Mining Markets


Eight juniors that cheered the market in 2012

In 2012, junior miners faced a dreary market. Despite a rally early in the year, from Jan. 3 to Nov. 15, the S&P/TSX Venture Composite Index fell by 19% overall.

In 2012, junior miners faced a dreary market. Despite a rally early in the year, from Jan. 3 to Nov. 15, the S&P/TSX Venture Composite Index fell by 19% overall.

But there were some juniors who managed to defy the market downdraft and rise by more than 100% over that period.

These companies gave investors something to cheer about and were thus rewarded with access to capital and the chance to build on their achievements. The top eight such juniors, listed below, display a surprising diversity in approach and commodity of focus — proving that even in times of uncertainty, the market craves a good success story.

8 Gold Standard Ventures (GSV-V) +111%

In eighth place on our list is Gold Standard Ventures, the Nevada junior stacked with ex-Newmont Mining (NMC-T, NEM-N) staffers.

The company proved its Nevada expertise when it hit high-grade gold at its previously discovered North Bullion Fault zone at its Railroad project in early 2012. The intercept, 56.4 metres grading 4.26 grams gold per tonne, confirmed that North Bullion is a Carlin-type gold deposit, which means it could be a much larger and stronger system than the adjacent Rain system.

That and subsequent results, such as 124 metres of 4.05 grams gold, have sent Gold Standard shares up 111%, or 80¢ this year to $1.52 in mid-November.

And with roughly $15 million in its treasury in November, drill results will continue to flow into 2013. The company has budgeted $14 million to drill 70 holes at Railroad for 70,000 ft. (21,300 metres) from June 2012 to May 2013.

The junior has also moved to consolidate more claims in the Railroad district and in the Pinon district just south of Railroad.

7 Gold Reach Resources (GRV-V) +125%

Gold Reach Resources started off 2012 on solid footing, after New Gold (NGD-T) bought its Auro gold property (adjacent to New Gold’s Blackwater project), in B.C., for $6 million.

The move allowed Gold Reach to plan a 20,000-metre drill program at the West Seel deposit, a late 2011 discovery at its Ootsa copper-gold-molybdenum porphyry project in northwest B.C.

Its shares were already starting to take off before it reported the completion of the first two roughly 1,000-metre holes of 2012 at West Seel, in June. Both holes ended in strong alteration with visible copper and molybdenum sulphides.

Assay results from West Seel have since returned up to 817 metres grading 0.45% copper-equivalent (from 262 metres depth) and 537 metres of 0.65% copper-equivalent (from 350 metres) and Gold Reach stock climbed 74¢ to $1.33 in mid-November.

Ootsa already contains indicated resources of 28.1 million tonnes grading 0.4% copper equivalent, plus 214.8 million inferred tonnes grading 0.33% copper equivalent in the Seel deposit.

The project is only 8 km southeast of the producing Huckleberry copper-gold-molybdenum mine, and close to infrastructure, including roads and power.

The company has more than doubled its initial drill target with over 41,500 metres drilled this year, and in November, had $2.4 million in its treasury.

6 Argex Titanium (RGX-V) +193%

With a steeply rising price for titanium dioxide (the mineral is expected to double in price from 2010 to 2015), Argex Titanium has seen its share price follow a similar trajectory. The junior has a pilot plant in Ontario that is using a patented process to extract high-purity titanium dioxide pigment — used in paint, cars, construction materials and more — from ilmenite.

Argex saw a dramatic surge early in the year, spiking just after it announced a deal with PPG Industries (PPG-N), a leading U.S.-based paint supplier, that would help make its titanium dioxide pigment suitable for use in PPG end products. Under the collaboration agreement, Argex will help develop and optimize PPG’s technology for pigment-grade titanium dioxide for paints and coatings.

To the middle of November, Argex shares were up 81¢ to $1.23.

In the meantime, Argex is also completing a feasibility study on a full-scale titanium dioxide production plant that is due out by the second quarter of 2013.

