Four junior explorers discuss their pursuit of diverse commodities
by Greg Klein
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Why do some juniors thrive despite depressed capital markets? Obvious answers would include the right commodities, projects and management. But how that plays out on a company-by-company basis came through in a May 31 Canvest ’15 panel discussion bringing together four explorers pursuing widely diverse minerals.
The quartet comes under the umbrella of Zimtu Capital TSXV:ZC, a prospect generator with several core holdings among junior explorers. Lakeland Resources TSXV:LK holds one of the Athabasca Basin region’s largest portfolios of uranium prospects. Equitas Resources TSXV:EQT brings modern exploration techniques to a surprisingly under-explored Labrador land package southeast of Voisey’s Bay. Electra Stone TSXV:ELT has made aggressive moves into British Columbia jade properties while producing industrial minerals. Commerce Resources TSXV:CCE continues to advance its Ashram rare earths deposit in Quebec towards pre-feasibility while also holding a tantalum-niobium project in southern B.C.
Panel moderator Chris Berry, president of House Mountain Partners and co-editor of the Disruptive Discoveries Journal, opened the discussion by asking about each company’s competitive advantage.
Commerce president Chris Grove noted that Ashram is one of a “very, very small” number of comparable projects that survived the rare earths bubble. Meanwhile rare earths demand for electric vehicles and magnets “has actually increased since the highs in 2010, 2011 and arguably will increase.”
He suggests investors consider a rare earths deposit for its distribution of magnet materials. “In that regard our project is not only hosted by the three minerals that are processed every day basically all around the world but it also has a great distribution of those magnet materials.”
Electra president John Costigan related his company’s entry into the $20-billion global jade industry. “B.C. accounts for 75% of the world’s nephrite jade … and that market is worth about $400 million.” Coming from an industrial minerals perspective, Electra sees neglected potential in the province’s B-grade jade, which Costigan says is literally left behind in the quest for higher-grade stuff used in jewelry and carving.
Among Lakeland’s advantages is its location. “We’re in the Athabasca Basin where the world’s highest grades are,” said manager of corporate communications Roger Leschuk. Uranium deposits outside the Basin average 0.1% to 0.15% U3O8, he added. Pointing to Basin grades like McArthur River’s 22% to 24% and Cigar Lake’s 18% to 22%, he said, “These mines are essentially hundreds of times richer, so the cost per pound of pulling it out of the ground is lower. Even in a low-rate environment, the Athabasca Basin’s the only place that makes sense.”
Location also helps explain the optimism of Equitas president Kyler Hardy. His company’s flagship Garland project sits 30 kilometres southeast of Vale’s (NYE:VALE) Voisey’s Bay on a land package undergoing modern exploration techniques for the first time. Canadian sulphide-type nickel deposits are “considered some of the best mines in the world simply because they’re not laterites,” Hardy said. “The environmental destruction that can occur when you mine laterite is massive because you’re basically strip-mining.”
And markets for Canadian nickel are relatively close. While other countries might produce the metal for China, Canadian nickel goes mostly to the eastern U.S., Montreal and Europe.
Tough equity markets have failed to keep these four companies down. So Berry asked about their sustainability plans for the next 12 to 24 months.
Last year’s $11.1 million in financings testifies to Commerce’s stability, Grove replied. The money supported a 31-hole drill program and Phase I mini-pilot plant tests, with the second phase set to begin within weeks. “Sustainability in this industry goes back to the actual rocks,” he said. When a company finds the metals it’s looking for and understands the market for those metals, “then arguably you have both sides covered.”
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