Junior’s Projects Hindered by Investor ReticenceWed, 10/21/2015 - 13:42
When he still worked for Minera Delta, Daniel Nofrietta Fernández carried out extensive exploration work in Chihuahua, one of the most important mining states in Mexico. In 2000, Golden Goliath Resources came to own 99% of Minera Delta’s shares through a private placement. “We now depend completely on Golden Goliath for our administration and financing, but Minera Delta continues to be a Mexican company that focuses on the exploration of precious metals, and partially on lead, zinc, and copper projects in the state of Chihuahua,” shares Nofrietta Fernández, who now serves as Exploration Manager of Golden Goliath Resources.
In line with many other junior companies, Golden Goliath has been enduring harsh market conditions since 2013 after long relying on the flow of capital from the Vancouver Stock Exchange. Despite the difficult access to capital, years of expertise and a persistent focus on this important mining region have given the company access to promising projects such as La Nopalera, situated in the historic mining district of Uruachi in Chihuahua. “There is a possibility to build at least three mines within our project portfolio. Our claims are directly adjacent to Fresnillo’s Orisyvo project which has between 9-10 million proven ounces of gold,” states Omar Rodríguez González, auditor of Golden Goliath. Towns in the Sierra Madre Occidental of Chihuahua, such as Batopilas, Urique, Uruachi, and Ocampo, have a long mining history of highgrade gold and silver mining works. As surface deposits were depleted, the mining works closed and miners moved to other zones. Now, with modern exploration techniques such as satellite mapping and geophysics, geologists such as Nofrietta Fernández are able to return to these ancient treasure troves and explore at greater depths.
Nevertheless, even with such exciting techniques in contemporary exploration, it is not possible to advance this type of mining project without access to capital. After all, the exploration phase is not an earner and requires the injection of millions of dollars for drilling. “Our La Nopalera project alone demands US$10 million for exploration since it requires very deep drilling,” Nofrietta Fernández explains. “If it costs US$150-200 to drill just one meter, 1,000m of drilling could cost up to US$200,000.” Additionally, a number of other factors may affect the success of an exploration project. Problems such as access to water, or tough negotiations with communities for access to the land, may lead a project to become economically unviable. “Problems with communities exist because there is no legislation that precisely lays out what earning percentage of a mine site should be given back to the community,” Nofrietta Fernández expresses. The most advanced technology will not stop issues relating to communities and capital from derailing the access to precious deposits. The risky nature of the exploration market has been the main reason that many Canadian investors have avoided it, according to Nofrietta Fernández. “Investors have ceased to believe in junior companies because their investment rarely leads to fructuous results,” he exclaims. “This is due to geological and natural factors that we cannot control. If a company does not find an economically viable mineral deposit, then the millions it has invested will be lost.” For this and other reasons, many investors have now opted to invest in advanced projects with proven reserves that will allow a company to quickly enter the production stage. However, these kinds of projects are hard to find. For better or worse, Golden Goliath has sold all of its advanced projects and now holds properties in the early stages of exploration that all require investment for development. As a way to overcome the difficult access to capital, Golden Goliath is opting for alternative solutions such as providing larger companies with exploration work.
Despite these sizeable potential obstacles, Golden Goliath has continued to develop its projects in the Uruachi district through geological studies, sampling, and geochemical analyses. Some of these projects are now ready for drilling, as is the case of La Nopalera. “We are sure that there is a great chance for success in our projects but we have been waiting for financing for nearly two years now,” Nofrietta Fernández exclaims. “An investment in some of our projects would definitely have a decent return on investment, but junior companies are now the last to get new investments from the Canadian stock exchanges.” For this reason, Golden Goliath has begun looking to European stock exchanges in the hopes of finding new investors willing to share the risk.