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Tuesday, 19 February 2013
Canamex Resources embarks on aggressive exploration with strong financial backing
Canamex Resources (CVE:CSQ) (OTCQX:CNMXF) is one of those few juniors that has enough funds to execute on its plans amid a challenging market environment, with the company recently receiving strong backing from silver mining giant Hecla (NYSE:HL) as it advances its flagship Bruner project in Nevada.
The junior mineral explorer recently raised $2.5 million from Hecla, which bought 14 million shares of Canamex at 18 cents apiece through a straight stock purchase. Hecla now has a near 15% interest in the company, and has a right to maintain its interest in future financings.
But Canamex doesn’t plan to go to the markets anytime soon. With $4.1 million in the bank at the start of the year, the company says it has enough to take it into the first quarter of 2014.
“We obviously hit the bull’s-eye with Hecla as they are critically important as a strategic investor. Hecla had the opportunity to look at literally hundreds of other juniors, but they chose us because of our strong management, and our land package in under-explored gold and silver mining districts in the Americas,” says CEO Robert Kramer.
The company’s Bruner gold project, in Nye County, Nevada is where Canamex will devote most of its attention this year. The project has three areas of focus according to Kramer, two of which will be addressed in the first half of 2013.
The property has a historic, non NI 43-101 compliant resource near the southwest portion, which identified roughly 383,000 ounces of gold, or 15 million tons at 0.026 ounces per ton. The resource, though not compliant, was based on work completed by some heavyweights in the industry, including Miramar, Newmont, and Kennecott, meaning that Canamex has faith that the work is valid.
Within this historic resource area, Kramer explains there are “two real areas of interest”. The first lies just to the north, and is 200 metres long by 100 metres wide, and the second lies to the east in a 100 by 100 metre space.
Recently acquired rock and soil sampling in the north region, done by Newmont, showed samples of up to more than 50 g/t gold, Canamex says. The company will start drilling the area, which has not been drilled before, in early March, with plans for around 10,000 feet of drilling.
“The plan is for the program to give us an understanding of the northern extension,” says Kramer. “At the same time, we will also be mapping and completing surface work on the area east of the historic resource, where we could potentially start drilling in the latter half of this year.”
The aim, the CEO adds, is to see if the company can extend the historic resource, either to the north or the east, before bringing it to NI 43-101 compliant standards.
The other priority for the first half of this year is the Penelas East discovery area of the property, where Canamex reported high grade intercepts in March and July of last year. All together, the company says this mineral system could be more than 600 metres long and 100 metres wide.
“Penelas East has a significant amount of potential, and we are planning on coming at what we did last year from a different angle, with plans for around 12,000 feet of drilling in this area during the first half of this year.”
Indeed, in 2012, a total of 20 holes were drilled at the Penelas East area and 19 hit mineralization with an average overall thickness of 48.2 metres averaging 1.4 g/t gold.
The “third piece of the puzzle”, Kramer says, are the high grade vein targets on the property, which Canamex anticipates it will be ready to drill in the second half of 2013.
The vein targets are the Penelas mine, which saw historical production of “100,000 ounces running over a half ounce per ton” and the old Bruner vein area – located about 1.5 kilometres north of Penelas East – where recent surface samples returned up to 5 g/t gold.
The property, which benefits from the mining-friendly environment in Nevada, is comprised of 98 unpatented and 21 patented mining claims, covering a total of around 2,100 acres. It is located in central Nevada, near the Paradise Peak mine, the Round Mountain mine and the Rawhide mine.
The company has also completed column leach testing on material from the historical resource area at Bruner, showing a plus 85% gold extraction rate. “These are certainly metallurgical results that in our view support advancing the historical resource.”
The property has gone through a number of hands, as is typical for Nevada, and Canamex has a right to earn a 75% interest in the asset, 70% of which can be bought by spending $6 million on exploration over a period of seven years. The remaining 5% can be attained by producing a bankable feasibility study.
The Bruner project is not the only property Canamex is exploring. It also stands to benefit from its Aranka North property in Guyana, where it has the option to acquire up to a 100% interest in the asset by making cash payments to GMV Minerals, spending US$1.0 million in exploration work before the end of this year, and issuing a total of 3.75 million shares to GMV.
Its final cash payment is due in early August this year, with the company having already met its exploration commitment. The final 1.0 million share payment is due by August of next year.
“Because we have already met our expenditure obligation at Aranka North, we have flexibility on how we approach our activities there,” Kramer says.
The company is in the midst of a power auger drilling program at the site, which it hopes to finish at the end of February or early March, with results anticipated sometime in early April.
“We don’t have to do anything,” he emphasizes. “Further exploration will be based on a decision of where best to put our resources, as opposed to having to do something to meet our contractual obligations,” asserts the CEO, who adds that the Guyanese property is on the same trend as Guyana Goldfields (TSE:GUY), a company that just completed a $100 million bought deal financing.
The Aranka North property, which spans 98,057 acres, is also on trend with major gold discoveries by Sandspring Resources(CVE:SSP) at Toroparu.
According to the junior explorer, there are active alluvial gold mining operations within Canamex’s land package, and initial interpretive work on airborne magnetic data has found 15 “large anomalies”, the company says, all of which have dimensions of two to four kilometres long and one to three kilometres wide.
Along with its properties, Canamex also boasts a strong management team, with Kramer having more than 35 years of business experience as an accounting professional, having served in senior exec positions with natural resource and tech companies in both Canada and the U.S.
President and COO Greg Hahn is also a professional geologist and geological engineer, with over 30 years of experience taking precious and base metals mines in the western U.S. from exploration into production.
But the potentially lucrative properties and the management don’t mean much if there is not a strong supporting environment for precious metals. Obviously, Kramer believes there will be.
“I believe the trend is in our favour. Governments around the world seem to be in a race to the bottom in terms of their own currencies, and the ultimate result of this will be higher precious metal prices,” he says, adding that he expects some consolidation in the junior mining industry as many “simply do not have the necessary capital in hand” or the realistic ability to attain the capital to complete exploration.
Canamex is luckily not one of these juniors, Kramer concludes, having the cash it needs to hit the ground running at its Bruner property.