Mirasol Resources Ltd’s (CVE:MRZ) (OTCMKTS:MRZLF) business model is built around discovery.
While the junior-mining company calls itself an explorer, Mirasol also bills itself as a project generator in which attracting quality partners on prospective exploration projects plays a major role in fulfilling its business strategy.
And the company, which has multiple gold, silver and copper properties in Chile and Argentina, recently gave a boost to that strategy by activating its fifth partnership agreement in Chile.
The model for these partnerships is that the partner, typically a well-funded major mining company, invests its own money over several years in Mirasol-owned properties — saving Mirasol from risking its own money while retaining exposure to a potential discovery and generating an income stream.
But that’s not to say Mirasol, flush with some $20 million in cash and no debt, will refrain from doing the hard work itself.
“It’s often better to spend someone else's money but we also want to have the optionality to do it ourselves,” said CEO Norman Pitcher, a professional geologist who took over the top post in February.
Under the project generator model, the company secures ownership of the property, completes preliminary exploration work and defines drill targets. Then Mirasol will assess the risk-reward trade-off to determine whether to invest further by drill-testing the property or to option it via an earn-in agreement with a mining partner.
“When we start a project, it’s like going down a road. As you move forward, you get to learn a little bit more. You do some mapping, some sampling and you might also want to do a little geophysics. Then there comes a fork in the road, and you need to make a decision. Do we go out for an option to earn-in and ultimately a joint venture or do we do it ourselves?” Pitcher explained.
“Now the reality is that the option to earn-in to a joint venture is a much bigger road and most of the time projects are going to go that way. If you look forward over the next few years at actual exploration expenditures, the bulk of it is going to be pursuing ventures that allow us to keep our treasury to the extent possible,” he added.
Nearly 40 projects in portfolio
The company’s portfolio is comprised of nearly 40 projects, some deal-ready and others are in the pipeline. It also has five earn-in projects ongoing in northern Chile.
Mirasol’s project generation efforts are focused on two highly productive mining regions: the Atacama-Puna region of northern Chile, and the Santa Cruz Province in southern Argentina. These regions are richly endowed with mineralization and have world-class gold, silver and copper mines.
“The reason we’re anywhere is based on geology,” Pitcher said. “You go where the geology is prospective, and certainly in both Chile and Argentina we’re pretty sure the geology is prospective because there are already multiple of deposits and mines there. So we’re looking at terrain that has already produced economic deposits.”
In the Atacama region, the company owns a large portfolio of exploration claims, some of which include earn-in partners.
With the Altazor and Gorbea projects, Mirasol has teamed with a subsidiary of Newcrest Mining Limited (OTCMKTS:NCMGY), which is funding and operating both gold projects. Newcrest has initiated a 3,000-meter drilling program at Gorbea and expects to start a 2,225-meter diamond drilling program at Altazor during the current field season.
Indra, a third project, is focused on the potential for gold and silver deposits with Hochschild Mining Plc (LON:HOCH) (OTCMKTS:HCHDF) funding the work while Mirasol operates the project.
In October, the company added another earn-in partner, First Quantum Minerals Ltd (TSX:FM), for its Coronacion copper and gold project in Chile. First Quantum has the option to earn-in 80% of the project over six years by making annual cash payments totalling US$875,000, completing at least 10,000 meters of drilling and delivering a pre-feasibility study report.
Mirasol soon followed up that deal with its fifth partnership announcement. The company signed an earn-in deal with Mineria Activa, a Chilean private-equity fund focused on mining. Mineria has the option to buy 100% of Mirasol’s Nord project (copper, gold and silver) over four years but must make annual cash payments totalling US$3 million and complete at least US$500,000 worth of exploration during the first two years.
Meanwhile, in the Santa Cruz Province of southern Argentina, the company has a number of projects available for earn-ins or joint ventures: Claudia (gold and silver), La Curva (gold), Sascha Marcelina (gold and silver) and Virginia (silver).
Gorbea, Los Amarillos and Sascha-Marcelina show promise
Out of all the company’s projects, CEO Pitcher said Gorbea and Los Amarillos in Chile and Sascha-Marcelina in Argentina so far show the greatest promise.
In July, the company released results from Gorbea, where Newcrest drilled two holes (out of four targeted) but stopped due to the onset of winter. Newcrest has restarted drilling with 3,000 meters of diamond drilling planned. Mirasol is confident that the project could host a large-scale oxidized gold deposit.
“On that one we’re pretty sure that there is a mineralized system there,” Pitcher said. “Whether or not it’s an ore body is the question and what the ultimate size and grade are, we don’t know at this point. There just hasn’t been enough drilling. Hopefully, Newcrest will start answering those questions this field season.”
Also in July, Mirasol announced positive surface exploration results for gold and silver based on rock-chip samples at three prospect sites at the Sascha-Marcelina project. The company is currently searching for a partner to drill the test project.
“We’ve had very good results on the surface,” Pitcher said. “Again it’s whether or not it extends to depth and what’s the tonnage and what’s the grade. We don’t know that at this point but certainly indications from the surface are quite encouraging.”
Finally, at Los Amarillos, the company has signed an option to purchase agreement with Empresa Nacional de Minería of Chile to consolidate and gain control of additional claims. To date, the project has returned high-grade gold and silver assays in rock-chip samples. Mirasol recently completed a ground magnetics survey and will fund a trenching program expected to start by year’s end or in early 2020. Drilling will start next year if results come back positive.
Going forward, the strategy for Vancouver-based Mirasol is quite simple:
“We need to get more drilling going and in the end find something -- that’s how we’ll get rewarded,” Pitcher recently told Proactive following the Gorbea and Sascha-Marcelina announcements.
“You do get rewarded, to a certain extent, by investors when you sign a deal but it is nothing like when you actually find ore body and that’s what we are focused on. That’s why I want to churn through these properties and why I want to get more joint ventures going. It will give us better chances of finding a deposit.”
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