When metals prices took a dip in 2012, the first casualty was exploration. With no budget, mining companies in Mexico focused on improving processes at existing mines instead of seeking new greenfield projects for expansion. Now, with prices starting to move upward, a group of top geologists is banking on its collective experience for a standalone discovery that could offer shareholders a “Spinco” windfall.

Minaurum Gold saw the opportunity to gather some of the most experienced geologists in the industry to form an exploration company that would target Mexico, having a team with extensive experience in the country. Minaurum is focused on three key areas in Mexico – southern Sonora, the Guerrero gold belt and the Oaxaca-Chiapas region. “We have a considerable amount of deal flow in those areas due to David Jones, Peter Megaw and myself having carried out extensive work there over the course of our careers,” says the company’s President and CEO Darrell Rader. According to Jones, one of the company’s directors, the team hopes to make a standalone discovery that will justify creating a “Spinco” pure play. “This only happens when a concession has a tangible value and this will hopefully happen in the next year or two,” he says.

The “Spinco” model dictates that if a sizeable discovery is made, the company will spin it off into a new company, allowing shareholders a direct interest and greater leverage over the project. For instance, if Minaurum makes a large find at its Alamos silver project in Sonora, it could spin this off into Minaurum Silver and shareholders would own both companies. “The second company would have its own listing and trade on the TSX,” explains Rader. “This model adds extra value for shareholders as they can start off with one company and end up with multiple.”

The project in question – Alamos - is located in the historically rich Alamos silver district and accounts for about 80 percent of its silver production, according to Rader. For many years, it was not drilled or explored due to ownership issues until a family from Hermosillo was able to consolidate the property, permit the project through to construction and sell it on to Minaurum. “Since making the acquisition, we have been carrying out a lot of mapping and discovering new veins and targets,” says Rader. The explorer is now at the point where it plans to drill 5,000m starting in 2Q17 and Rader is hopeful of finding a deposit that was missed by the 19th century miners.

Minaurum Gold’s management team and Board of Directors is composed of a high caliber of technical expertise. Megaw is responsible for the discovery of La Platosa, now in Excellon’s portfolio and the 200 million-ounce Juanicipio mine, which is now a JV between Fresnillo and MAG Silver. Jones discovered an 8-million-ounce deposit in Guerrero that went on to become Los Filos, later sold to Goldcorp and the 2-million-ounce Buckhorn gold deposit in Washington State, now owned by Kinross.

In Guerrero, Minaurum is also looking at the promising Vuelcos del Destino project. For Jones, “All the large gold deposits in the Guerrero gold belt are associated with an intrusive complex. This includes Los Filos, Timmins Gold’s Ana Paula concession and Torex Gold’s Media Luna.” Many years ago, he acquired the mineral rights to what is now Vuelcos del Destino, which has never before been explored or drilled. “I see the same indicators in the new project as I did in Los Filos,” he says. A third project – Santa Marta – is located in southern Oaxaca, an area that is not traditionally familiar with mining, which opens the opportunity for significant exploration potential.

Another issue the young company has run into is the Mexican mining authorities’ slow pace in freeing up old claims, especially those lost with the metals downturn in 2012. “Legislature dictates that these claims should be released after six to 10 months but five years later we are still waiting for many to be staked in title lotteries,” says Rader.

Despite these challenges, Minaurum has not lost its appetite for investing in Mexico. “We are here for the long-term and the idea is to chase these big discoveries,” says Rader. “We believe in real results, developing our expertise and moving onto bigger and better projects.”