TORONTO (miningweekly.com) – In the battle to stay afloat, juniors using the prospect and project generator model are finding the platform has offered greater security, helped offset costs, and reduced the risk of an emptied treasury.

In its simplest form, a company holds a suite of early-stage prospects, developing each one to the extent a joint-venture partner or an outright buyer is attracted. Often a royalty will also be sought, most likely in the form of a net smelter return.

However, the model has a downside; in effect, a generator loosens its ownership levels early, which can reduce the opportunity to secure a larger asking price. During boom times, it can appear to some as an overly-cautious approach. But then, these are not boom times. 

One prospect and project generator recording encouraging progress is Miranda Gold, which is focused on Colombia and Nevada. “We try to generate a number of projects either under an alliance, as we now have with Agnico Eagle mines in Colombia, or as regular joint ventures (JVs), as we have in Nevada,” Miranda Gold president, CEO, director and chairperson Kenneth Cunningham told Mining Weekly Online.

“Miranda is all about trying to mitigate risk,” he said. “[The model] also helps preserve our treasury, which currently stands at about $8-million. We are one of the companies people look at because they know we’ll survive this downturn.”

ALLIES IN ACTION
In Colombia, Miranda is joint-ventured on the Pavo Real and Cerro Oro projects with Red Eagle Mines and Prism Resources respectively. Miranda anticipates drilling work will be undertaken by both partners over the next few months.

In addition, one of the company’s greatest coups came in February; it finalised a three-year Colombian exploration alliance with Agnico Eagle Mines, with a budget of no less than $1.1-million into which Agnico will fund 70%.

The Minagrande project was bought in early May and would be the first to be developed under this strategic umbrella. Gold mineralisation on the property is associated with a 4 km-long fault zone from which two samples have previously been assayed, returning 0.951 g/t gold and 0.82 g/t gold.

Miranda is planning an early stage exploration campaign at the property, including trenching and sampling to determine the width of surface mineralisation within the fault zone. “We’ve paid what are called ‘canon payments’ on Minagrande and are now waiting for the Mining Ministry to decree that the property has moved into the licence or concession stage,” Cunningham said.

Under the alliance, Miranda will compile the results of exploratory work on Minagrande and any future projects into technical reports for Agnico’s consideration. “We’ll deliver a technical report to the committee that oversees Agnico’s technical group. The report will comprise mapping, definition of structural zones, geochemisty and the highlighting of potential drill targets etcetera,” Cunningham said.

“After reviewing the report, the committee has three options,” he continued. “Firstly, it could determine that a project is not large enough for Agnico’s purposes. In this case, Miranda would be free to take it to other parties. Secondly, it might earmark the project as of interest, but ask Miranda to undertake further work. Finally, it could agree the project is wholly suitable, leading to the creation of a JV, with Agnico having the right to earn-in between 51% and 70%.”  

OTHER TARGETS
Under the auspices of the Agnico alliance, Miranda is examining other potential acquisition targets in Colombia; it believes a period of opportunity might be opening up, with a cluster of robust projects available at discount rates.

“It makes sense to essentially start prospecting through the portfolios of other companies,” Cunningham said. “We’re already looking at a specific opportunity in Colombia and are in discussions with its controlling company.”

However, part of the acquisition process has been slowed due to a government moratorium on new mining applications, although the company believes this is likely to end in July.

“One of the reasons we opted for Minagrande was that its application had been made before the moratorium came into effect,” Cunningham said.  “We’re hoping two things will happen when the moratorium is lifted. Firstly, the government will speed up the issuing the necessary licences for properties such as Minagrande and, secondly, that new applications can be made.”

Inadvertently, the moratorium may have assisted Miranda. “The moratorium came about because the system was being overwhelmed by the sheer volume of applications, many of which were nothing more than land speculation by both companies and individuals,” Cunningham said.

“In response, the government has been strict in reviewing the backlog, with deficiencies in the paperwork resulting in rejections. For example, if a property is wrongly positioned, not dated or not signed etcetera,” he said. “Government also demands that a company or individual show economic capacity to develop a project.”

“So this means a lot of applications have been rejected during the moratorium and we’ve been evaluating several of these as holding good potential,” he added.

BACK IN THE USA
Miranda is also hoping further progress will shortly be made at its Nevada interests. “Right now we have three active JVs in Nevada. Two of our partners plan on drilling; Montezuma is seeking to begin a six-hole campaign at the Red Canyon property during the summer, while Ramelius Resources aims to start a drill program at the Angel Wing property, most likely in August,” Cunningham said.

Taking a wider view of current conditions, he voiced some concern. “Our business relies on creating projects that attract companies wanting to develop them further. In the past, this pool of companies was much larger as the health of the sector was that much better. So this is one of the challenges we face,” he said.

“Having said that, we’re currently in discussion with two major companies who realise we’ve got a good track record and a strong technical team. They also saw what we’ve done with Agnico. We’d love to establish a similar type of strategic partnership for the work we do in Nevada, so we’re pursuing this. But deals like this obviously take time to put into place.”