- Reservoir Minerals’ joint venture partner finds high-grade gold and silver at the Serbian Parlozi project.
- This wasn’t really unexpected, as this is a past-producing mine, and I would have been surprised if the mine would have been depleted.
- The investment thesis doesn’t change, as the value of Reservoir will be determined by the Timok property.
Reservoir Minerals (OTCPK:RVRLF) has released an exploration update on its Parlozi Silver-lead-zinc project in Serbia. Fellow exploration company Midlands Minerals (OTCPK:MDLXF) is currently earning into the property and can earn an initial stake of 51% by spending $4.5M on the property within four years. Thereafter, Midlands' stake can increase to 65% if it's able to obtain an exploitation permit from the Serbian government and even 75% if the company can show the results of a bankable feasibility study within two years after receiving the aforementioned exploitation permit.
These first drill results are very encouraging, as several holes have hit relatively high-grade mineralization such as almost 3 meters of almost 6oz/t silver as well as 6.3% Zinc and lead. You obviously can't build a mine on 3 meter intercepts, but it's an indication there's mineralization left and I would have been surprised if everything was mined out in the past. As Midlands Minerals had to drill 1,500 meter before the end of September as part of its earn-in deal with Reservoir Minerals, I'm expecting more drill results which will hopefully confirm the continuity of the mineralization.
As Midlands will have to spend $4.5M, Reservoir can sit back and wait for the exploration results to roll in and it doesn't cost the company a single dollar. AsReservoir's focus is on the high-grade copper-gold Timok property in Serbia which is a joint venture with Freeport McMoRan (NYSE:FCX), Parlozi is a non-core asset, and I think Reservoir will divest its stake in a later stage when the exploration programs will have made the property more attractive.