Two of the three concessions Everton Resources (TSXV: EVR) has in the Dominican Republic are next to the huge Pueblo Viejo open-pit gold mine, jointly owned by Barrick Gold (TSX: ABX; NYSE: ABX), 60%; and Goldcorp (TSX: G; NYSE: GG), 40%.
But it was Agnico Eagle Mines’ (TSX: AEM; NYSE: AEM) decision to invest $23 million for a 15% stake in GoldQuest Mining (TSXV: GQC) — which is permitting its prefeasibility-stage Romero gold-copper project — that generated more interest than usual in Everton’s holdings in the Dominican Republic.
“We had a lot of people come to our booth at PDAC all of a sudden because of that investment, saying: ‘Holy jeez, maybe we should look at this country,” André Audet, Everton’s founder, president and CEO, says in an interview. “Companies like Agnico don’t do those sorts of things without doing a lot of research — it’s a big investment — and people started coming to us and saying: ‘OK, tell us what you’ve got in the Dominican Republic.’ It certainly gives confidence in the geology, economics and politics of the country.”
The Dominican Republic “was really hot five years ago, and then died off,” adds Audet, who founded Everton in 2001–2002 after specializing for a decade in private portfolios and mining investments at BMO Nesbitt Burns.
“It’s like the Yukon and Colombia — they go through cyclical highs and lows in the investment cycle,” he says. “It’s good to have it back on the map as a premier location for discoveries. And we hope to prove that with our own drill program in the next 90 days.”
Everton has been working in the Dominican Republic since 2004, and has spent $10 million on its concessions. But it’s been a slow process. It wasn’t until June 2016 that the Ministry of Energy and Mines renewed the exploration permits for the junior’s three key exploration concessions: Arroyo Carpintero, 35 km southeast of Pueblo Viejo and 50 km north of the capital of Santo Domingo; Cabirma del Cerro, which adjoins the Pueblo Viejo concession (Pueblo Viejo’s open pit is 700 metres east and 1,450 metres south of Cabirma del Cerro’s concession boundaries); and Mermejal, which is situated on the east side of the Pueblo Viejo concession.
Under the mining law, exploration permits for concessions are granted for three years but can be extended for one year twice. Environmental impact reports are required before drilling can begin and companies can hold no more than 300 sq. km of ground.
“It took us about three years to renew the concessions, but it felt like five years,” Audet says, adding that Everton entered the Dominican Republic at around the same time as GoldQuest. “The good news is that you keep your priority rights when the concessions are in the renewal process. We finally got them granted in mid-2016. Our patience has been rewarded.
“It’s been frustrating to get this permitted,” he concedes. “It’s been a tough struggle. We’ve had to cut back and lay people off. It’s not that fun to do, but you’ve got to do what you’ve got to do. We’re still around, and people are surprised we’re still at it, but that’s the name of the business.”
As soon as the government formally granted the exploration permits for the three concessions, Everton launched an induced polarization (IP) survey at Arroyo Carpintero, where the company had completed a regional sampling program of rivers and creeks in 2011, and says it has identified a multi-kilometre copper-gold anomaly.
“We sampled all the outcrops and gossans, and had interesting results,” Audet says. “All the streams, sediments and creeks are anomalous in gold — with up to 1,000 parts per million — and we were getting up to 0.6% copper on gossans and outcrops. We’ve dug some pits and they’re showing up to 0.6% copper, and we’re not even in fresh rock.”
Everton raised $1 million in a private placement last month and kicked off a 3,000-metre drill program on March 2. The $600,000 drill program will consist of seven diamond drill holes ranging between 400 metres and 600 metres long. Audet hopes the $600,000 drill program will confirm a new copper-gold porphyry discovery.
“It’s one of the best targets in the country,” he says of Arroyo. “We’re excited because this area has never been drilled, and we think it’s going to confirm a copper porphyry system based on everything we see here.”
The question, he says, is how big it is and what its grades will be.
“We don’t know whether the grades are going to be exciting or just so-so,” he admits. “Is it 0.6% copper? Is it continuous? We think from the work we’ve done on the surface this thing should have good grades.”
“The geophysics is certainly exciting,” he continues. “We’d be surprised if the drills don’t turn up something interesting, and we’ll know in the next two or three months.”
Meanwhile, at its Ampliacion concession — whose land boundary is 300 metres from where Barrick and Goldcorp are mining Pueblo Viejo — Everton will need a partner.
“We really like that one,” he says of Ampliacion. “But the deposit is deeper than Arroyo, and it’s more complex. We’re focusing on Arroyo because it’s the easier one. It’s large, it’s copper-gold and it comes right to surface, based on the IP survey. Ampliacion is deep and needs a $5-million program to move it forward. It’s a property we would want to bring a partner in on.”
Everton’s third concession, Mermejal, is 10 km east of the Cerro de Maimon copper-gold mine. The mine, previously owned by Australia’s Perilya Ltd., was acquired by Perilya’s major shareholder, Zhongjin Lingnan Mining (HK) Co., a wholly owned subsidiary of Shenzhen Zhongjin Lingnan Nonfemet Co. in 2013. Audet says Mermejal could become a satellite deposit for Shenzhen Chongjin.
“There’s potential to grow that small deposit, but it’s not something that is going to be a company-maker, it’s third on our priority list,” he says. “We have to see if we can expand it to make it more interesting. It needs more work and more drilling to make it bigger.”
Everton acquired its Dominican concessions through its purchase of the Dominican Republic division of Linear Gold Corp., a company that was later acquired by Primero Mining (TSX: P; NYSE: PPP). “It took me five years to convince them to do a deal,” Audet recalls. “They were active in the Dominican Republic, but were more active in Canada and Mexico. At the time their Dominican concessions were not strategic.
“Our concessions are the best ones,” he says. “We’ve explored the whole country from east to west and north to south, so we’re happy with our land position.”
He notes that the government wants to make sure that companies have the financial wherewithal to work their concessions. “You can’t just sit on your concessions. It’s not expensive to secure ground — it costs virtually nothing — but you have to show a budget and demonstrate you’re going to spend some money.”
In terms of working in the Dominican Republic, patience is key, Audet emphasizes. “They want to make sure things are done properly and that companies are serious about moving their projects forward, and you have to prove that.
“There’s a lot of red tape,” he adds. “It’s not like in Quebec where you can take a concession by clicking on a computer. There’s a longer process. It’s going better now because they need investment, and mining is one of the biggest engines of growth in the country. Pueblo Viejo is generating [tremendous] cash flow … and that money flows into the smaller communities, which helps improve the quality of life and creates jobs.”
While the number-one industry is tourism, followed by agriculture, mining “is probably close to overtaking agriculture as the biggest generator of their GDP.
“You can be caught up in Dominican Republic red tape and if a comma is in the wrong place, the file gets returned,” he says. “It’s very, very picky. But it does work. Things do get done.”