Element79 Gold Corp is this rare mining junior with both cash flow and upside exploration
Mining exploration companies rarely talk about the potential for cash flow generation, because that’s just not part of the vision. For Element79 Gold (CSE:ELEM, OTC:ELMGF) Corp, however, this is a key aspect of the road to success, and the company is currently putting the finishing touches on a portfolio designed to achieve this in the short term.
Element79’s flagship is the Maverick Springs project in Nevada and it also owns a number of other properties along the state’s Battle Mountain trend. It also has projects in British Columbia and Ontario, and recently decided to acquire two high-grade Peruvian gold projects.
Once the Peruvian acquisitions are complete, Element79 Gold (CSE:ELEM, OTC:ELMGF) will have a diversified portfolio of assets, including greenfield land, advanced 43-101 inferred resources and high-grade historic mines that have the potential to still become producers.
For Canadian Securities Exchange Magazine, Proactive sat down with Element79 Gold CEO James Tworek in late March to find out more.
Element79 recently completed a 43-101 compliant in-pit mineral resource estimate for the Maverick Springs project in Nevada. What did that tell you?
This gave us the opportunity to pull together all the data that had been gathered from the previous owners of this property and take the historic resource and bring it up to modern standards. In doing so, we were able to incorporate 59 additional drill holes of data, which had been completed after the historical reports.
It also gave us the opportunity to refresh our outlook on the project. Since it was previously designed only as a potential underground mine, there was undoubtedly a lot missing. Looking at it from the perspective of a pit-constrained model, we can now look at the stripping ratio of all strata above hard rock and begin to integrate these economics.
Currently the stripping ratio is around 5:1, and going forward our plans include infill drilling to prove value and improve our understanding of the project metallurgy, with the aim of obtaining better yields from higher strata and improve the whole project. economy.
Besides Maverick Springs, Element79 has a portfolio of 15 properties in Nevada that you evaluate for further exploration, potential sale or spin-off. Which is most likely?
Because it’s such a diverse portfolio, we’ve stratified them into what we’ll call ‘best performers’ in terms of what we’re likely to hold and focus on to unlock value. I would say Element79’s market capitalization is heavily weighted to the value provided by our 3.71 million gold equivalent ounces and the development potential of Maverick Springs. A small portion of the rest of the portfolio is booked today.
Some of these are well explored properties, with over 160 drill holes, but they have no form of modern reporting. So this is a great opportunity for us to review the data, work on the properties and generate modern reports about them with the aim of unlocking resource value in our balance sheet.
In addition to raising capital for the projects, we spoke with potential partners who might want minority joint ventures on specific properties. We are looking at all of these aspects, and now that we have reached our current M&A strategic plateau, we are confident in the direction in which we will develop our portfolio.
Beyond Nevada, you are in the process of acquiring the Snowbird project in British Columbia and have an option on another project in the famous mining camp of Timmins in Ontario. What can you tell us?
The Timmins project, called the Dale property, is located adjacent to IAMGOLD’s Côté Gold project, where production is expected by mid-2023. Being on the same greenstone belt, about 60 kilometers away, there is a great opportunity to show that there is something worth chasing.
That said, Dale is still in its infancy, so we need to balance this exploration requirement with developing our other more advanced projects at the same time.
With the Snowbird project, where we have already financed approximately 3,000 meters of drilling, we intend to complete the purchase shortly. The catch to the deal was that the exploration license ended on December 31, 2021 and the sellers, Plutus Gold, had contractually committed to invest $1 million in exploration by June 30, 2022.
Exploration permits currently take six months or more to obtain, so the wait could have jeopardized acquisition in the immediate term. We’ve been told that Plutus is only receiving analytics, and a 43-101 report on the project is pending. We should have this information in the first part of the second quarter.
Element79 recently signed a letter of intent to acquire certain former gold mines in Peru. What do they offer?
We have signed a letter of intent and are undergoing a 90 day due diligence process prior to closing. These assets were previously in production but were shut down due to low prices in the early 2000s. But there was prolific production of them. The Lucero asset produced approximately 19 grams per tonne of gold equivalent.
The beauty of working in Peru is that mining is deeply rooted in the culture and it is the lifeblood of the economy. In addition, the authorization process is simplified compared to many jurisdictions.
Permits exist to extract 350 tonnes of ore per day. And with the Lucero asset, where both permits are in place, there is regional infrastructure. The nearest plant operates at only about 60% capacity and about 20 days per month. It is therefore possible that we will start to generate cash flow in the short term.
The company said its portfolio provides a pathway to revenue. What do you think is the timeline?
Following the acquisition of the Peru portfolio, which is expected to close no later than mid-June this year, we plan to take the time to ensure we have adequate core exploration, including an initial 43-101 resource. for the two old mines to make them work again. We are quite confident that within 18 months we should be in production at Lucero.
This can help offset our day-to-day operating costs and even fund some exploration work. If we want to take leaps and bounds, we go to different lenders, debt financing being one topic. With cash flow, we can justify borrowing to grow both the Peruvian assets as well as our flagship and Nevada portfolio much faster.
What should Element79 investors expect in the medium term?
We are growing very quickly from a small start-up to a fully operational mining company on a global scale. We have just hired another world-class teammate, Mr. Kim Kirkland, as Vice President of Global Exploration and are hiring other consultants and country managers for specific assets.
The pending newsreel includes updates as we close on Snowbird and possibly Peruvian assets. We are also actively raising capital and making progress on long-term sustainability initiatives while growing our portfolio.
Cash generation is a key part of our business strategy. There are many junior miners who are unable to achieve this goal due to their assets or strategy. We intend to do so within 18 months of acquiring the Peruvian portfolio.
My personal goal was to have this company have access to cash within 24 months of our IPO. We seem to be on that trajectory right now, with an incredible team of people and key assets to get us there.
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