to September, in an effort to further improve the all-important mineral competence of Ana Paula.
Last year, the company declared a maiden Canadian National Instrument 43-101-compliant resource for Ana Paula, which estimated the measured and indicated resource to contain 43-million tons of ore grading 1.63 g/t, resulting in about 2.26-million contained gold-equivalent ounces, which comprise 2.2-million ounces at 1.59 g/t of gold and 9.7-million ounces of contained silver at grades of 7 g/t of silver.
The inferred resource was estimated at 1.8-million tons of ore grading 0.89 g/t, containing a possible 60 000 gold-equivalent ounces, comprising 50 000 oz of gold grading 0.78 g/t and 1.1-million ounces of silver grading 18.7 g/t. The company used a cutoff grade of 0.45 g/t gold equivalent.
Newstrike plans plan to update the resource by February.
Former President of Monsanto Canada Joins Calyx Board
VANCOUVER, BRITISH COLUMBIA–(Marketwired – Jan. 23, 2014) – Calyx Bio-Ventures Inc. (TSX VENTURE:CYX) (“Calyx” or the “Company”) is pleased to announce that Derek Penner has joined the Company’s board of directors effective January 22, 2014. Mr. Penner brings extensive global agriculture commercialization, potential partnership relationships and executive leadership experience to Calyx, having previously served as President of Monsanto Canada.
Derek Penner is a world-class executive with national and international experience in agriculture. He is a highly motivated professional who has successfully led many functions within a leading global agricultural biotechnology corporation and a rapidly expanding entrepreneurial organization. As president of Monsanto Canada Mr. Penner grew sales and profits by 30%, significantly contributing to overall corporate wide profitability, revenue and cash flow growth. Mr. Penner developed and rolled out a vision and strategy for Monsanto Canada along with a restructuring plan to guide the business into new jurisdictions. Prior to his role as president, Mr. Penner held positions of chief financial officer of Monsanto Canada and Director of Product Management, Strategy and Licensing for Monsanto International. During his time with Monsanto, he was engaged in and led a variety of business and strategic initiatives in Europe, Middle East, Africa and Canada including: restructuring Monsanto’s business model which included decentralization of product management and marketing functions; divesture of product lines and production facilities; acquisitions; and the development of market strategies for new markets in Eastern Europe and East Africa.
“It is with great excitement that I join as a member of Calyx Bio-Venture’s Board of Directors. The development of the proprietary crop “Carinata” is an innovation in agriculture research that will benefit farmers and the agricultural industry while bringing an alternative fuel to market that will reduce carbon emissions. It is not often there is an industry game changer that can benefit all along the value chain from the grower to the end user of the biofuel. Calyx is a company that realizes the importance of reaching new heights and I look forward to being part of the team that brings a green and sustainable fuel to the world” commented Derek.
“We are delighted to have Derek join the Calyx board. Having previously served as President of Monsanto Canada Derek gained unparalleled agriculture and biotechnology experience. He is an effective leader who has monetized opportunities and executed efficiently. His experience is vital in the commercialization of Carinata in Western Canada and the northern United States” commented Don Konantz, chief executive officer of Calyx.”
Additionally, the company announces the resignation of Richard Whittall from the board of directors. The Board thanks Richard for his ongoing contributions.
Calyx Bio-Ventures Inc. (TSX VENTURE:CYX) is an agricultural technology company focused on renewable fuels including biojet and biodiesel. Calyx is the largest shareholder of Agrisoma Biosciences Inc., a company which is producing a new proprietary non-food energy feedstock crop – carinata – which yields oil that can be refined into fuels that work in existing engines as a 100 percent petroleum substitute. From seed to sky, fuels produced from carinata substantially reduce carbon and other harmful emissions, and help to reduce global petroleum dependence. Carinata was used to fly the world’s first 100% biojet flight, as achievement that Popular Science called one of the top science events on the planet in 2012. For further information about Calyx, please visit www.calyxbio.com. For more information on Agrisoma, please visit www.agrisoma.com.
