Bamako's Blog //Thursday, September 28Yet another news release from Plexmar Resources (PLE-v) today, following on the heels of one yesterday. Today, Plexmar announced formalization of its acquisition of the Escondida properties. In my view, the deal is a very shrewd one as it assuages several key concerns regarding how Plexmar could retain Escondida, instigate an exploration program, give sufficient attention to its most advanced property, the Bolsa del Diablo in Peru, and mitigate share dilution, all at the same time.
What Plexmar has done is sign a letter of intent with the Ecuadorian owner of Escondida--by all signs an important mining figure in Ecuador--to acquire 100 percent of the mining rights to the Escondida project, a close to 90,000 hectare set of claims contiguous to Aurelian Resources' (ARU-v) Cordillera del Condor project, which includes the multi-million ounce Fruta del Norte gold discovery. Plexmar will pay a total of two million U.S. dollars and six million shares to the owner, given in a set schedule over the next two years.
Plexmar then will assign 60% interest in the Escondida concessions to a new company, presumably through either a shell takeover or a new initial public offering. The new company will incur Plexmar's debt to the owner, issue an unspecified but "significant" number of shares to Plexmar and commit to a three-year exploration work program on Escondida. The new company will also assign 20% of its shares before a financing to the owner and 10 percent in warrants. The owner will also claim a seat on the new company's Board of Directors.
Ultimately, the deal means that Plexmar will retain 40% control over the Escondida concessions and become a significant shareholder of the new company. If the new company's shares do well, then Plexmar shareholders should also benefit. Except for the 6 million in Plexmar shares given to the owner, all costs relating to acquisition plus exploration of Escondida will be borne by the new company. Plexmar will remain an Ecuadorian and Peruvian play. Recent sampling from the Escondida II mining concession, that is, the concession most approximate to and directly due west of Aurelian's Fruta del Norte discovery, returned assays as high as 396 grams/tonne gold.
Now the question turns to when will the new company be launched as a new ontology? The Escondida claims are highly prospective and expansive. Except for Aurelian, no other junior exploration company within the Fruta del Norte area play comes close to the property size of Plexmar's Escondida. Only a week ago, both Goldmarca (GML-v) and Oromonte (ORR-v) released outstanding results from drilling. Plexmar's Escondida claims sits in the approximately ten kilometres tract of land between where GML and ORR drilled. Escondida is so large that it is an area play to not only Aurelian, but also Goldmarca and Oromonte to the south and Corriente to the north where an very large copper deposit is being developed for mining. Goldmarca and Oromonte found significant results some two dozen kilometres south of Aurelian's Fruta del Norte, and Plexmar is the connective tissue in between.
Today's news somewhat overshadows yesterday's important announcement that another gold zone has been discovered in the Bolsa del Diablo. As mentioned in an earlier blog post, geologists believe that Bolsa del Diablo is very likely a multi-nodal gold deposit, with nodes distributed at some distance away from one another. At Pena Planca, an area some ten kilometres north of where the company has performed extensive sampling to very encouraging results, channel samples returned grades as high as 60.9 g/t gold. Like the six by nine kilometre high-grade gold zone to its south, the newly discovered zone near the Ecuadorian border is also being worked on by artisan miners.
Apparently, aerial surveying and geophysics are now completed on Bolsa del Diablo but IP surveying has been delayed for about three weeks. Depending on how much time the company will need to analyze the data from surveying, drilling should begin by start November or shortly thereafter. There remains a chance that drilling could start before the conclusion of October. All the signifiers are there for Plexmar to make an important gold discovery. High grade gold in the intrusives, the volcanics and at surface is a very rare geological conflation. Moreover, in a June 28 news release, the company included assays for silver and copper which were also found to be convincingly present.
There is no questioning the potential of the Bolsa del Diablo and the high volume of trading in Plexmar shares is surely a reflection of investor interest in the company. What is a question is how Plexmar shares will perform between now and drilling start? As an investor, this question is somewhat a mute one but Plexmar has also become very much a trader's stock, so more up and down volatility is likely. However, with these two back to back news releases, the company is setting the building blocks in place.
The high potential Bolsa del Diablo property is now confirmed to bear a second high grade gold zone, as had been theorized by Plexmar's own geologists upon analyzing the first high grade gold zone. The matter of Escondida is now largely clarified at little dilutional expense to Plexmar, while allowing the company to retain a significant interest in the concessions both through direct percentage ownership and through indirect investment ownership of the joint venture company. I continue to wait with bated breath to find out the secret of Bolsa del Diablo's gold.
About the Writer
Username:
bamako