Saturday 1st October 2016

Resource Clips


A Little Help From Their Friends

Estrella Forms Golden Alliances in Latin America

By Greg Klein

President/CEO/Director Keith Laskowski describes it as “a micro-cap company with a mid-sized company’s portfolio.” Indeed, Estrella Gold Corp’s range of properties in Peru and Chile belies its $14-million market cap. But Estrella didn’t accomplish that singlehandedly.

“We have 15 properties that we acquired as part of a strategic alliance with Cliffs Natural Resources,” Laskowski explains. “They’re funding us to explore these properties. And we have six other properties that we hold independently. They’re in various stages of exploration, and we’re seeking partners on those properties as well. We have two joint ventures in place.”

Estrella Forms Golden Alliances in Latin America

Estrella’s flagship is its 100%-owned Colpayoc Project, 12 kilometres from South America’s largest gold producer, Newmont’s Yanacocha Mine in northern Peru. Primarily a gold deposit, Colpayoc also shows signs of copper, silver and molybdenum. A July 2010 43 101 estimates 7.58 million inferred tonnes grading 0.59 grams per tonne for 144,600 gold ounces using a 0.3 g/t cutoff.

Not exactly market-shattering results, but Laskowski is unfazed. “The reason it was so small was because SRK Consulting was not comfortable extending the mineralization between the drill holes. Right now we’re drilling between these holes, which is not very risky at all. We anticipated that we would be drilling wide zones of uniform mineralization, and in fact that’s what we’re starting to see.”

Since December 2010 Estrella has drilled a total of 14 core holes for over 2,300 metres. The most recent results, released September 20, include:

  • 0.52 g/t gold over 110.5 metres (including 1.27 g/t over 10.1 metres)
  • 0.57 g/t over 53 metres (including 0.34 g/t over 13 metres)
  • 0.4 g/t over 43.7 metres (including 0.98 g/t over 5 metres)
  • 0.65 g/t over 22.5 metres
  • 0.62 g/t over 25.5 metres (including 0.99 g/t over 8.1 metres)

Laskowski expects results like these to increase the resource substantially. “We’re not in a position to drill off the entire deposit,” he says. “Our drill holes are quite shallow, generally down to about 130 to 150 metres. We’ll probably get around 400,000 ounces near surface, but these types of systems are entirely capable of producing multimillion-ounce deposits, if you drill deeper. We’re going to be looking for a partner to do that.”

Estrella already has a partner for its Pucarana Gold Property located 15 kilometres east of Peru’s Poracota Mine and eight kilometres west of the Chipmo Mine. Together those two produced 360,000 ounces gold and 131,000 ounces silver last year. The JV allows operator Esperanza Resources to earn up to a 60% interest by spending $1.3 million and paying Estrella $80,000. Initial drill results are expected this fall.

Estrella’s other joint venture is Pampa Poroma, an iron oxide-copper-gold deposit in southern Peru. Although drilling has yet to be announced, Pampa Poroma is the first JV with Cliffs to emerge from the 15-property deal signed in February. The alliance has Cliffs funding Estrella $400,000 a year to explore properties from Estrella’s GIS-based database, which targets deposits using geological, geophysical and geochemical data, along with Landsat imagery. Where exploration looks promising, Cliffs has the right to an initial 50/50 JV, with options allowing the company to increase its stake up to a total of 80%.

What’s in it for Estrella? Access to much deeper pockets. At $8.45 billion, Cliffs’ market cap dwarfs Estrella‘s.

We’ve got a pretty large portfolio and a pretty small share structure. We hope to increase the value of that share price through optimization of these properties —Keith Laskowski

The search continues for JV partners on the company’s five other properties, which include the Trol Gold Project in southern Chile. The company also has applications pending for 27,000 hectares in the Dominican Republic, home to another JV of note, Barrick/Goldcorp’s 23.7-million-ounce-reserve Pueblo Viejo Mine.

But most of Estrella’s activity is in Peru, and Laskowski speaks highly of the country, despite concern among others in the industry. Last June the Peruvian government cancelled Bear Creek Mining’s rights to its Santa Ana concessions. The following month a new president with an interventionist reputation took office.

“The challenges that Bear Creek faced are unique to the property and not reflective of the country,” Laskowski says. “There’s a certain set of circumstances that unfortunately culminated just ahead of the election. There were concerns involving the new president and his perceived reputation, but those issues greatly diminished during the two months prior to the election. The new president, Ollanta Humala, softened his stance considerably, moved to the middle, and that’s the reason he was elected. What we’re seeing now is that he’s actually staying true to his words and following through with progressive mining reforms that are going to impact the industry in a minimum manner but hopefully satisfy some of the needs of the people in the poorer sections of the country.

“About 56% of [Peru's] export income comes from mine production. So they’re pretty well hooked on mining. In our business we’re prospect generators, and their mines are going to deplete their resources, so they need to replace them.”

“I’ve looked at a lot of countries,” he emphasizes. “At the end of the day, I don’t know a better country in Latin America.”

With more partners and potential partners than a TV soap opera character, Laskowski doesn’t see Estrella going into production itself. “We’re geologists and accountants,” he says. “We focus on what we know best.”

At press time Estrella had 24.1 million shares trading at $0.59 each for a market cap of $14.2 million.

“So we’ve got a pretty large portfolio and a pretty small share structure,” Laskowski concludes. “We hope to increase the value of that share price through optimization of these properties.”


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