Forward-Looking Statements: This document contains certain forward-looking statements concerning Calyx, as well as other expectations, plans, goals, objectives, information or statements about future events, conditions, or performance that may constitute “forward-looking statements” or “forward-looking information” under applicable securities legislation. Such statements or information involve substantial known and unknown risks and uncertainties, certain of which are beyond Calyx’s control.
Such forward-looking statements or information are based on a number of assumptions, which may prove to be incorrect.
Although Calyx believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Calyx can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Calyx and described in the forward-looking statements or information.
The forward-looking statements or information contained in this news release are made as of the date hereof and Calyx undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise unless so required by applicable securities laws or the TSX Venture Exchange. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Calyx Bio-Ventures Inc.
President & CEO
Calyx Bio-Ventures Inc.
PGF Biofuels Ltd. (“PGF Biofuels”), in conjunction with Paterson Grain, and the RSB Services
Foundation are pleased to announce that PGF Biofuels has received Roundtable on Sustainable
Biomaterials (“RSB”) certification for Resonance® carinata. PGF Biofuels is the first Canadian
organization and only the fourth feedstock provider globally to obtain this distinguished certification.
Carinata is an oilseed crop well adapted to production in semi-arid regions with an oil profile ideally
suited for use in the renewable aviation and biodiesel fuel industries.
Mr. Andrew B. Paterson, Chief Executive Officer of PGF Biofuels states:
“RSB certification will now allow us to access a number of global markets for carinata oil, which can be
converted into renewable aviation fuel or biodiesel. As the airline industry works towards reducing
overall greenhouse gas emissions by 20% by the year 2020 it is using the RSB certification as its
standard to ensure that procured renewable aviation fuel is produced in an environmentally sustainable
manner. PGF Biofuels is continuing to advance development of this industrial oilseed crop, which has
strong genetic properties, and is looking forward to scaling up production throughout western Canada
and the northern United States.”
RSB Services Foundation is the implementing entity of the RSB, a global sustainability standard and
certification system for biofuel and biomaterial. Achieving RSB certification means that PGF Biofuels
has met the stringent international sustainability standards, encompassing environmental, social and
economic criteria. Mr. Peter Ryus, Chief Executive Officer of RSB Services Foundation states:
“We strongly believe that new industrial oilseeds, such as Brassica carinata, are the key to a sustainable
bio-based future and we are proud to be a part of the continued development of this unique oilseed.”
PGF Biofuels has partnered with Agrisoma Biosciences Inc. (“Agrisoma”) on the commercialization and
market development for carinata under the Resonance brand and is working with Paterson Grain to
contract with local growers for production. These efforts will ensure current and future demands for
renewable aviation fuel and biodiesel are satisfied. Agrisoma continues to enhance Resonance carinata
with a focus on varietal development, crop protection, product evaluation and agronomic characteristic
To learn more about PGF Biofuels we invite you to visit www.pgfbiofuels.com. To learn more about
Agrisoma please visit www.agrisoma.com.
more great results from NES
Newstrike Capital’s Deep Drill Program Intersects 39.39 Metres Of 6.42 G/T Au Included Within A 72.19 Metre Intersection Of 3.92 G/T Au At The Ana Paula Project, Guerrero, Mexico
Vancouver, B.C. October 23rd, 2013 – Newstrike Capital Inc. (TSXV: NES) (“Newstrike” or the “Company”) announces final results for the deep drill program at the Company’s 100% owned Ana Paula Project in Guerrero, Mexico. Drillhole AP-13-215 confirmed high-grade mineralization approximately 100 to 150 metres beneath the conceptual pit in the current resource model. Results from the deep drill program continue to be very encouraging and demonstrate a strong potential for high-grade mineralization at depth.
AP-13-215 intersected 72.19 metres of 3.92 g/t Au from 675.75 to 747.94 metres down hole, including 39.39 meters of 6.42 g/t Au from 677.10 m to 716.49 metres. This includes multiple discrete intervals that returned over 10 g/t Au as highlighted in the table below.
Other intersections in AP-13-215 include:
24.50 metres of 2.15 g/t Au from 574.10 to 598.60 metres, which includes 11.41 metres of 3.91 g/t Au from 581.15 to 592.56 metres.