The junior has a potential source of supply in its titanium dioxide property in Quebec, which was the study of a 2011 preliminary economic assessment. The study on the La Blanche project showed an internal rate of return of 32% and a net present value of $2.2 billion (at an 8% discount rate) with a capital cost of $801 million.

5 Diamcor Mining (DMI-V) +237%

At a time when most diamond juniors are struggling, Diamcor Mining’s stock has been on a tear, rising from 38¢ to $1.28 over the year.

The company is starting trial mining at its 70%-owned Krone-Endora project, in South Africa, and at presstime, had been planning its first diamond sale in November.

Diamcor expects to receive a mining licence that will allow it to move to 24/7 production in the first quarter of 2013, but still expects to have 10,000 carats of diamonds by year end. The alluvial operation is currently producing around 2,000-4,000 carats per month.

The project, which is 30% owned by Diamcor’s black economic empowerment partner Nozala Investments, is a former De Beers project, and is located right next to the diamond giant’s rich Venetia mine.

Krone-Endora has an inferred resource of 1.3 million carats in 54 million tonnes of gravel. While the company hasn’t completed an economic study yet, it does have a deep-pocketed partner in the form of Tiffany & Co. (TIF-N). In return for a right of first refusal to buy diamonds from the project at market prices, Tiffany has provided $9.5 million in financing.

4 Zenyatta Ventures (ZEN-V) +238%

Listed in late 2010, Zenyatta Ventures was hoping to find a nickel-copper-PGM deposit when it drilled a large airborne EM conductor on its Albany joint-venture project, in northern Ontario.

Instead, the company hit graphite — the hot commodity of early 2012.

Most graphite stocks have fallen back to earth after peaking in April, but not Zenyatta. To the middle of November, the stock was up 34.5¢ for the year to 49¢, and at presstime in late November, its shares soared to 70¢, after announcing it had acquired 100% of Albany from partner Cliffs Natural Resources (CLF-N).

Albany is a vein-type deposit, and has a rare, high-purity form of graphite used in steelmaking that is only mined in Sri Lanka.

Located 86 km west of Hearst, only 30 km north of the Trans-Canada Highway, and close to rail and power, the project has returned up to 170 metres grading 6.6% carbon as graphite from 44 metres depth. Initial metallurgical work has yielded 97.2% carbon.

Cliffs owns 12.7% of Zenyatta’s outstanding shares but could own up to 20.5% of its shares (15.4% fully diluted) if it exercises all warrants it holds.

There was some friction between Zenyatta and the Constance Lake First Nation last year, but in July 2011, the two signed an exploration agreement covering prefeasibility activities.

At the end of June, Zenyatta had $1.4 million in working capital.

3 Bitterroot Resources (BTT-V) +250%

While Bitterroot Resources’ stock was affordable even at its highest price this year at 19¢, it qualifies as our third biggest gainer of 2012, climbing from 4¢ up to 14¢ in mid-November.

Rather than a new discovery at its Upper Peninsula project in Michigan, it’s the potential for a new discovery or takeover that has propelled the junior higher.

Rio Tinto (RIO-N, RIO-L) is advancing its nearby Eagle nickel-copper project to production by 2014. And it’s looking for more deposits like the small, but high-grade Eagle, which hosts 3.2 million tonnes grading 3.89% nickel and 3.04% copper. The diversified major is drilling in the area — as close as 180 metres from Bitterroot’s claims.

The news that sent Bitterroot stock higher in early September was simply that it had generated several new targets on its Upper Peninsula project, after conducting an aeromagnetic survey over its claims.

At the time, the company said it was exploring its funding and “industry-related” options for proceeding with exploration.

At the end of July, Bitterroot had $1.2 million in working capital.

2 Reservoir Minerals (RMC-V) +416%

Second on our list is Reservoir Minerals, a prospect generator that attracted big fish Freeport-McMoRan Copper & Gold (FCX-N) as a joint-venture partner at its Timok copper-gold project in Serbia.

