Prospect Generator Going it Alone with Cuale ProjectMon, 10/22/2018 - 14:28
Q: Why did the company decide to focus on the mineral belts in the western North American continent?
A: When Evrim was launched in 2011, we were interested in a database and a group of projects that were located in Sonora, Durango and Sinaloa. They were high-quality projects and this is what initially attracted us to the region. We also have a great deal of exploration expertise in the Western Cordillera of North America. Many people working for Evrim are experienced in the gold belts of Mexico and the copper porphyry belts in British Columbia. This strategy allows us to really focus and understand not only the geology of the region but also on regulations and community relations.
Q: What are your expectations for the US$7.2 million private placement from Newmont Mining?
A: The first time we did an alliance with Newmont was in the Trans-Mexican volcanic belt for early-stage generative exploration over a broad area. That experience created a strong relationship between both parties. When Newmont wanted to expand in North America over a larger scale, it made it much easier for us to have that discussion on what Evrim could provide. When the discovery at Cuale was made, our relationship made it easier for Newmont to invest US$7.2 million into Evrim, and approximately US$5.8 million of that amount is earmarked for exploration of our Cuale high-sulfidation gold project.
Q: How close is Evrim to forming a JV for Cuale?
A: With respect to Cuale, it is the one project Evrim has decided to keep in its own portfolio and not JV. For every project generator, there comes a project where the opportunity and geology are so compelling that the company will take its own risk capital and stake it on that, and that is exactly what we are doing with Cuale. We have been able to use Evrim’s share value as leverage to raise a significant amount of funding for the Cuale project. At least 80 percent of the funds raised by the Newmont private placement will be allocated to exploring Cuale. We generally like to mitigate exploration risk and that was one of our key strategies. But we will assume most of the risk on Cuale. Having said that, it is an extremely prospective high-sulfidation gold target and I think Newmont shares the same outlook that we do in thinking Cuale has a tremendous amount of potential to grow into something very significant.
Cuale is a project that has never been drilled and is creating a lot of excitement in the market. It is not very often that a company comes across a target with the numbers that were found in the trenching programs. Those numbers alone have generated tremendous interest from a number of groups as to what our next steps will be. It is still a fairly early-stage project but an exciting one.
While most deposits in the Talpa de Allende area of Jalisco are polymetallic in nature, Cuale is a gold target, which is pretty unique for the region. The project has near-surface potential of high-grade gold, and high-sulfidation deposits are considered among the lowest-cost producing mines. The size of successful high-sulfidation deposits in the Sierra Madres can be in the range of 2-5 million ounces of gold, as seen at La India, Mulatos and El Sauzal.
Q: What has been your experience working in Jalisco, which is not a traditional mining state in Mexico?
A: Jalisco is a lesser-known area for exploration, especially from a junior perspective. But in 2012, we formed an alliance with a company called Callinan Royalties and through this we were paid to conduct generative exploration and acquire projects for our own account, in exchange for a royalty. One of the prospective areas we identified through this program was the southern Sierra Madres, which is where Jalisco is. As previously mentioned, the state is known more for being a polymetallic belt rather than a gold belt but our team was very interested in the region, and Cuale was one of the projects that emerged from that program. The fact that Jalisco is a lesser-explored area is also an opportunity for us to enter and acquire ground on a fairly inexpensive basis.