This year marks Miranda Gold’s (MAD-V) most active drill season to date, with partners spending between $5 million and $7 million to test at least seven of the company’s nine joint-venture projects.
The project-generating company which describes its joint projects as “lottery tickets” says the chance of winning the prize will increase as it generates more targets and secures additional partners.
While the odds of hitting a target that becomes a gold mine are slim, it is not deterring the company led by veteran geologist Kenneth Cunningham from exploring.
“Exploration is always a long shot,” notes Miranda’s president and CEO after a recent corporate presentation in Toronto. “I’ve been doing exploration my entire life — I love it. Making a discovery is really exciting. One of the reasons we work where we’re working, is if we make a discovery we are hoping it’ll be very big.”
The company has 16 targets in three world-class gold jurisdictions including Nevada, Alaska and Colombia, with 13 of them located in Nevada.
Cunningham says its team of geologists has been involved in over ten discoveries, including what are now Barrick Gold’s (ABX-T, ABX-N) Cortez Hills and Goldrush deposits in Nevada.
The Vancouver-based junior has five geologists in its exploration office in Elko County, Nev., and three in Medellin, Colombia.
Miranda says its joint-venture business model helps mitigate exploration risk while conserving cash and minimizing shareholder dilution. In turn, it provides investors several chances to take part in a discovery on someone else’s dime.
The company currently has $6.3 million in cash on hand and a burn rate of $2.7 million a year.
While the joint-venture model varies from partner to partner, Miranda in the end will retain 30% of each project.
A typical deal in Nevada, where the company has six joint ventures, a partner will spend $4 million for the right to either spend another $10 million or produce a feasibility study, after which it will gain a 70% equity position.
“So that’s a $14-million protection before Miranda has to participate,” Cunningham says.
He’s quick to point out that not all interested partners will buy that deal. For instance, Agnico-Eagle Mines (AEM-T, AEM-N) can earn a 51% stake at Ester Dome, Miranda’s sole project in Alaska, by spending $4 million, after which it can either spend $10 million or complete a feasibility to bring its stake up to 70%. (However, none of Miranda’s current partners have spent $4 million yet.)
Agnico-Eagle has budgeted $700,000 this year to drill Ester Dome located in the Tintina gold belt near Fairbanks. Last year, Agnico completed its first round of drilling, where four of six holes cut gold mineralization, ranging between 0.3 and 0.9 gram gold per tonne.
In Nevada, Miranda has a few partners testing if the potential gold systems on the company’s targets are economic or not.
NuLegacy (NUG-V) plans to spend over $1 million to drill about nine holes or a combined 4,700 metres on Miranda’s Red Hill and Coal Canyon projects in Eureka Cty., Nev.
NuLegacy intends to put two to three holes at Red Hill to off-set the historic hole, BRH-013, that cut 24.4 metres of 4.96 grams gold per tonne, including 13.7 metres of 8.06 gram gold. The hole was one of the four drilled by Barrick in 2006 at the West Pediment prospect.
Miranda believes this may be the most significant intercept outside of Barrick’s Cortez camp, and is on trend with and southeast to the major’s Red Hill and Goldrush projects.
Also in Nevada this year, Montezuma Mines has budgeted $776,000 to drill Miranda’s Red Canyon project in Eureka County, while Ramelius Resources has completed 2 holes in the Big Blue project in Lander County and aims to drill additional holes at Angel Wing in Elko County.
In Colombia, Miranda has teamed up with Red Eagle Mining at two projects: Pavo Real and Cajamarca. This year, Red Eagle looks to punch eight holes in Pavo Real, located in the Tolima Department.
Brent Cook, an editor of the Exploration Insights newsletter, describes Pavo Real as “intriguing” given it’s hosted in sediments and has a broad area of alternation and surface mineralization.
Miranda says it’s close to forming a Colombian alliance to bring down the company’s costs associated with working there. For any of the projects Miranda generates in Colombia, that partner will have a first right of refusal to participate in that project. To be first in line, that partner will have to take care of the lion’s share of Miranda’s Colombian costs.
Miranda has 52.9 million shares outstanding, or 60.8 million fully diluted shares. Management holds 6% of the shares, while retail and institutional investors hold 43.5% of the company.
The junior recently closed at 33.5¢ within a 52-week range of 24¢-56¢.
Cunningham hopes the share price will increase as the company’s partners continue to drill, in hopes of delineating something attractive.
“We want to either discover something so big that we get taken out by a major or something that is economic that our partner puts it into production and we are the passive partner.”
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