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Tuesday, 22 January 2013
Tarsis Resources’ prospect generator model attracts big backers, with further acquisitions ahead
Tarsis Resources (CVE:TCC) is one of those “lucky few juniors with a little bit of cash”, according to CEO Marc Blythe, whose company functions on a prospect generator model – meaning it seeks out prospective exploration projects to acquire, and then vends or options them to partners for development.
“It’s been really tough for junior companies to raise money that don’t have a niche, a management team with particular experience, or a project that is appreciated,” he says.
“We have a strong group of supporters who like the prospect generator model, and for this reason, we haven’t had difficulties to date.”
Blythe also points out that Tarsis has made efforts to maintain relationships with major companies that like its style of exploration or type of project, and could be sourced for financing.
Indeed, the company has strong backers. Kinross Gold(TSE:K) invested about a year and a half ago, and now has around a 9% stake, while Sprott’s Rick Rule has a more than 10% interest. Almaden Minerals (TSE:AMM) also holds over 10%.
And there is even more proof that Tarsis hasn’t had any trouble raising cash. Last October, it closed a financing for total proceeds of just over $1 million, raising double what it had originally anticipated. Backers in the offering included Sprott, and management, which holds a significant chunk of shares, among others.
“We have tried to maintain a tight share structure, and we’ve done a reasonable job with 40 million shares, considering we’ve been on the market since 2007.”
The company has big plans for the new funds, as it intends to spend the money on its prospect generation efforts in the Yukon, Canada, in Mexico and the U.S., as well as on early stage work at its existing projects.
Currently, Tarsis has nine properties in the Yukon and one in Mexico, where Blythe says the main focus of the company will be this year.
Its Erika property in Guerrero State, Mexico, which spans 16,000 hectares, has seen “really encouraging drill results”, attests the CEO, with 10 metres of just over a gram of gold. The property hosts Carlin-style mineralization – the type of gold that is seen in Nevada - says Blythe, and Tarsis believes it’s one of the only properties in Mexico with this style of mineralization.
“The asset has got everything in terms of infrastructure – roads, power line, and people. It’s very well set up, with Goldcorp sitting almost adjacent and Torex Gold one of our neighbours.”
“We’re talking to a number of groups, and we are aiming to do a deal this year.”
Its second priority is adding new properties in Nevada as well as in Mexico. “We are looking fairly extensively at projects in Nevada because we like it there. We like the Carlin-style of gold mineralization and it’s easy to work there. There is a good, long season.”
The company is also a fan of the Yukon, where it has nine properties, including its 6,700-hectare White River asset, where it has an option agreement with Driven Capital Corp (CVE:DVV), and the 5,660-hectare Prospector Mountain property - located near Carmacks in central Yukon, close to the operating Minto copper mine.
“The Yukon is under-explored. It is a big territory, with great geological potential and several recent major discoveries.”
In late September, Tarsis unveiled final results from diamond drilling at White River, a program that Driven funded as part of its deal to earn a 60% stake in the project. To earn the full 60%, Driven must pay $400,000 in cash to Tarsis, issue 2 million shares and spend $4.25 million in exploration on the project.
“Moderately elevated” gold values were identified in all holes at White River, with assays ranging from 0.42 to 2.78 grams per tonne (g/t) gold over intervals ranging from 0.76 to 1.47 metres.
“We’re not sure what will happen yet with the option agreement, but the property will be returned to us if Driven doesn’t meet its commitments. If it is returned, we will either undertake a small, early-stage exploration program or find another partner.”
Tarsis also has the Prospector Mountain property in the Yukon, which was returned to the company last year, with the junior explorer now working through the data it has so far. The asset is located “fairly close” to Western Copper’s Casino Deposit, says the company’s CEO, and he believes that Prospector may have higher gold grades than Casino. Though there is no defined resource, he says the company has recovered grab samples from surface of over 100 g/t gold.
Prospector lies within the Dawson Range portion of the Tintina Gold Belt and the company says it covers an area of mineralization indicative of both a porphyry copper-gold and epithermal gold-silver mineralizing environment.
Over two years, $2.7 million has been spent in terms of exploration at Prospector. SilverQuest Resources, which was taken over byNew Gold (AMEX:NGD), was the previous option partner, and dropped the Prospector property as a result of the takeover.
With about $700,000 in the bank, Blythe expects Tarsis has enough cash to last through the year. Despite many juniors in Canada being cash-strapped, the company has maintained its general and administrative costs low, with most money spent on the ground.
“We run the company very cheaply; most of the people we use are contractors and consultants, so it’s really easy to turn the tap off. Prospecting is also fairly cheap in comparison to drilling.”
With regards to an outlook for the small-cap market, Blythe says the broader picture remains that commodity prices are still high for gold and copper – which is what Tarsis explores for.
“Major mining companies are mining out their reserves and resources, and they will need to replace these. We like to think that we can help with this, and this is what we will be able to do.”