In July, the junior announced a 266-metre intercept of 1.23% copper-equivalent (1.07% copper and 0.28 gram gold) from 598 metres depth at Timok, a high-sulphidation copper porphyry deposit only 7 km away from the massive Bor copper mine.

That hole prompted Freeport to exercise its option on the project, and the major is now fully funding exploration and can earn 75% by completing a feasibility study.

A second hole delivered an even more incredible 160 metres of 10.16% copper-equivalent (or 6.92% copper and 5.4 grams gold) from 460 metres in September.

Reservoir’s stock has responded to the discovery, rocketing 416% this year, from 49¢ in January to $2.53 in mid-November.

Still to come are results from another 10 holes being drilled at Timok.

In October, Reservoir had $19.8 million in its treasury to acquire new projects or advance its several other wholly owned properties in Serbia, or its 90%-owned interest in the early-stage Bibemi gold project in Cameroon.

1 GoldQuest Mining (GQC-V) +679%

And in first place, is GoldQuest Mining, the Dominican Republic-focused junior that made the grassroots Romero gold-copper discovery at its Las Tres Palmas project this year.

When the company released the results of the discovery hole at Romero in May, it was trading at under 10¢ and had less than $500,000 in the bank.

But the hole, which cut a near-surface 231 metres of 2.4 grams gold per tonne (including 160 metres at 2.9 grams gold and 0.62% copper), and others like it, allowed the junior to raise money and continue drilling.

Since the discovery hole, GoldQuest has delivered additional intercepts of up to 258 metres of 4.5 grams gold and 1.3% copper (from 120 metres).

The junior, which has been working away in the DR for just over a decade, has been rewarded with a whopping 679% gain this year, up 64.5¢ in mid-November from 9.5¢ at the beginning of the year (it traded as high as $2.03 in August).

While more recent holes have disappointed the market, sending the stock down to around 50¢ at the end of November, after closing $6.6-million and $15-million bought-deal private placements in June and August, the company is fully funded for the next year of exploration with $19 million in the treasury.

With that cash, GoldQuest plans to continue drilling Romero, where it currently has three portable drill rigs at work.

“What we want to do is try to define how big it is to the east and west,” Espaillat said in an interview in late November. “And we are going to find that out very quickly.”

To help it do that, GoldQuest is bringing in a fourth drill rig to the project in January.

So far, Romero extends for about 400 metres from the northwest to southeast and to 400 to 500 metres at depth (and still open), with a higher-grade mineralized corridor measuring around 100 metres wide. The company describes the mineralization as intermediate sulphidation epithermal in style.

Once the company gets a better idea of the geometry of the deposit, which Espaillat anticipates could be as soon as mid-2013, it will consider putting a resource estimate together.

By late November, GoldQuest had drilled 23 holes at Romero, which is located in the country’s west end, close to the Haitian border.

The Las Tres Palmas project extends for about 50 km north-south and is about 5-10 km wide. The land was staked based on the geologic environment (volcanic rocks) and the results of stream-sediment sampling that turned up gold and copper anomalies.

Romero was a blind discovery identified by an induced-polarization (IP) survey at Las Tres Palmas that Espaillat initiated shortly after joining the company in early 2011. He says only 20% of the IP anomaly has been tested so far.

Romero is at the north end of the Las Tres Palmas trend, where Goldquest has identified several deposits, including La Escandalosa Sur, which hosts 4.86 million inferred tonnes grading 2.6 grams gold.

The company also needs to follow up on other anomalies identified by the 2011 IP survey, and will start a deeper IP survey in December. While the initial survey penetrated to 280 metres depth, this one will go to 500 metres.

“What we want to do is maximize the drilling return, in other words, if we have better evidence of the geophysics, the target will be more valid, it will warrant drilling,” says Espaillat, a mining engineer and geologist who also has a master’s degree in finance.

Espaillat served as vice-president exploration for GlobeStar Mining — which was bought for its Cerro Maimon mine in the DR in 2010 by Australia’s Perilya (PEM-A) for $186 million — and as an exploration manager for Falconbridge.

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