Discussion of results
AP-13-215 is a 990.15 metre angle hole that was drilled northerly across the plunge of the breccia zone to test the continuity of the breccia body and associated high-grade mineralization at depth. The hole tested beneath a conceptual open pit described in the initial gold resource estimate that outlined a pit constrained 2.2 million ounce gold resource in the measured and indicated categories*. Completing the recommendations made in the initial resource report is the focus of the Company’s activities on the project.
One of the conclusions in the initial resource report described high-grade mineralization located in the lower part of the breccia zone that was intersected below the 375 metre level, which is the approximate depth from surface of the base of the conceptual pit shape. This mineralized zone was identified as having potential to increase the resource through additional drilling and pit optimization studies to determine if some of this material could be included within the confines of the pit, and/or is of a sufficient grade and tonnage suitable for underground mining operations. AP-13-215 is the last of a four-hole exploratory deep drill program designed to further evaluate this deep high grade potential.
All final results from the deep drilling have now been reported (Newstrike press releases June 20 and September 16, 2013) and the program has successfully confirmed the presence of high grade mineralization within the breccia zone from surface to a depth of at least 700 meters vertically and over a horizontal distance of about 100 metres with variable widths. The mineralized zone remains open and additional drilling will be required to fully evaluate the high grade potential at depth.
Table 1 presents the preliminary drill location information for AP-13-215. Table 2 is a selection of assay results above a gold grade thickness of five gram meters with gold grade thicknesses greater than ten gram meters highlighted. Maps and assay tables of all drillholes reported to date are available on the Company website at www.newstrikecapital.com.
* Applying a cutoff grade of 0.45 grams per tonne gold equivalent (AuEq) defined by the price, cost and recovery assumptions outlined in the initial resource report, the Ana Paula project includes a conceptual open pit constrained resource in the measured and indicated categories of 43.0 million tonnes, including 2.2 million ounces of gold and 9.7 million ounces of silver at a weighted average grade of 1.59 grams per tonne gold and 7.0 grams per tonne silver (NI-43-101 technical report filed May 8th, 2013, available on the company website or at www.sedar.com).
Newstrike CEO Richard Whittall on Junior Exploration Viability
from mining weekly
Seasoned Vancouver-based investment banker and exploration junior Newstrike Capital director, president and CEO Richard Whittall believes that nowadays it is part of the junior business model to be acquired in the long run, which could potentially create significant value for investors.
“It’s a question of whether a junior can discover a deposit, how much of a mineral it can discover and at what cost the discovery comes,” he explains in an interview with Mining Weekly.
He points out that the normal investment rules for any business also apply to investing in the junior minerals sphere, which means taking a critical look at the margin at which the company would be, or is, producing goods.
“When assessing a junior for potential investment, the mantra ‘Have they got the likelihood of constructing a low-cost operation for low-cost capital expenditure?’ applies. Investors look for a rate of return,” Whittall says.
Among questions investors should be able to answer about any specific junior, before making an investment decision, are ‘can this be a low-cost mine?’; ‘what are the infrastructure requirements, such as roads, rail and electricity?’; ‘how stable and mining-favourable is the jurisdiction in which the project is located?’ and ‘can the company transform the discovery into an economical deposit with compelling enough character-istics to attract financing?’
He says these are the boxes juniors have to tick in order to raise capital through equity raises, which are, in general, the life force juniors need to survive.
In general, when a commodity price is high, one can afford to pursue a low-grade project, but when prices are low, high-grade projects tend to be the only saving grace.
Equally important to having a strong asset is to have the right management team in place. Investors should look to see whether the company has the expertise to bring a discovery into commercial production.
“You need ‘cradle-to-grave’ people in the management team. They need to have certain skills sets, such as the ability to raise cash, credibility and a proven track record and the ability to bring a discovery all the way through to production,” Whittall notes.
This is especially true in the face of the volatile commodity prices in recent months, underlining the need to have staying power in the team, which only comes with experience. Management needs to have been through several cycles to be able to know what to expect.