While the phrase "there you go again" has pejorative connotations in the U.S. political sphere, in the junior mining space it can mean very good things.
Richard Bedell and Ron Parratt smacked a home run with finding and eventually selling AuEx Ventures’ gold assets, and they’re at it again in familiar geological territory with their latest venture: Renaissance Gold (REN-T).
AuEx’s success was built on the Long Canyon property, which hosts a deposit in a newly emerging gold district in Nevada’s Pequop Mountains.
Fronteer Gold wanted to consolidate its ownership of Long Canyon, and in late 2010 it closed a deal to buy AuEx for shares and cash that valued AuEX at $281 million — a 50% premium to its share price at the time.
But that wasn’t the end of the gains for AuEx shareholders, who soon reaped another windfall. With the ink barely dry on the AuEx acquisition, Fronteer turned from acquirer to target, and was snatched up by Newmont for $2.3 billion in cash in February 2011. Newmont says it saw Long Canyon as part of a trend reminiscent of the famed Carlin trend, also in Nevada.
The acquisitions have meant that from the time of its initial public offering in 2005, AuEx shareholders enjoyed a return that was 98 times their original investment.
And so it is little wonder that the men behind the former company’s success are looking to generate more wealth for investors by making another bet on Nevada’s rocks.
Bedell now serves as Renaissance Gold’s president and CEO, while Parratt is on-board as chairman.
This time around, the co-founders of AuEx have cast the net wide for the next big find, having built a portfolio that includes 23 projects in Nevada and Utah, as well as others in Argentina and Spain.
Bedell and Parratt will manage the large stable of assets using a prospect generator and joint-venture model.
At a presentation in Toronto on Oct. 11, Bedell explained that the model allows Renaissance to leverage exploration risk to its partners while minimizing its equity dilution.
"We can go for two more years without any dilution to our shareholders," he said.
Renaissance Gold will look for desirable properties and form joint ventures where the earn-in company makes a one-time upfront payment and funds the project through a bankable feasibility study, at which time it earns a 70% interest, with Renaissance retaining 30%.
Bedell emphasized the benefits of the one-time upfront payment, saying that it frees the earn-in company to spend its capital on drilling.
Renaissance has formed JVs on 16 properties. In 2011, $6.8 million was spent and over 41,000 metres were drilled. This year, Bedell says he expects partners to spend roughly $10 million on exploration, and drill over 65,000 metres.
"With that amount of drilling, we expect total resources at our projects to more than double by the end of the year," he says.
The company has more than 404 sq. km staked in Nevada’s Pequop area. Wood Hills South is one of the most promising properties, with NuLegacy Gold (NUG-V) committing to spend at least $300,000 this year. NuLegacy’s first hole on the property shows anomalous gold, with a 10.7-metre intercept grading 0.4 gram gold.
Wood Hills sits 20 km west of Long Canyon on the western side of the Pequop Mountains, and south of the range lies another prospect, named Spruce Mountain.
At Spruce, Sumitomo has an earn-in agreement on the property, which hosts multiple Carlin-type gold targets that Bedell said are similar to Alligator Ridge and Long Canyon.
But much of Sumitomo’s interest has to do with base-metal targets, especially a prospective porphyry with molybdenum mineralization. Sumitomo is planning a second phase of drilling with a $1.7-million budget at the site.
The Japanese conglomerate’s satisfaction with Spruce Mountain led to another agreement between the two firms, with Sumitomo planning to spend $500,000 at the Big Gossan copper play, which is also in Nevada.
Closer to production is the Trinity Silver project — a past oxide heap-leach silver producer that turned out over 5 million oz. silver in its day.
Liberty Silver (LSL-T, LBSV-O) owns the earn-in option at Trinity, and while the company’s shares are halted at press time due to an investigation by the U.S. Securities and Exchange Commission, it has made strides at the site over the last year. (The Ontario Securities Commission followed with its own cease-trade order on Liberty’s shares on Oct. 12, 2012.)
One if its biggest achievements was acquiring the Hi Ho claim, which is adjacent to Trinity. The past operator, U.S. Borax, claimed that Hi Ho held half of the project’s oxide resources. The claims are in Renaissance’s name, and if Liberty can’t continue at the project, the property will fall back to Renaissance.
Trinity has inferred oxide resources of 1.7 million tonnes grading 38.8 grams silver for 2.6 million oz. silver, and inferred sulphide resources of 4.8 million tonnes grading 47.9 grams silver for 9 million oz. silver.
Elsewhere in the state, Renaissance had a JV with Eldorado Gold (ELD-T, EGO-N) on the Buffalo Canyon property. The claims are described as hosting an intrusion-related gold and silver system. Eldorado has drilled 14 reverse-circulation holes and 4 core holes, with highlights of 15.2 metres grading 0.4 gram gold, and 4.6 metres grading 1.89 grams gold.
Renaissance has acquired adjoining claims with a small non-National Instrument 43-01 compliant resource, and is combining all the drilling into a 3-D model to pursue additional targets.
Another property to keep an eye on is across the Nevada border in Utah, where Renaissance has an agreement with Newmont Mining (NMC-T, NEM-N) that gives the senior the right to earn into the Wildcat property. While only geological mapping, soil and rock-chip sampling and airborne geophysics have been completed to date, Newmont began a 9,500-metre, reverse-circulation program in August, with results expected soon.
So while some juniors may think getting the big boys at Newmont and Eldorado to fund exploration on their projects seems too good to be true, Bedell says it’s simply part of a strategy.
"It’s a very risky business," he says, "but we are taking many swings of the bat."
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