Altan CEO gets creative to finance greenfield exploration

Altan Nevada Minerals' North Star gold project in Nevada. Credit: Altan Nevada MineralsAltan Nevada Minerals' North Star gold project in Nevada. Credit: Altan Nevada Minerals

VANCOUVER — It has been a lean two years for mineral explorers, and Evan Jones has seen just how tough capital markets have been on juniors, having guided sister companies Altan Rio Minerals (TSXV: AMO) and Altan Nevada Minerals (TSXV: ANE; US-OTC: ATNVF) to advance early stage assets on opposite sides of the globe.

But to start 2014, president and CEO Jones and his team have closed two deals that should see the drills turning again later this year. These aren’t traditional retail placements, but two creative-financing options that juniors could use to advance greenfield properties.

Altan Rio is a prospective area play in Mongolia that houses a speculative copper porphyry target, along with two gold projects. Two years ago Altan Rio had been focused on its 825 sq. km Chandman–Yol copper property in Mongolia’s western Khovd province.

“To get active at Chandman again, I think we really need to go in there with a larger budget,” Jones says during an interview. “Even if the money was available to do justice to the project it would simply be too dilutive. We’re thinking the most attractive way to advance Chandman is through a joint venture.”

Altan Rio has shifted its attention for this season to the Khavchuu orogenic-lode gold target in the country’s Tov province, which lies 10 km west of Centerra Gold’s (TSX: CG; US-OTC: CAGDF) Boroo gold mine and mill complex. In 2012 the company completed a 1,900-metre, scout-drill program at Khavchuu. The best intersection was in hole 5, which cut 11.5 grams gold per tonne over 1 metre in a structurally complicated area on the edge of a large Boroo complex granitoid.

Khavchuu played a large part in attracting the European Bank for Reconstruction and Development (EBRD) to Altan Rio, with the bank offering the company an equity facility in January that could be worth $10 million.

To start, the EBRD will buy 16.7 million shares in Altan Rio at 6¢ per share. Under the agreement, the EBRD has committed to invest a minimum of $5 million and a maximum of $10 million in share purchases, in minimum tranches of $1 million.

“We’re really happy they’ve backed the team to move things forward . . . when we raise future money from arm’s-length third parties, they’ll match the terms,” Jones says. “We’ll be stepping out from our discovery hole at Khavchuu and look to hit some economic widths. The location would make it a really attractive place to find oxide ore, given its proximity to an existing mill.”

Jones sees “some really good things happening in Mongolia” in terms of mining legislation. He says there is optimism surrounding Turquoise Hill Resources’ (TSX: TRQ; NYSE: TRQ) Oyu Tolgoi (OT) underground copper–gold  mine, and that the government has recognized “a number of issues” in its mineral policy that it will address with amendments to the country’s mining legislation.

“They are looking at finalizing the adjustments to the mining law and removing the moratorium on exploration licences. Last season was tough and not a lot of companies did much work, but moving forward I sense a lot of optimism amongst Mongolian insiders,” he adds. “Assuming that OT moves forward and the policy landscape is cleared up, we should see an improvement, and I’m optimistic that will come to pass.”

Altan Rio has traded within a 52-week window of 2¢ to 12¢, and closed at 7¢ per share at press time. The company has 52 million shares outstanding for a $3.7-million market capitalization.

Meanwhile, Altan Nevada is another speculative land play that encompasses 150 sq. km in Nevada. The company had been advancing a variety of copper and gold prospects across the state when punishing markets stymied exploration efforts.

Enter Teck Resources (TSX: TCK.B; NYSE: TCK) at the end of 2013. Altan Nevada announced an option agreement with a wholly owned subsidiary of Teck on its North Star gold project that could see the Canadian major earn a 70% interest in the property by spending $5 million on exploration.

With permitting already in place, drilling at North Star is to begin by mid-year. The companies will work together to define drill targets in the intervening period, with Altan Nevada pitching in some technical expertise and Teck acting as operator.

“They actually looked at the project a few years ago. It’s north of the known extent of the Carlin trend, but we believe it could be an extension. We have some interesting Carlin-flavour geochemical anomalies above what we interpret to be a separated fault,” Jones says, noting that the property sits 55 km northwest of Barrick Gold’s (TSX: ABX; NYSE: ABX) Goldstrike gold mine in Elko County.

“Teck took a much closer look after we completed our trenching, which outlined a leakage anomaly with some very high-grade results,” he adds.

In 2010 Altan Nevada completed a deep-looking, induced-polarization geophysical survey that identified a large displacement structure, leaking Carlin-style geochemistry to surface and creating a 2 km long arsenic zone encompassing an 800-metre-long gold anomaly. Follow-up trenching revealed gold values at surface that ran up to 1.06 grams gold.

Altan Nevada has moved within a 52-week range of 2¢ and 17¢, and closed at 4¢ per share at press time. The company has 37 million shares outstanding for a $1.5-million market capitalization.


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